Employer Alert Update: Families First Coronavirus Response Act Signed Into Law
In follow-up to our recent blog post concerning the House of Representative’s passage of H.R. 6201, late yesterday the Senate passed a modified version of the legislation by a vote of 90 to 8, and President Trump then quickly signed the Families First Coronavirus Response Act (FFCRA) into law.
The final version of the FFCRA – which includes over $100 billion in aid – is similar in most aspects to the form originally passed by the House earlier this week. It provides qualifying employees with increased paid sick leave benefits, access to coronavirus testing, and required paid family and medical leave in several situations, with certain significant modifications and limitations. As an overview outline, the FFCRA provides for the following:
- Increased Paid Sick Leave: Under the FFCRA, employers with fewer than 500 employees are now required to provide workers with two weeks of paid sick leave benefits if they are suffering from COVID-19 symptoms and seeking a medical diagnosis for same, if they are caring for a family member subject to a quarantine, or caring for a child whose school and/or child care service is closed due to the current pandemic. Such benefits under the FFCRA will be capped at $511/day if used for the employee’s own care (or a total of $5,110), and $200/day if the employee is caring for a family member (or a total of $2,000). Such benefits are scheduled to expire at the end of 2020.
- Expansion of Family and Medical Leave Act (FMLA): Similarly, the FFCRA includes an emergency expansion of the Family and Medical Leave Act (FMLA). Again, this relief applies to companies having fewer than 500 employees, and obligates such employers to provide qualifying employees (those who have been on the company’s payroll for at least 30 days) with up to twelve weeks of qualifying family and medical leave benefits at two-thirds of the worker’s average monthly earnings, capped at $200/day (or a total of $10,000), and payable only after the employee first takes two weeks of unpaid leave. However, while the earlier version of the legislation allowed employees to utilize such leave for a variety of reasons, the final FFCRA restricts it to employees who are unable to work because of child care unavailability. As with the expanded paid sick leave, such FMLA benefits will expire at the end of 2020.
- Provision of Tax Credits for Payments of Sick and Family Leave: Qualifying employers subject to the emergency paid sick leave and FMLA requirements will be eligible for 100% refundable quarterly tax credits on their portion of their Social Security payroll taxes equal to the amounts paid to employees under the above provisions. Further, if the sick and family leave payments exceed the quarterly payroll taxes, the businesses will be entitled to a refund. There is also the possibility that the refund, and tax credits, may be available to businesses prior to the end of the quarter.
Notably, the FFCRA does leave many questions unanswered, as well as loopholes. For example, employers of over 500 employees are exempt, as they are in theory expected to be providing comparable benefits to their workers already. Further, employers having fewer than 50 employees may apply to the Secretary of Labor for an exemption from certain of the emergency paid sick leave and FMLA obligations if they can demonstrate that compliance will “jeopardize the viability of the business as a going concern.” Finally, employers having 25 or fewer employees will not be required to restore employees utilizing the expanded FMLA leave to their previous positions under certain enumerated circumstances, such as if the position no longer exists due to economic conditions or changes in the employer’s operating conditions. Alternatively, employers of greater than 25 employees are barred from terminating employees taking such leave.
Given the significant costs and expense that the FFCRA will obviously place upon businesses, the federal government is already exploring means to alleviate this burden, including a $1 trillion spending package designed to infuse cash into the economy to encourage consumer spending and thereby support business. We are all in this fight together, and it is hoped that a bipartisan, united front with these types of creative measures will successfully stabilize our nation’s economy during this period of unprecedented circumstances.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.
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