Families First Coronavirus Response Act overview and related issues
On Wednesday, March 18, 2020, President Donald Trump signed a $100 billion relief package—the Families First Coronavirus Response Act—to address the impact of the coronavirus (COVID-19). Key components of the package include free testing for COVID-19 and emergency paid leave for workers who are employed at companies with fewer than 500 employees or who work for the government. Here is an easily scannable fact sheet to use in your practice.
In addition, the Senate has expanded paid leave and unemployment benefits, with additional stimulus packages under consideration to address the economic impact of this pandemic.
How this benefits employees
This legislation has provided many employees with paid sick leave (up to two weeks) if they are being tested or treated for the virus or have already been diagnosed with COVID-19. Plus, if an employee has been told by a medical professional or government official to remain at home because of symptoms or exposure to the virus, he or she is also eligible. This is relevant even if an employee has not worked for a company for 30 days.
The legislation went through multiple iterations but, in the final version, it was determined that sick leave payments will be capped at $511 daily. This would allow employees who receive up to $133,000 annually to receive their full pay during the sick leave period. Full-time employees are entitled to take 80 hours of this paid sick time, while part-time employees are limited to being reimbursed for their typical number of hours during a two-week period.
If someone needs to remain home because a family member has been affected by COVID-19 or his or her children are home because of school closings or child care shutdowns, they are eligible for up to two-thirds of their pay during this period, capped at $200 daily.
Employers needing to calculate sick leave must determine and use the greatest of these figures: the employee’s regular rate of pay; the federal minimum wage applying to this situation; or the state or local minimum wage.
If someone’s employment ends at a company during the time in which this Act is in effect, the employer is not required to pay his or her unused paid sick leave. Employers may not require employees to find replacement coverage while they are gone, but they may require reasonable notice of a relevant situation. Employers may not retaliate against any employee who takes or raises the issue of COVID paid sick leave.
In general, employees taking this type of sick leave (or leave under the Family and Medical Leave Act, to be discussed next) must be given their original positions when they come back to work. If an employer has fewer than 25 employees, though, they are not required to do this if the position no longer exists for economic or operational reasons or is altered by this public health emergency.
The employer with fewer than 25 employees must make a reasonable attempt to give a returning employee a position that’s equivalent to his or her previous position, including in pay, benefits, and other employment-related conditions. If reinstatement is not possible, the employer must make a reasonable attempt to contact the employee if an equivalent position opens within a year from the earlier of these two dates: when the need for the employee concludes or 12 weeks after the employee’s leave begins.
In addition, FMLA has been expanded, providing employees of the government and those who work for companies with fewer than 500 employees with ten weeks of emergency paid leave to care for children who are home because of school or childcare closings. Note that this FLMA provision is restricted to employees who are not able to work or telework.
Employees must have worked 30 days at their current job to qualify for the FMLA and must be an employee as defined by the Fair Labor Standards Act—meaning, they cannot be an independent contractor. Plus, the employee is “subject to a federal, state, or local quarantine or isolation order related to COVID–19.”
When businesses close because of a government order, such as in California, it is uncertain whether this Act will apply.
This benefit would kick in after ten days of unpaid leave, and then the employer would pay qualified employees two-thirds of their typical pay, up to $200 daily, with a maximum cap of $10,000. Quarantined employees and those who stayed home to care for impacted family members would not be eligible for this benefit. Others who may be excluded include healthcare providers and other types of first responders. They may be excluded by an employer or through the Secretary of Labor.
Note: during this ten-day period of unpaid leave, qualifying employees may be eligible to receive sick pay through this Act, or can use accrued sick, vacation, or personal time. Employers, however, are not permitted to require employees to use accrued paid time during this ten-day unpaid period.
Under 50 employees exemption
The Department of Labor can exclude some businesses, such as those with fewer than 50 employees, if this benefit would “jeopardize the viability of the business.” This could affect approximately 12 million employees in the private sector. And, companies with more than 500 employees are also exempted from this paid leave; out of the approximate 59 million people working for companies of this size in 2019, about 6.5 million of them did not have access to this type of paid sick leave. Many of these companies, however, have added paid sick leave to their benefits package in response to COVID-19. Employers who have fewer than 50 employees and believe that paying these benefits would jeopardize their business should contact the Department of Labor.
What companies are required to do
Companies that fit within the parameters of the paid sick leave policy will need to pay sick leave and emergency leave costs upfront for qualifying employees—and then these businesses will be eligible for tax credits to reimburse them in the future. More specifically:
- Companies will be reimbursed up to $511 per employee per day for those workers who are sick with the virus or trying to be diagnosed.
- Companies will be reimbursed up to $200 per employee per day for those workers who are providing care to loves ones.
- Self-employed people are also eligible for these tax credits.
- The credits are to be the full value of qualified sick or FMLA wages paid. The IRS is expected to provide a starting date and further information soon.
These benefits will last through December 31, 2020, with the paid leave benefits supposed to go into effect within 15 days of the bill’s signing. This is anticipated to mean April 2, 2020. COVID-19 notices about sick leave provisions are expected to be provided to employers within seven days of the Act’s enactment, and employers will be required to post these notices.
In addition, state and local governments are considering or have already implemented payroll relief measures, such as the New York City Grant Retention Program. Also, some places have been declared disaster areas by the Federal Small Business Administration, which would allow them to obtain business loan assistance.
If you close your practice, whether voluntarily or by government order, you are not required to pay your employees. If you decide to offer salary advances to your employees, check state laws that regulate employment as well as consumer lending laws to ensure that you are complying. Overall, it’s important to have a written agreement with each employee about the specifics of the advance, including the amount, if interest will be charged, how it will be paid back, and so forth. Work with your payroll company or accountant to take out the appropriate taxes.
If a practice closes during this time, either voluntarily or through a governmental action, this is considered a temporary layoff, which means that employees are not usually entitled to use PTO or sick or vacation time. Depending on state law and practice policy, it’s possible that they would not be allowed to accrue these benefits during the shutdown.
The practice is therefore typically able to deny the request. But, if state law permits a practice to pay employees for this time during a shutdown and the practice can afford to do so, it may make sense to allow employees to benefit from PTO during this shutdown.
If your state requires companies to provide paid sick time, double check the specifics. If the practice is not able to pay for all sick leave requested, your practice may need to calculate what you’ll need to continue to operate along with expected short-term revenue, and create a plan to pay employees sick leave time as soon as you can.
During a temporary layoff because of a shutdown, employees may qualify for unemployment benefits, but this is a decision made by your state’s Department of Labor, not your practice. Employees using paid time off may see an impact on unemployment compensation, so you could advise them to investigate this possibility. Whether or not your practice will see an increase in taxes due to unemployment benefits also will vary by state.
This is a rapidly evolving situation, so it’s important to continue to watch for updates.
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