H.R. 6201, also known as the Families First Coronavirus Act, has passed the House, Senate and was signed by the President on Wednesday, March 18th
H.R. 6201 outlines employee eligibility for sick leave related to COVID-19 cases. Specifically, employees are eligible for two weeks of sick leave as well as use of 12 weeks of Family and Medical Leave Act (FMLA) leave. Legislation indicates that it would be effective not more than 15 days after enacted, April 2nd
, and would expire December 31st
There are three key elements employers need to review and be aware of for H.R. 6201:
1. FMLA Expansion
2. Paid Sick Leave
3. Payroll Tax Credits
Emergency FMLA Expansion
What has been expanded in the Emergency FMLA?
- Covered Employers: Employers with fewer than 500 employees are covered.
- Covered Employees: Any employee who has been employed for at least 30 calendar days, though employers can choose to exclude employees who are health care providers or emergency responders.
- Covered Leave Purposes: To care for a child under 18 of an employee if the child’s school or place of care has been closed, or the childcare provider is unavailable, due to a public health emergency, defined as an emergency with respect to the Coronavirus declared by a federal, state, or local authority.
What is the Duration?
- Up to 12 weeks of job-protected leave.
How is the Compensation Structured?
- No pay for the first 10 days of leave (an employee can, but is not required, to use any other leave available to them, including the emergency sick leave discussed below). Employers may not require employees to use paid leave during this period.
- After 10 days, employers must pay two-thirds of the employee’s regular rate of pay for the number of hours they would normally be scheduled to work, capped at $200/day and $10,000 total.
How will Reinstatement Work After Leave?
- The same reinstatement provisions apply under the traditional FMLA. However, restoration to position does not apply to employers with fewer than 25 employees if certain conditions are met:
- The job no longer exists because of changes affecting employment caused by an economic downturn or other operating conditions caused by a public health emergency, subject to the following conditions:
- The employer makes reasonable efforts to return the employee to an equivalent position, and
- The employer makes efforts to contact a displaced employee if anything comes up within a year of when they would have returned to work.
Emergency Paid Sick Leave
What is covered under Paid Sick Leave?
- Covered Employers: Employers with fewer than 500 employees.
- Covered Employees: All employees (no matter how long they have been employed). Employees who are health care providers or emergency responders may be excluded.
- Covered Leave Purposes:
1. When quarantined or isolated subject to federal, state, or local quarantine/isolation order;
2. When advised by a health care provider to self-quarantine (due to concerns related to COVID-19);
3. When experiencing symptoms of COVID-19 and seeking a medical diagnosis;
4. When caring for an individual who is included in circumstances listed in #1 and #2 (2/3 pay);
5. When caring for a child whose school or place of care is closed due to COVID-19 (2/3 pay); or
6. When the employee is experiencing any other substantially similar condition (2/3 pay).
What is the Duration?
- Full time employees are entitled to 80 hours of paid sick leave.
- Part time employees are entitled to sick leave equal to the amount of hours worked on average over a typical two-week period.
What is the Rate of Pay?
- Sick leave must be paid at the employee’s regular rate of pay for leave used for the employee’s own illness, quarantine, or care.
- Sick leave must be paid at two-thirds of the employee’s regular rate if taken to care for a family member or to care for a child whose school has closed, or if the employee’s childcare provider is unavailable due to the Coronavirus.
- Pay is capped at $511/day and $5,110 total for reasons 1, 2, and 3 described above.
- Pay is capped at $200/day and $2,000 total for reasons 4, 5, and 6 described above.
What about Interaction with Other Employer-Provided Paid Sick Leave and other Paid Leave?
- This bill does not pre-empt existing state and local paid sick leave requirements.
- Employers cannot require employees to use other leave first.
- Sick leave provided for under the bill does not carry over from year to year, and the requirements expire December 31st, 2020.
- Employers must post a model notice to be provided by the federal government.
The bill reserves the right for the Secretary to exclude certain care providers and emergency responders from the list of “eligible employees” and exempt small businesses with fewer than 50 employees if business viability was jeopardized.
Payroll Tax Credit
Under the Families First Coronavirus Act (H.R. 6201), employers can claim a refundable tax credit to offset the incremental cost of providing expanded FMLA and emergency paid sick leave to their employees.
- These refundable tax credits are taken against the employer portion of Social Security taxes for the calendar quarter in which wages are paid under these programs.
- If the credit exceeds the employers accumulated Social Security tax for the calendar quarter, the excess will be issued in the form of a refund from the IRS.
- The amount of refundable tax credit is based on the type of leave.
- The refundable credits would apply to all wages paid under these programs between the date specified by the Secretary of Treasury (must be within 15 days of the bill being enacted) and December 31st, 2020.
Tax Credit for Expanded FMLA Leave
- An employer can claim 100% of the qualified family leave wages that they are required to pay for in the calendar quarter.
- The amount of the credit is $200 per day for each employee paid.
- The maximum annual credit per employee is $10,000.
Tax Credit for Emergency Paid Sick Leave
- An employer can claim 100% of “qualified sick leave wages” that they are required to pay for in a calendar quarter.
- The amount of the credit will vary based on the reason for the leave and is limited to 80 hours (10 working days) for full time employees and two-weeks average hours for a part time employee.
- Employee Using Emergency Paid Sick for their self:
- The refundable tax credit for an employee who is self-isolated in the lesser of their regular daily pay for 8 hours or $511.
- The max credit to be taken for an employee under self-isolation is $5,110.
- Employee Using Emergency Paid Sick Leave for family:
- The refundable tax credit is the lesser of their regular daily pay for 8 hours or $200.
- The max credit to be taken for an employee that is caring for a family member is $2,000.
- An employer can claim additional refundable tax credits for the following items if they can be directly linked to the Emergency Paid Sick Leave payments to employees:
- Employer portion of Medicare taxes.
- The nontaxable health insurance premiums paid by the employer for employees.
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