This article was updated April 7, 2020, to reflect additional regulatory updates.
If you have fewer than 500 employees, buckle up.
The Families First Coronavirus Response Act (FFCRA) is sweeping legislation to temporarily extend and enhance policies relating to family and medical leave for employers with fewer than 500 employees. There are two leave-related components within the FFCRA.
- The Emergency Family and Medical Leave Expansion Act outlines requirements for providing ongoing paid family leave time for up to 12 weeks.
- The Emergency Paid Sick Leave Act outlines requirements for short-term paid sick leave.
What type of documentation is required from employees who want to request leave?
We recommend that you create a leave request form. If there isn’t a form, then your employees can verbally or in writing provide the following information:
- Employee’s name;
- The date(s) for which leave is requested;
- The reason for leave; and
- A statement that the employee is unable to work because of the reason.
If the reason is to take care of a child whose school or daycare is closed, the employee should give the additional following information:
- The name of the child;
- The name of school or daycare; and
- A statement that another suitable person is not available to care for the child.
The statement also needs to be backed up with additional documentation based on the specified reason.
Provide the name of the government entity that issued the quarantine or isolation order.
Provide the name of the health care provider that gave advice to self-quarantine or provide the name of the family member’s health care provider that gave advice to your family member that they should quarantine themselves.
Provide the school or daycare closure announcement.
How does FFCRA affect exempt and non-exempt employees differently?
Where it differs is that when calculating pay due to employees, you must include overtime hours that were received by non-exempt employees. However, there are per day and total aggregate caps, so you are not required to pay above those caps.
Emergency Family and Medical Leave Expansion Act
What is the definition of a covered employer?
- Generally, it’s any employer with under 500 employees.
- There is an exemption for small businesses with under 50 employees who can prove a hardship to business viability.
What is the definition of a covered employee?
- A worker who has been employed for at least 30 days.
- There are some exemptions for health care and emergency responders.
- Note that employees who have worked less than 30 days are still eligible for the paid sick leave portion of the FFCRA.
What are the details of the paid leave provision of this legislation?
- The first 2 weeks are unpaid. Employees can choose to use accrued paid sick or other accrued paid leave, but employers cannot require it.
- For the following 10 weeks, employees must receive at least 2/3 of their regular pay, up to $200 per day and $10,000 total.
Does this legislation offer job protection for employees to return to work?
- Yes, there is a reinstatement provision.
- Employers with under 25 employees will not have to provide reinstatement if the position no longer exists upon resuming regular business due to the COVID-19 crisis.
- A reasonable effort to return the employee to a similar role must be demonstrated.
Does this act as a substitute for state or local paid sick rules?
- No, it does not preempt state or local paid sick leave requirements.
Emergency Paid Sick Leave Act
What is the definition of a covered employer?
- Here again, this covers employers with fewer than 500 employees.
What is the definition of a covered employee?
- There is no length of service requirement for employees.
- Health care providers and emergency responders may be exempted from coverage.
When can the leave be used?
- Leave must be made immediately available for employees impacted by the following situations:
- They are subject to a state, local, or federal quarantine or isolation order due to COVID-19.
- They have been told by heath care providers to self-quarantine due to COVID-19 related concerns.
- They have the symptoms of COVID-19 and are waiting for diagnosis.
- They are caring for a family member who was advised by a health care provider to quarantine or self-isolate due to COVID-19 related concerns.
- They are caring for a child whose school or childcare facility has closed due to COVID-19.
- They are under similar orders to above as judged by the Secretary of Health and Human Services.
What is the available amount of leave time, and what are the payment caps for an employee on leave?
- Full-time employees receive 80 hours of sick leave. Part-time employees should be pro-rated based on their regular hours worked.
- The cap is $511 per day and $5,110 total if an employee is ill or subject to quarantine, either mandated or recommended.
- The cap is $200 per day and $2,000 total if the employee is caring for others, including family members affected by the illness or a school-aged child whose school or childcare center has been closed.
Is this leave time payable upon termination?
- This specific paid sick leave is not payable on termination nor does it roll over year to year. Furthermore, it ceases to exist once the employee is able to return to work when the business resumes normal function.
Do shelter-in-place orders issued by local or state governments qualify for leave under FFCRA?
- The employee(s) do not qualify for emergency paid sick leave if the company does not have work for the employees as a result of a local or state shelter-in-place order. If the company cannot provide work during a shelter-in-place order, then the employee can seek wage replacement by filing for unemployment benefits.
- If an employer can provide work remotely (telework) under a shelter-in-place order, then the employee should continue to work and, thus, would not need to go on emergency paid sick leave.
Available Payroll Tax Credits
How do I get reimbursed for wages paid under FFCRA leave?
- Your payroll processor needs to figure out how to stop processing the 6.2% on COVID-19 leaves. Or if your payroll processor has not figured out how to stop processing the 6.2% on COVID-19 leaves, then you can claim the credits on your Form 941, Employer’s Quarterly Federal Tax Return. Or you may request an advance on the payment of credits from the IRS by submitting Form 7200, Advance Payment for Employer Credits Due to COVID-19. The IRS says they expect to begin processing these requests during April 2020.
How do I calculate the payroll tax credit for required emergency paid sick leave?
- For sick leave, we assume it’s the 6.2% employer portion of Social Security on qualified wages for the 80 hours or 10 days of required sick leave. Maximum is wages up to $511/day x 6.2% x 10 days = $316.80 maximum for 2020.
- For the family leave, we assume it’s 6.2% of qualified wages up to $10,000 maximum payable wages, or $620.
How can my company qualify for a payroll tax credit?
- Businesses with fewer than 500 employees and workers who take qualifying sick leave or emergency family and medical leave will be eligible for the tax credit. We recommend that you pay out related sick leave and emergency family and medical leave under a separate earning code in the payroll system for a quicker determination.
- In addition to the tax credit, eligible employers will be able to offset the cost of providing qualifying sick or emergency family and medical leave wages against their federal tax deposits. The IRS has the example below, and further guidance is expected:
- If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
- If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
Should I set up earnings codes in my company’s payroll system, and what about time tracking?
- Yes, you should set up earnings codes immediately and you need three types.
- Code for taking emergency family and medical leave.
- Code for employee taking sick leave for self due to COVID-19.
- Code for employee taking sick leave for taking care of a family member due to COVID-19.
- Yes, you should be time tracking for the leaves in your time tracking system because you’ll need to be able to differentiate leaves that were taken under FFCRA or if the leaves were taken for other reasons, like regular sick leave or other leaves that you grant per your company’s policies.
What if my credit is more than I can claim on my tax forms?
- If the amount of your credit exceeds your tax, you get a refund
For regulatory compliance questions and other information on running your business through disruption, visit our COVID-19 Resource Center.
