27
March
2020
|
04:09 PM
America/Chicago

Employer obligations under the Families First Coronavirus Relief Act (FFCRA)

by Kyle B. Russell

The Families First Coronavirus Relief Act (“FFCRA”) was signed into law March 18. It requires employers with less than 500 employees to provide two types of paid leave to most employees. The leave must be granted for qualifying reasons from April 1, 2020, through December 31, 2020, and employers may take a tax credit for the cost associated with granting the leave, such that the obligation is intended to be cost-neutral. The two key provisions for employers are (1) emergency expansion of Family Medical Leave Act (FMLA) leave, and (2) emergency paid sick leave benefit (PSL). 

Provisions Applicable to both FMLA and PSL 

  • Applies to employers with fewer than 500 employees. This is calculated the same way as FMLA and FLSA employer liability. Employers under common control or in a common enterprise should count as one employer unless and until the Department of Labor (DOL) issues guidance or regulations to the contrary.  

  • Allows employers to exclude employees who are health care providers or emergency responders. However, the FFCRA adopts the FMLA definition of “health care provider,” which is relatively narrow and does not include employees such as nurses and physical therapists. In the context of this exclusion, this definition makes little sense. But unless the DOL issues guidance or regulations to the contrary, these employees should be offered both types of leave under the FFCRA. The term “emergency responders” is not defined at all.  

  • Allows DOL to issue regs excluding employers with less than 50 employees from the leave obligations, if compliance would jeopardize the viability of the business.  The DOL says such businesses should document the reasons they believe they should be excluded but should not send anything to the DOL at this time.  

  • Requires that employees be unable to work (including telework) due to a qualifying reason in order to be eligible for the leave.  

  • Provide new refundable tax credits to employers in an amount equivalent to the cost of granting the leave. This credit can be taken against Social Security payroll taxes each quarter and is refundable.  

  • Expires Dec. 31, 2020, unless extended further.  

  • Prohibits discrimination/retaliation against employees who exercise their rights. 

  • Requires employers to post notices about the law. These notices are now available on the DOL website. 

 

FMLA Expansion – Summary of Key Provisions 

  • Employees are eligible after being employed for 30 calendar days (as opposed to one year for “normal” FMLA).  

  • There is only one qualifying reason for this leave: Inability to work (including telework) because the employee needs to care for son/daughter under 18 years old due to school or childcare facility being unavailable because of COVID issues.  

  • The first two weeks can be unpaid (but see PSL provision). The Employee may elect to use accrued Paid Time Off (PTO).  

  • The next 10 weeks are payable at 2/3 of the employee’s normal pay, capped at $200/day or $10,000 in all during the 10-week period. For employees whose schedule varies, the pay is calculated using a 6-month look-back period, or (if the employee has not worked for 6 months) the pay that the employee could have reasonably expected to receive.  

  • This is NOT a separate 12-week leave entitlement in addition to “normal” FMLA. Therefore, employees who have already exhausted their FMLA entitlement for the current 12-month period are not entitled to this leave. The FFCRA just provides an additional reason that qualifies for FMLA leave, and for which employers must provide pay.  

  • The normal FMLA requirement to restore the employee to the same or equivalent position after the leave generally applies. However, there is an exception that applies when: 

  • the employer has fewer than 25 employees; 
  • the employee’s position doesn’t exist when the leave ends due to economic issues caused by COVID-19 crisis; 
  • the employer makes reasonable effort to restore to equivalent position; and  
  • the employer contacts employee if an equivalent position opens in the 12 months after the leave ends.  

Also, for employers with more than 25 employees, keep in mind that the normal FMLA allows for an exception to the restoration requirement if the employee’s job otherwise would not have existed in any event after the leave. Presumably, this exception also applies when an employee takes the expanded FMLA leave.  

  • Employees with fewer than 50 employees (i.e. not covered by “normal” FMLA) are not subject to lawsuits by employees for failure to offer the leave. However, the DOL can still take enforcement action.  

 

Paid “Sick Leave” Benefit – Summary of Key Provisions

  • Employees are eligible for PSL regardless of length of tenure with the employer. They’re eligible on Day 1 of employment.  

  • The PSL benefit must be made available immediately as opposed to accruing over time, and it is in addition to any other paid leave offered by the employer.  

  • Employees do not have to be sick in order to qualify for the PSL benefit. There are six qualifying reasons for PSL: 

  1. Employee is subject to a government quarantine/isolation order. (General “stay at home” orders affecting the general public likely do not entitle employees to the leave benefit.) 
  2. Health care provider has advised employee to self-quarantine/isolate. 
  3. Employee has symptoms consistent with COVID-19 and is waiting for diagnosis. 
  4. Employee is caring for an individual described in #1 or #2 above. 
  5. Employee is caring for son/daughter whose school or childcare facility is not available (same as expanded FMLA). 
  6. Employee is experiencing “substantially similar condition” specified by HHS regs. 
  • Employers must offer 2 weeks of fully paid leave for reasons 1-3 above.  

  • Employers must offer 2 weeks of leave at 2/3 pay for reasons 4-6 above. Therefore, if an employee’s children’s school or childcare facility is closed due to COVID-19, the employee would be entitled to 12 total weeks of leave at 2/3 pay – 2 weeks of PSL, and 10 weeks of paid FMLA – capped at $12,000 in all.  

  • Pay for leave taken for reasons 1-3 above is capped at $511/day or $5,110 in all.  

  • Pay for leave taken for reasons 4-6 is capped at $200/day or $2,000 in all.  

  • Employers can’t require employees to use other accrued paid leave before using this leave.  

  • Employers can’t require employees to find a replacement worker as a condition of using the leave.  

  • Accrued leave doesn’t carry over after Dec. 31, 2020.  

  • Employers are not required to pay out unused PSL upon termination. 

 

Employer Tax Credit for Benefits Paid to Employees 

Both provisions – expanded FMLA and the PSL benefit – allow employers to take a credit against the total Social Security payroll taxes due from the employer in the quarter in which benefits were paid to employees.The intent is to make the paid leave obligation cost-neutral to the employer.  

Payments made to employees under the FFCRA are subject to normal withholdings for federal income taxes and the employee share of Medicare and Social Security taxes, and employers must pay those withheld amounts to the IRS as usual. Employers also must remit the employer share of Medicare taxes on the amounts paid to employees. However, employers need not remit the employer share of Social Security taxes on these wages. 

Each quarter in which benefits were paid to employees, the employer may take a tax credit against all Social Security taxes due from the employer to the IRS in the amount of: 

  • wages required to be paid to employees on leave under the FFCRA, plus 

  • employer-paid health insurance premiums allocable to these wages, plus 

  • the employer share of Medicare tax on the required payments made to employees under the FFCRA. 

Additional IRS guidance and/or forms related to this tax credit are expected soon. 

Conclusion 

Note that there are no new obligations under this Act for employers with more than 500 employees. New guidance is being issued frequently, and Congress is passing new laws each week in response to this crisis, some of which may create additional employer obligations. Employers are advised to consult an employment lawyer with knowledge of the FFCRA and other applicable laws to ensure that they comply with these obligations. 

 

Kyle B. Russell is a lawyer with Jackson Lewis P.C. in Overland Park, Kansas. 

This information is intended as general information about the law and legal system. It is not to be considered as legal advice for your specific situation.