Overview
On March 18, 2020, President Trump signed the Families First Coronavirus Response Act into law, marking "Phase Two" of emergency relief legislation that Congress has approved. The law contains important provisions on paid sick leave and family and medical leave summarized below.
In a blog post on 5/11, the Department of Labor provided a succinct summary of those eligibility requirements. If your company has more than 50 but fewer than 500 employees (n.b.: employers with 50 or fewer employees may be exempt at their option as described below), an employee may be eligible for:
Paid sick leave up to two weeks or 80 hours at the employee’s regular rate or the minimum wage (whichever is higher),* if one of these scenarios applies:
- They’re under a government quarantine or stay-at-home order.
- They’ve been advised by a health care provider to self-quarantine.
- They’re seeking a diagnosis for COVID-19 symptoms.
Paid sick leave up to two weeks or 80 hours at 2/3 of the employee’s regular rate or the minimum wage (whichever is higher),* if either scenario applies:
- They’re caring for somebody under quarantine or a stay-at-home order.
- They’re caring for their child whose school, child care provider, or place of care is unavailable due to COVID-19.
Paid family leave up to 10 additional weeks at 2/3 of the employee’s regular rate,* if both criteria apply:
- They’re caring for their child whose school, child care provider, or place of care is unavailable due to COVID-19; and
- They’ve been employed at least 30 calendar days.
*Paid leave is capped at specific maximum amounts per worker as described below.
Eligible employees working for a covered employer must check with their employer, request the leave, and let their employer know which of the qualifying conditions applies.
This poster highlights these paid leave requirements and the qualifying scenarios. A more detailed description of each provision is below.
Emergency Paid Sick Leave
- Requires employers with fewer that 500 employees to provide two weeks of paid sick leave (80 hours for FT; average hours over a two-week period for PT). Employer may not require employees to use other available paid leave first.
- Employees are eligible if they are unable to work (or telework) because they are subject to a quarantine or isolation order related to COVID-19; have been advised by a health care provider to self-quarantine; are experiencing symptoms of COVID-19 and seeking a diagnosis; are caring for an individual subject to a quarantine/isolation order or self-quarantining per health care provider advice; are caring for children whose schools are closed or whose care provider is unavailable due to COVID-19 precautions; or are experiencing another substantially similar condition specified by HHS
- Employees must be compensated at the higher of their regular rate of pay, the federal minimum wage, or the local minimum wage, capped at $511/day and $5,110 total for employees who are themselves quarantined or ill; or 2/3 of their regular rate, capped at $200/day and $2,000 total, for those caring for others.
- Gives employers a refundable tax credit against quarterly payroll taxes for family leave wages paid. Gives self-employed individuals a credit against self-employment taxes of equivalent amounts.
- DOL issued regulations on April 6, 2020, providing an optional exemption for businesses with fewer than 50 employees if the requirements would jeopardize the viability of the business as a going concern. See FAQs below for more details.
- Provision sunsets at the end of 2020.
Family and Medical Leave
- Requires employers with fewer than 500 employees to provide up to 12 weeks of paid FML.
- Employees are eligible if they have been employed at least 30 days and are unable to work (or telework) in order to care for children whose schools are closed or whose care provider is unavailable due to a public health emergency.
- First 10 days may be unpaid (employee may elect to substitute other paid leave, if available), after which employees must be compensated at least 2/3 of their regular rate, capped at $200/day and $10,000 total. For employees with irregular hours, amount is based on the average hours over the past six months, or employee’s reasonable expectations at time of hiring for employees who have not been on the job for six months.
- DOL can exempt businesses with fewer than 50 employees if the requirement would jeopardize the viability of the business as a going concern.
- Employers with fewer than 25 employees are not obligated to restore employees to their position post-leave, if their position no longer exists due to the emergency, and the employer has made reasonable efforts to restore the employee to an equivalent position and to offer the employee such a position if it becomes available over a one-year period.
- Gives employers a refundable tax credit against quarterly payroll taxes for family leave wages paid. Gives self-employed individuals a credit against self-employment taxes of equivalent amounts.
- DOL issued regulations on April 6, 2020, providing an optional exemption for businesses with fewer than 50 employees if the requirements would jeopardize the viability of the business as a going concern. See FAQs below for more details.
- Provision sunsets at the end of 2020.
Frequently Asked Questions
On April 17, the IRS issued FAQs for COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses. This is the latest guidance from the IRS and incorporates small changes made by the CARES Act.
Additional FAQs:
Important note: These FAQs are based on our initial review of the Families First Coronavirus Response Act, complex new legislation. As with any new legislation, members are encouraged to work with their own counsel in fully understanding their obligations. The following is both tentative and not intended to be a comprehensive summary of the bill.
What new benefits does the legislation establish, and what triggers them?The new legislation provides for two weeks of paid sick leave for employees who are unable to work or telework because they are subject to a COVID-19-related isolation order or recommendation from a health-care professional; are caring for such an individual; or are caring for children whose school or daycare is unavailable due to COVID-19 precautions. It also provides for up to 12 weeks of paid family leave for employees have been employed for at least 30 days, and who are unable to work or telework because they are caring for such children.
What employers are covered?The new requirements apply to employers with fewer than 500 employees. DOL has the authority to exempt employers with fewer than 50 employees, if the requirements would jeopardize the viability of the business as a going concern.
The Department issued rules on April 6, 2020, stating that small employers with 50 or fewer employees are exempt from the requirement when: (1) Such leave would cause the small employer's expenses and financial obligations to exceed available business revenue and cause the small employer to cease operating at a minimal capacity; (2) the absence of the employee or employees requesting such leave would pose a substantial risk to the financial health or operational capacity of the small employer because of their specialized skills, knowledge of the business, or responsibilities; or (3) the small employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services the employee or employees requesting leave provide, and these labor or services are needed for the small employer to operate at a minimal capacity. The employer must document these facts at the time the leave is denied and retain such records for its own files.
(Employers under 25 employees are exempt from the obligation to return employees to their positions after they return from family leave, subject to a number of conditions and limitations beyond the scope of this FAQ.)
What does the new paid sick leave benefit provide?Full-time employees who qualify for the new paid sick leave benefit are entitled to 80 hours of paid sick leave; part-time employees are entitled to their average hours over a two-week period. Employees must be compensated at the higher of their regular rate of pay, the federal minimum wage, or the local minimum wage, capped at $511/day and $5,110 total for employees who are themselves quarantined or ill; or 2/3 of their regular rate, capped at $200/day and $2,000 total, for those caring for others. Employers may not require employees to use other available paid leave first.
What does the new paid family leave benefit provide?Employers are not required to pay the first 10 days of family leave, though employees may elect to use other available paid leave. After the first 10 days, employees must be compensated at 2/3 their regular rate, capped at $200/day and $2,000 total. For employees with irregular hours, the amount is based on the average hours over the past six months, or the employee’s reasonable expectations at the time of hiring for newer employees.
What tax relief is available to employers who pay benefits under the new law?Employers are entitled to a refundable credit against payroll taxes for benefits paid under the new requirements. As with any tax matter, there may be circumstance-specific ramifications or complexities, and businesses are highly encouraged to confer with their counsel or tax professional regarding the implications of these tax credits to their particular situation.
Does the bill provide any benefits to independent contractors?Individuals who qualify as self-employed under the Internal Revenue Code and who would have been entitled to the paid sick or family leave benefits if they were an employee are allowed a refundable credit against self-employment taxes corresponding to those benefits.
The Department of Labor has more information here and here on common issues employers and employees face when responding to COVID-19, and its effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act.