Kramer, Elkins & Watt

Families First Coronavirus Response Act: Breaking it Down

Families First Coronavirus Response Act: Breaking it Down

During the early morning of Saturday, March 14, 2020, the United States House of Representatives passed H.R. 6201, the Families First Coronavirus Response Act (“FFCRA”), after President Trump tweeted his support of the bill.  The United States Senate passed the bill on March 18, 2020, and President Trump signed the bill later that day.  It is expected that this is just one of the first of several coronavirus-related pieces of legislation to address the virus’s public health and economic impacts. Thus, bolder action is forthcoming.

However, the FFCRA provides some needed and immediate help to individuals and businesses alike.  Below are highlights of only some of the provisions, as the legislation is rather lengthy. If you or your business have any questions, please contact us at Kramer, Elkins & Watt, LLC. We are committed to doing our part to get through this crisis, together .

Coronavirus Diagnostic Testing

Regardless of your health insurance availability, diagnostic testing for the coronavirus will be provided to those in need without cost. In other words, even if you do not currently have health insurance you will not incur a cost for coronavirus testing if you become symptomatic or come into contact with someone who has tested positive.  After several weeks of promises on tests, it is believed that tests will become widely available within the next few days.

Emergency Paid Sick and Family/Medical Leave

Private employers of 500 or fewer employees, or public agencies or other non-private entities which employ one or more employees, must provide paid sick leave and family/medical leave to its employees under certain conditions related to the current coronavirus public health emergency. However, employers that are health care providers or emergency responders are excluded from this requirement. The emergency paid sick and family/medical leave benefits cannot carry-over to the next year if unused. This law terminates at the end of the calendar year.

Full-time employees are eligible for a maximum of 80 hours of paid sick and family/medical leave. Part-time employees are eligible for a maximum amount of hours equal to the average number of hours the employee works over a two-week period. However, the law does not give any specific guidance as to the time frame an employer should use to calculate a typical two-week average for a part-time employee. Yet, if there is an expectation that a part-time employee is to work the same shifts or the same number of shifts of equal duration each weekly or bi-weekly period, then it seems reasonable to use the number of hours the employee reasonably expects. If a part-time employee’s hours vary so greatly from one week to the next that it is impossible to determine a typical two-week expectation then the law requires an employer to average the employee’s hours per day from the six months prior to when the leave commenced. To get the two-week maximum you would then multiply that daily average by 10.

            Sick Leave

If the employee is unable to work (including telework) because that employee: 1) is subject to a coronavirus related quarantine or isolation order; 2) has been advised by his or her health care provider to self-isolate; or 3) is experiencing symptoms of COVID-19 and seeking diagnosis, they are eligible for emergency paid sick leave benefits.

Employees covered under these conditions shall receive 100% of their wages based upon the employee’s regular rate of pay multiplied by the number of hours the employee would otherwise work.  However, sick leave compensation is not to exceed $511/day or an aggregate total of $5,110.

            Family/Medical Leave

Employees are also eligible for benefits if the employee is unable to work (or telework) because they are caring for an individual subject to a quarantine order or a recommendation to self-isolate, or if they are caring for a child whose school or childcare is unavailable.

Under these conditions, the affected employee shall receive two-thirds of their regular rate of pay multiplied by the number of hours the employee would otherwise work, for up to two weeks. This benefit shall not exceed $200 per day or a total of $2,000 in the aggregate.

Additionally, the Department of Labor may exempt employers with 50 or fewer employees from providing benefits to employees who take leave to take care of a child whose school or childcare is unavailable if the employer believes the imposition of that portion of the law would jeopardize the viability of the business as a going concern. In other words, if a business will fail to operate if forced to pay leave for employees who miss work because the schools or childcare are closed, then employers with 50 or fewer employees are exempt from providing leave under that condition only.

While employees are eligible for a maximum of two weeks of paid leave, the leave shall end if any of the conditions necessitating leave cease. In other words, if an employee exhibits symptoms and tests negative, the leave will cease because the employee will not be under order to quarantine. Similarly, if a quarantine order is lifted or schools reopen, the leave will cease. Under these scenarios, the leave ceases starting the next workday after the necessitating condition ends.

            Employer Requirements, Prohibitions, and Penalties

Employees are eligible immediately for these emergency benefits, no matter how long they have worked for an employer. Employees may use this benefit first before using any other accrued paid time off offered by the employer and, in fact, employers are prohibited from requiring employees use any accrued paid time off prior to using the emergency paid sick or family/medical leave.

Employers are prohibited from requiring an employee to find a replacement employee as a condition of providing paid sick time. The Department of Labor will provide a standard notice to employees regarding this law; employers are required to post this notice in a conspicuous location where employees will see it.

Employers cannot retaliate, discharge, or discipline an employee who takes leave under this law or files a complaint related to the law or testifies in any proceeding related to the employer and leave under this law. An unlawful termination will be considered a violation of the Fair Labor Standards Act and punishable pursuant to that Act. Similarly, failures to pay and follow this law will be considered violations of minimum wage law under the FLSA and subject to penalties under the FLSA.

            Tax Credits

Employers who pay out the paid sick and family leave will be reimbursed through a tax credit at each calendar quarter. The reimbursement is subject to the $200 or $511 limits per day and the aggregate total for each. Self-employed individuals are also available for this credit up to 67 percent of the average daily self-employed income as calculated by net earnings for the taxable year divided by 260. However, the self-employed credit shall only be allowed if there is documentation of its application to self-employed individuals. The Department of the Treasury may demand to review this documentation. Employers paying wages under this law do not need to to pay the 6.2% payroll tax for Social Security. However, Medicare payroll tax of 1.45% must still be paid, but the credit can be increased to cover this.

Emergency Family Leave Expansion

The FFCRA provides for extended family leave coverage for up to a total of twelve weeks (60 working days) for any employee who is unable to work (or telework) because of the need to take care of a child whose school or childcare is unavailable. Note, the twelve weeks of coverage includes the two weeks of emergency paid sick and family/medical leave described above, so the extended leave is an additional 10 weeks (50 days) beyond that. The eligibility for the extended leave differs from the emergency two-week paid sick and family/medical leave.

            Eligibility

An employee must have been employed with the employer for at least 30 calendar days preceding the extended family leave to be eligible. Thus, it does not apply to recent hires. Like the emergency paid sick leave up above, this law applies to employers who employ less than 500 people. Employers that are health care providers and emergency responders are exempt.

            Benefit Details

The first two weeks of the 12-week extended family leave is also technically unpaid. However, the two-week emergency paid sick and family/medical leave coverage above would cover the first two weeks, as those who are eligible for the extended family leave would also be eligible for the shorter emergency paid sick and family/medical leave. Thus, if an employee claims the immediate emergency paid sick or family/medical days and then conditions change to the point where they are no longer eligible for the two-week sick leave benefits, the remainder of the two weeks would be unpaid. However, under this scenario, an employee can use accrued paid time off offered by an employer’s benefit plan. After the first two weeks, an eligible employer must cover paid family leave for each day of extended leave for the additional 10 weeks or until the orders related to school and childcare are lifted.

The benefits are the same as the two-week emergency family/medical leave. The employee shall receive not less than two-thirds of his or her regular rate of pay at the number hours the employee would otherwise be normally scheduled to work, not to exceed $200 per day or $10,000 total over 10 weeks.

            Rehire requirement

Employers are generally required to rehire the employee after leave under this provision. Yet, if the employee’s position when his or her leave commenced no longer exists due to economic or employer operational conditions that were affected affect by the COVID-19 public health emergency, then the employer must make a reasonable effort to restore the employee to a position that is equivalent in terms of benefits and pay. If those reasonable efforts to rehire the employee fail, then the employer must offer to rehire the employee when an equivalent position becomes available for up to one year after the employee’s leave ends.

            Tax Credit

The calculation of hours for part-time employees and the tax credit to employers are substantially similar for the extended leave as they are for the shorter two-week leave pay. Self-employed individuals are eligible for a tax credit not to exceed 50 days of income as determined using the same formula as noted for the emergency paid sick and family leave provisions.

Unemployment relief for States

Finally, the FFCRA provides for $1 billion in emergency grants to the states from the Department of Labor for Unemployment Funds to help process and pay what is anticipated to be a large uptick in state unemployment claims. In order for states to be eligible for these grants they must meet certain conditions, including:

  • Ensure that applications for unemployment compensation are accessible to the public in at least two of the three separate ways: in-person, by phone, or online.
  • Require employers to provide notification of the availability of unemployment at the time of termination.
  • The state must notify applicants when their application is received and being processed. Or, if an application is unable to be processed, the state must provide information to the applicant about the steps they must take to ensure successful processing of an unemployment application.
  • Demonstrate steps the state has taken or will take to ease eligibility requirements and access to unemployment compensation for claimants, including waiving work search requirements and one-week waiting periods.
  • It also prohibits states from charging unemployment benefits to employers who are directly impacted by the COVID-19 due to an illness in the workplace or direction from a public official to isolate or quarantine workers.