The Families First Coronavirus Response Act (the “FFCRA”)
The FFCRA signed by President Trump on March 18, 2020, provides small and midsize employers refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing paid sick and family leave wages to their employees for leave related to COVID-19.
The FFCRA gives businesses with fewer than 500 employees funds to provide employees with paid sick and family and medical leave for reasons related to COVID-19, either for the employee’s own health needs or to care for family members. Workers may receive up to 80 hours of paid sick leave for their own health needs or to care for others and up to an additional ten weeks of paid family leave to care for a child whose school or place of care is closed or child care provider is closed or unavailable due to
COVID-19 precautions. The FFCRA covers the costs of this paid leave by providing small businesses with refundable tax credits. Certain self-employed individuals in similar circumstances are entitled to similar credits.
The paid leave under the FFCRA is only for employees that are unable to work (including telework)
- If your employer furloughs you because it does not have enough work or business for you, you are not entitled to then take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits.
- This is because you are not prevented from working due to a COVID-19 qualifying reason (see below), even if the furlough was somehow related to COVID-19.
- You may not take paid sick leave if your employer does not have work for you as a result of a shelter-in-place or a stay-at-home order.
- In summary, the FFCRA is only for those employees that could be working (i.e. there is work to do) but can’t because of a) their personal circumstances and/or b) their employer doesn’t have the ability to let them telework and they aren’t an essential business.
Overview of Paid Sick Leave Refundable Credit 1. The Emergency Paid Sick Leave Act (EPSLA) requires Eligible Employers to provide employees with paid sick leave if the employee is unable to work (including telework) due to any of the following: a. the employee is under a Federal, State, or local quarantine or isolation order related to
COVID-19; (e.g. shelter in place order in San Antonio) b. the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; c. the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis; d. the employee is caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; e. the employee is caring for the child of such employee if the school or place of care of the child has been closed, or the child care provider of such child is unavailable, due to
COVID–19 precautions; (applicable for parents) f. the employee is experiencing any other substantially similar condition specified by the
U.S. Department of Health and Human Services.
The paid leave under the FFCRA is only for employees that are unable to work (including telework)
- If your employer furloughs you because it does not have enough work or business for you, you are not entitled to then take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits.
- This is because you are not prevented from working due to a COVID-19 qualifying reason (see below), even if the furlough was somehow related to COVID-19.
- You may not take paid sick leave if your employer does not have work for you as a result of a shelter-in-place or a stay-at-home order.
- In summary, the FFCRA is only for those employees that could be working (i.e. there is work to do) but can’t because of a) their personal circumstances and/or b) their employer doesn’t have the ability to let them telework and they aren’t an essential business.
Page | 2 2. An employee who is unable to work for reasons due to a COVID-19 circumstance described in (a), (b) or (c) above is entitled to paid sick leave for up to two weeks (up to 80 hours) at the employee’s regular rate of pay, or, if higher, the Federal minimum wage or any applicable State or local minimum wage, up to $511 per day and $5,110 in the aggregate. 3. An employee who is unable to work due to a COVID-19 circumstance described in (d), (e) or (f) above is entitled to paid sick leave for up to two weeks (up to 80 hours) at 2/3 the employee’s regular rate of pay or, if higher, the Federal minimum wage or any applicable State or local minimum wage, up to $200 per day and $2,000 in the aggregate. 4. The Eligible Employer is entitled to a fully refundable tax credit equal to the required paid sick leave.This tax credit also includes the Eligible Employer’s share of Medicare tax imposed on those wages and its allocable cost of maintaining health insurance coverage for the employee during the sick leave period (qualified health plan expenses). The Eligible Employer is not subject to the employer portion of social security tax imposed on those wages.Eligible Employer must still withhold the employee’s share of social security and Medicare taxes on the qualified leave wages paid.
Overview of Paid Family Leave Refundable Credit 1. In addition to the paid sick leave credit, under the Emergency Family and Medical Leave
Expansion Act (Expanded FMLA), an employee who is unable to work (including telework) because of a need to care for a child whose school or place of care is closed or whose child care provider is unavailable due to COVID-19, as described in (e) above, is entitled to paid family and medical leave equal to two-thirds of the employee’s regular pay, up to $200 per day and $10,000 in the aggregate. Up to ten weeks of qualifying leave can be counted towards the family leave credit. 2. The Eligible Employer is entitled to a fully refundable tax credit equal to the required paid family and medical leave (qualified family leave wages).This tax credit also includes the Eligible
Employer’s share of Medicare tax imposed on those wages and its cost of maintaining health insurance coverage for the employee during the family leave period (qualified health plan expenses).The Eligible Employer is not subject to the employer portion of social security tax imposed on those wages. Eligible Employer must still withhold the employee’s share of social security and Medicare taxes on the qualified leave wages paid.
Payment of the Sick and Family Leave Credit 1. Applicable for the period beginning April 1, 2020 and ending December 31, 2020. 2. Eligible Employers that pay qualified leave wages will be able to retain an amount of all federal employment taxes equal to the amount of the qualified leave wages paid, plus the allocable qualified health plan expenses and the amount of the employer’s share of Medicare tax imposed on those wages, rather than depositing them with the IRS. The federal employment taxes that are available for retention by Eligible Employers include federal income taxes withheld from employees, the employees’ share of social security and Medicare taxes, and the employer’s share of social security and Medicare taxes with respect to all employees. 3. Eligible Employers will claim the credits on their federal employment tax returns (e.g., Form 941,
Employer’s Quarterly Federal Tax Return) 4. If the federal employment taxes yet to be deposited are not sufficient to cover the Eligible
Employer’s cost of qualified leave wages, plus the allocable qualified health plan expenses and the amount of the employer’s share of Medicare tax imposed on those wages, the employer will be able file a request for an advance payment from the IRS (Form 7200).The IRS expects to begin processing these requests in April 2020.
The FFCRA permits the Department of Labor to provide rules that a business with fewer than 50 employees may use to claim an exemption from providing paid sick leave and expanded family and medical leave for the purpose of caring for a child whose school or place of care is closed or whose child care provider is unavailable due to COVID-19-related reasons if providing these qualified leave wages would jeopardize the viability of their businesses as a going concern. Any business that claims the exemption is not entitled to tax credits for any qualified leave wages that they are exempt from providing.
