US companies with fewer than 500 employees will be covered by the Families First Coronavirus Response Act beginning April 1. The Act requires employers to pay for 80 hours of sick leave and extended family and medical leave for up to 10 weeks for specific reasons associated with COVID-19, between April 1 and December 31, 2020. It is not retroactive. The Act allows for leave for part-time employees at a pro-rated amount. The pay is later refunded by the federal government.
The 80 hours of sick leave is at the employee’s regular rate of pay, capped at $511 per day. Specifically, the sick leave is for employees unable to work, including telework, who are subject to
- a coronavirus quarantine or isolation order
- advice from a health care provider to self-quarantine due to coronavirus concerns
- symptoms of coronavirus and is seeking a medical diagnosis
- is caring for an individual subject to a coronavirus quarantine or isolation order, has been advised by a health care provider to self-quarantine, is experiencing COVID-19 symptoms and is seeking a medical diagnosis, or is caring for a child under the age of 18 whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.
These wages are NOT subject to the 6.2 percent social security tax for both the employee and employer.
The sick leave is paid by the employer and will be refunded to the employer by the IRS with a credit against the employer’s payroll taxes. If the employer’s payments to employees exceed the amount of the employer’s payroll tax, then the additional amount will be refunded to the employer. Applicable tax credits also extend to amounts paid by or incurred by employers to maintain health insurance coverage.
Expended Family and Medical Leave
The Act also allows for an additional 10 weeks of paid expanded family and medical leave for employees who have been employed for 30 or more days prior to the leave request. The pay is two-thirds of the employee’s regular rate of pay where an employee is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
Employees taking leave must be paid at two-thirds of their regular rate or two-thirds of the applicable minimum wage, whichever is higher, up to $200 per day, and $12,000 in the aggregate for a 12-week period. In other words, this means, two weeks of paid sick leave, followed by up to 10 weeks of paid expanded family and medical leave.
Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or childcare unavailability if the leave requirements would jeopardize the viability of the business as a going concern.
The Family First Coronavirus Response Act includes two new posters, one for federal workers and one for all other employees, that will fulfill notice requirements for employers obligated to inform employees about their rights under this new law. It also includes questions and answers about posting requirements, and a Field Assistance Bulletin describing WHD’s 30-day non-enforcement policy.
The coronavirus has caused an unprecedented disruption of the health around the world and a rapid and deep economic recession, with rising furlough’s and unemployment. This crisis will be with us for the next four to 10 weeks, possibly longer, and then another financial quarter to recover with changes occurring in the world of work.
Watch my blogs and podcasts for the latest information related to the coronavirus and how businesses can adjust.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and managing partner of InnovationOne. He works with companies to improve their recruiting, HR operations, and develop extraordinary leaders, teams, and cultures of innovation. His new book is Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com.