Families First Coronavirus Response Act (FFCRA)

The Families First Coronavirus Response Act, signed March 18, 2020, was one of the earlier COVID-19 pandemic initiatives signed into law. Several provisions are included in this act but there has been particular confusion surrounding the modification of the existing Family and Medical Leave Act and the new Emergency Paid Sick Leave Act. Below is a summary of how these two laws affect employees and employers.

Note: These provisions DO NOT apply if a company shuts down voluntarily or involuntarily or an employee does not want to work out of fear of becoming ill.

Emergency Family and Medical Leave Highlights

Expansion of the existing Family and Medical Leave Act

Original law entitles “eligible employees” to 12 weeks of paid or unpaid leave for a serious illness, childbirth, adoption or foster care placement, or to care for a sick spouse, child, or parent.

FFCRA adds an additional “qualifying need” related to a “public health emergency” declared by a federal, state, or local authority related to COVID-19 for 12 weeks leave for any period from April 1, 2020 to December 31, 2020.

  • Applicable Employers: Private businesses with less than 500 employees and all public employers (under the original act, FMLA applies to employers with 50 or more employees)
  • Eligible Employee: Any employee that has been employed at least 30 calendar days before leave is requested for COVID-19 purposes (under the original act, 12 months and 1,250 hours during that period is required)
  • Qualifying Need related to a public health emergency:
    • An employee is unable to work or telework due to a need for leave to care for their child because the school or daycare has been closed or the child care provider is unavailable due to the public health emergency.
  • How does it Work:
    • Job protection is required for 12 weeks leave
    • First 2 weeks can be unpaid (Employee may elect to use vacation or sick leave)
    • Following 10 weeks must be paid
      • Must be paid at least 2/3 of regular pay (must be above minimum wage)
      • Must be paid number of hours normally scheduled (including overtime)
      • Part-time employees subject to separate calculation
      • Pay not required to exceed $200/day and $10,000 over the benefit period (per employee)
    • Family leave pay is not subject to the employer Social Security Tax
  • Other:
    • If an employer has less than 25 employees, the employee is not guaranteed their job back if the position no longer exists because of economic conditions caused by COVID-19 and the employer makes reasonable efforts to restore the employee to the position if the position becomes available in the next year.
  • Additional Information and Resources:

Emergency Paid Sick Leave Act Highlights

Eligible employees are entitled to up to 80 hours of sick leave pay for any period from April 1, 2020 to December 31, 2020.

  • Applicable Employers: Private businesses with less than 500 employees and all public employers
  • Eligible Employee: Any employee regardless of the length of employment
  • Qualifying Reason for sick leave:
    • Subject to quarantine or isolation order
    • Advised by a health care provider to self-quarantine due to concerns related to COVID-19
    • Experiencing symptoms of COVID-19 and seeking a medical diagnosis
    • Caring for an individual who is subject to quarantine or has been advised to self-quarantine
    • Caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions
    • Experiencing any other substantially similar condition
  • How does it Work:
    • If the employee is taking sick leave for items 1-3 above
      • Must be paid number of hours normally scheduled
      • Must be paid at least 100% of regular pay (must be above minimum wage)
      • Total pay is limited to $511/day or $5110 over the benefit period (per employee)
    • If the employee is taking sick leave for items 4-6 above
      • Must be paid number of hours normally scheduled
      • Must be paid at least 2/3 of regular pay (must be above minimum wage)
      • Total pay is limited to $200/day or $2,000 over the benefit period (per employee)
    • Sick leave pay is not subject to the employer Social Security Tax
  • Other: If an employee is taking care of a child, they can potentially use sick pay for the first two weeks and paid family medical leave for the next ten weeks for a total payment of $12,000.

Note: Employers with less than 50 employees are exempt if compliance with these new requirements will jeopardize the viability of the business as a going concern. Documentation will be very important for small businesses that meet this criteria.

Payroll Credit for Employers with Family Leave or Sick Pay

Family Leave and Sick Pay Payroll Tax Credit

  • 100% of qualified family medical leave wages and/or 100% of qualified sick Leave wages (see above limits), plus
  • Employer’s 1.45% Medicare tax on wages, plus
  • Employees share of allocable health care costs
  • How does it work?
    • Total the family medical leave wages or sick pay, medical costs, and health care costs
    • Reduce the next payroll tax payment for ALL payroll by the above total
    • Excess credit qualifies for an immediate refund
    • Example: Eligible employer pays $2,000 in qualified sick leave and qualified family leave wages. The employer does not owe Social Security tax on the $2,000 but owes $29 Medicare tax. The allocable health insurance costs are $50. The payroll tax payment for all payroll is $5000. The employer would only be required to deposit $2921 for payroll tax on the next scheduled deposit date. If the total sick and family leave is more than the scheduled payroll tax, the employer can file a request for a refund of the remaining credit.
  • Gross income of employer is increased by any credit allowed against payroll taxes
  • The Social Security tax deferral is also available for employers claiming the payroll tax credit under FFCRA.

Self-Employed Taxpayers Can Qualify for Family Leave and Sick Leave Credit

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