Memo: H.R. 6201 Families First Coronavirus Response Act

By Daniel S. Judd

Overview: H.R. 6201 Families First Coronavirus Response Act “Families First” or “the Act” became effective March 18, 2020. The Act contains a wide array of governmental changes in response to COVID-19. This memo will focus on what changes are pertinent to businesses.

Emergency Family and Medical Leave Expansion Act

The Act has expanded The Family and Medical Leave Act of 1993 (“FMLA”). FMLA is usually only able to be used if a defined qualified event occurs, such as a birth of a child, or for a family member who is needed to care for him or herself or another family member due to illness. Families First has expanded FMLA to allow employees to take off work up to 12 work weeks within a 12 month period under certain circumstances. If there is a qualifying need relating to a public health emergency in accordance with Section 110 of Division C of Families First, then the Act will apply. A public health emergency is defined as an emergency with respect to COVID-19 declared by a Federal, State, or local authority. A qualifying need under Families First includes an employee who is unable to work or telework due to a need for leave to care for a son or daughter under the age of 18 if the school or place of care has been closed or the child care provider is unavailable due to a public health emergency. This revision applies to most public and private employers with fewer than 500 employees, with some exceptions. In order for an employee to be covered by this provision, the employee must have been employed by the employer for at least 30 calendar days prior to the qualifying need.

In general, the first 10 days for which an employee takes leave under this provision may be unpaid. Although the employee may use accrued vacation time, sick leave, or other paid time off benefits, the employer may not require the employee to do so. After the initial 10-day period of time off, the employer must provide paid leave at a rate of not less than 2/3 of the employee’s regular rate of pay for the number of hours that the employee would normally be scheduled to work. In no event is the employer’s payment to exceed $200 per day and $10,000 in aggregate. If an employee works a varying schedule and the employer is unable to determine the number of hours the employee would normally be working, the employer must use the average number of hours per week that employee was scheduled to work for the previous six months, and if that is not possible, the employer must use the number of hours that the employee is expected to work per week prospectively.

There is an additional requirement that the employer must hold the employee’s position with the employer during the term of the leave. This requirement generally does not apply to an employer that has less than 25 employees and who meets the following conditions:  a) the employee takes leave under this Act; b) the position held by the employee when the leave commenced does not exist due to economic conditions or other changes in operating conditions of the employer that affect employment and are caused by a public health emergency during the period of leave; c) the employer makes reasonable efforts to restore the employee to a position equivalent to the position the employee held when the leave commenced, with equivalent employment benefits, pay, and other terms and conditions of employment; and D) if the reasonable efforts of the employer under paragraph C) fail, the employer makes reasonable efforts during the earlier of one year from the qualifying need relating to the public health emergency concludes, or the date 12 weeks after the date on which the employee’s leave commences to restore the employee to a comparable position.[1]

Emergency Paid Sick Leave Act

Families First also added the Emergency Paid Sick Leave Act. This portion of the Act requires employers to give employees paid sick leave to the extent that the employee is unable to work or telework due to: 1) a Federal, State or local quarantine or isolation order related to COVID-19; 2) advice by a health care provider to self-quarantine due to concerns related to COVID-19; 3) experiencing symptoms of COVID-19 for which the employee seeking a medical diagnosis; 4) the employee is caring for an individual who is subject to an order as described in paragraph 1) or has been advised as described in paragraph 2); 5) the employee is caring for a son or daughter because the school or place of care for the son or daughter has been closed or the child care provider is unavailable due to COVID-19 precautions; or 6) the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and the Secretary of Labor.[2] Sick leave under the Act for items 1-3 above is limited not to exceed $511 per day and $5,110 in the aggregate. The sick leave under the Act for items 4-6 is not to exceed $200 per day and $2,000 in the aggregate. The amount paid to the employee will be based on the employee’s rate of pay or minimum wage, whichever is greater, and subject to the maximums. If the employee is taking sick leave under items 4-6, his or her compensation will be subject to 2/3 his or her rate of pay or minimum wage, whichever is greater, and subject to the maximums.

If the employee is a full-time employee, the employer is required to provide 80 hours of paid sick leave. If the employee is a part-time employee, the employer must provide paid sick time in the amount of the average hours the employee works in a given 2-week period. Paid sick leave under this Act does not carry over from year to year. Employer paid sick leave under this Act terminates immediately with the employee’s next shift immediately following the termination of the need for the sick leave. An employer may not require employees to use other sick time prior to using the sick time provided under the Act. An employer may not require employees taking sick time under the Act to attempt to find coverage for their shifts while taking the sick leave. The sick leave provided under the Act is available immediately to the employee regardless of the length of employment with the employer. Employers are also required to post a notice of these sick time rights in a conspicuous place for the employees to be able to view. The required notice can be found at this link:

https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf

Additionally, employers may not discharge, discipline, or otherwise discriminate against an employee who takes leave in accordance with the Act or who has filed any complaint or caused any proceeding to be instituted under the Act. If an employer fails to comply with the Act, the employer will be considered to have failed to pay minimum wages in violation of Section 6 of the Fair Labor Standards Act of 1938, and be subject to penalties contained in Sections 16 and 17 of the Act. If an employer willfully terminates an employee in violation of the Act, the employer will be considered in violation of section 15(a)(3) of the Fair Labor Standards Act of 1938 and be subject to the penalties in Sections 16 and 17.

Tax Credit for Paid Sick and Paid Family and Medical Leave[3]

A benefit conferred to employers in Family First is the ability to receive a tax credit for any paid sick and family and medical leave paid to employees under this Act. An employer is allowed a credit against the tax imposed by Section 3111(a) or 3221(a) of the Internal Revenue Code for each calendar quarter an amount equal to 100% of the qualified sick leave wages paid by the employer with respect to the calendar quarter. The amount of qualified sick leave wages taken into account under subsection (a) with respect to any individual may not exceed the maximum daily sick time allowed to be paid under the Act for any day which the individual is paid qualified sick leave wages. In general, if the amount of credit is in excess of the amount due under 3111(a) or 3221(a), it shall be treated as an over payment and shall be refunded under Sections 6402(a) and 6413(b). Qualified sick leave under this section means wages and compensation paid by an employer which are required to be paid by reason of the Emergency Paid Sick Leave Act.

It is also possible for employers to receive tax credits for some expenses associated with employee health plans. The amount paid by the employer to provide and maintain a group health plan in the amount which is excluded from the gross income of the employees may be a tax credit for the employer. It is important to note that although employers may elect to have these tax credits apply, they may also elect not to have them apply. These credits are also available to self-employed individuals in a substantially similar form. There are a few more rules for the self-employed regarding additional documentation, but the substance is the same. 

Conclusion

The government has enacted Families First to help alleviate some of the pressure both on individuals and businesses during this time of economic hardship. Individuals are going to benefit with expanded paid sick leave if they are affected by COVID-19. In exchange for employers providing employees additional paid time off, they become eligible to receive tax credits which are intended to offset some of the cost.

For further or additional information, contact your human resources professional.