Families First Covid-19 Response: HR & Payroll Implications

On March 18, President Donald Trump signed into law the Families First Coronavirus Response Act. This emergency measure directly imposes upon certain smaller employers new paid family leave and new paid sick leave obligations and expands unemployment insurance.

Besides dealing with immediate public health-related matters, the bill contains several
provisions that will impact employers.

Here are the highlights of the bill that may affect HR, payroll, and legal teams:

Paid Family Medical Leave:

• The bill provides 12 weeks of job-protected paid Family and Medical Leave Act (FMLA) leave of which the first ten days of leave may consist of unpaid leave.  Applicable for employers with fewer than 500 employees.
• Employees may use accrued vacation, personal or sick leave during the first 10 days, but employers may not require employees to do so.
• The employer shall provide paid leave thereafter. The paid leave shall be for an amount not less than two-thirds of the employee’s regular rate of pay, and at the number of hours the employee is regularly scheduled to work. Paid leave, however, shall not exceed $200 a day or $10,000 in aggregate.
• This leave benefit covers employees who have been working for at least 30 calendar days.
• Among other uses, employees may use the leave to respond to quarantine requirements or recommendations, to care for family members who are responding to quarantine requirements or recommendations, and to care for a child whose school has been closed as a result of the COVID-19 pandemic.
• An employer with fewer than 25 employees does not have to restore the employee to his/her position if very specific conditions exist.
• The provisions will go into effect 15 days after the date of enactment and expire on December 31, 2020.

Paid Sick Leave

• Employers with fewer than 500 employees will be required to provide full-time employees 2 weeks (80 hours) of paid sick leave for specific circumstances related to COVID-19 (e.g., self-isolating, doctors’ visits, etc.).
• Part-time employees are entitled to the number of hours of paid sick time equal to the number of hours they work, on average, over a 2-week period.
• Employers must compensate employees for any paid sick time they take at their regular rates of pay.
• As currently drafted, the bill expressly provides that it does not preempt existing state or local paid sick leave entitlements.
• An employer shall provide each employee with paid sick time to the extent that the employee is unable to work (or telework) due to a need for leave because:
• The employee is subject to a federal, state, or local quarantine or isolation order due to COVID-19.
• The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
• The employee is caring for an individual who is subject to an order as provided in (1) or has been advised as per (2).
• The employee is caring for a son or daughter if the school or place of care for the child has been closed, or the child care provider is unavailable, due to COVID-19 precautions.
• 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.
• Cap on paid leave and amount of pay. The paid sick time shall not exceed:
• $511 per day and $5,110 in the aggregate for Uses (1)-(3) above. The pay must be provided at the employee’s regular rate of pay or the minimum wage, whichever is greater.
• $200 per day and $2,000 in the aggregate for Uses (4)-(6) above. Additionally, the pay must be provided at two-thirds of the employee’s regular rate of pay or the minimum wage, whichever is greater.
• The provision will go into effect 15 days after the date of enactment and expire on December 31, 2020. This does not cover larger employers over 500 employees.  Expanded Unemployment Insurance

 Expanded Unemployment Insurance

• The bill provides $1 billion in emergency unemployment insurance (UI) relief to the states: $500 million for costs associated with increased administration of each state’s UI program and $500 million held in reserve to assist states with a 10 percent increase in unemployment. 

Payroll Tax Credits

This division of the Act covers tax credits for employers. Employers shall be provided with credit against the tax imposed on the employer for the payout of qualified sick leave wages under the Emergency Paid Sick Leave Act. There shall be a payroll credit against the tax imposed for the qualified family leave wages.

What’s Next?

Namely continues to monitor for new developments and how the payroll tax credits will be implemented.

You can continue to monitor by going to the IRS site setup for Coronavirus Tax Relief.

Still not sure if you're prepared? Click here to request a personalized demo of Namely’s compliance solution, or use our Compliance ROI calculator to see how much money Namely’s Comply Advice and Action solution could save your business.