In an effort to assist the American people dealing with the effects of the coronavirus the House has passed the Families First Coronavirus Response Act. While this is not yet law, President Trump has indicated his support of the bill and the Senate is expected to act on the bill this week. The bill provides increased funding for: food assistance, Medicaid, unemployment assistance, and to cover testing for the coronavirus.
The bill also contains the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act which will require certain employers to provide sick benefits and leave to its employees affected by the coronavirus. Details are as follows:
Emergency Family and Medical Leave Expansion Act
The Act would require companies with less than 500 employees to provide up to 12 weeks of leave for those employees that have been employed for 30 days and are:
The first 14 days may consist of unpaid leave. However, the employee may elect to use any accrued vacation, personal, medical or sick leave in lieu of unpaid leave. The employer is required to pay the employee at a rate of 2/3 of the employee's regular rate after the first 14 days.
The Act authorizes the Secretary of Labor to issue regulations to exempt small businesses with less than 50 employees from the above requirements if they would jeopardize the viability of the business as a going concern. In addition, the Secretary can exclude certain health care providers and emergency responders from the above requirements.
Emergency Paid Sick Leave Act
The Act would require companies with less than 500 employees to provide paid sick time for all employees that are:
For full time employees, the amount of required paid sick time will be 80 hours at their regular rate of pay or 2/3 of their regular rate of pay to care for a family member or child as required under 4 and 5 (referenced above). For part time employees, the amount of required paid sick time will be the number of hours the employee works over a 2-week period. The amount of paid sick time is in addition to any other paid sick time that the employee would be entitled to under the company’s existing policies.
Tax Credits for Paid Sick and Paid Family Medical Leave
The bill provides a payroll tax credit to help employers cover the cost of the wages required to be paid as outlined above. For wages paid under the Emergency Paid Sick Leave Act, the credit cannot exceed $511 per day for employees taking time off under situations 1, 2, or 3 (referenced above). For employees taking time off under situations 4 and 5 (referenced above) the credit cannot exceed $200 per day. The maximum number of days for the credit calculation is 10 days. For wages paid under the Emergency Family and Medical Leave Expansion Act the amount of credit is $200 per day, limited to an aggregate of $10,000 per employee. Under both situations, the amount is refundable should the credit exceed the amount of payroll taxes for the quarter.
For self-employed individuals, there would be a similar credit allowed against their income tax for their average daily self-employment income. The same dollar limitations ($511 or $200) apply as outlined in the previous paragraph, except the amount of self-employment income to be used for purposes of calculating the credit equivalent for the Emergency Paid Sick Leave Act, would be 67% of the individuals average self-employment income.
The aforementioned provisions are effective though December 31, 2020.
There are other items that Congress, Treasury and the White House have been discussing, some of which you may have seen in the press. We will continue to monitor these items and provide updates when necessary.