Congressional Action on the Coronavirus Pandemic - March 17, 2020
In partnership with CUNA we have been carefully reviewing the second wave of Federal legislation targeted at helping address the Coronavirus pandemic. Below is the overview of the legislation.
New legislation has been passed by the House of Representatives aimed at helping individuals affected by the coronavirus pandemic. In the coming weeks, Congress is expected to consider additional legislation to help certain businesses affected by the current crisis.
This new bill passed by the House is H.R. 6201, the Families First Coronavirus Response Act. This legislation provides for paid leave for certain individuals, establishes free coronavirus testing, adds additional protection for front line health workers, and provides additional benefits those most affected by this crisis. The bill also provides emergency funding for state unemployment insurance programs. The Senate is presently considering this legislation.
Sick Leave Credit
The bill provides for emergency paid leave benefits for workers who are sick, quarantined, providing care to the sick, or unable to work because of unavailable childcare. This benefit is paid for by employers who will then receive a fully refundable tax credit against their payroll tax liability. If the employer’s cost of providing this new benefit exceeds its payroll tax liability, the balance will be refunded to the employer by the Treasury.
Certain employers would be required to provide two weeks of full or partial paid leave to full-time employees (pro-rated for part-time employees). Days when an individual receives pay from their employer (regular wages, sick pay, or other paid time off) or unemployment compensation do not count as leave days for purposes of this benefit.
For the purposes of this benefit, there are two categories of employees that would receive differing amounts of compensation. The first group includes employees subject to a Federal, State, or local quarantine or isolation order related to coronavirus; employees that have been advised by health care provider to self-quarantine due to coronavirus; and employees experiencing symptoms of coronavirus. These employees would be entitled to their full wages, not to exceed $511 per day.
The second group includes employees caring for an individual who is quarantined or been ordered to self-isolate. It also includes employees who must provide childcare because of school or daycare closures. For this category, employers would be required to pay these employees two-thirds of their wages, up to $200 daily.
This new mandate applies to all public sector employers as well as private sector employers with less than 500 employees. The tax credit only applies to the latter group. Employers with more than 500 employees would not be eligible for the tax credit as most already offer paid sick leave. Employers with less than 50 employees may be exempt if they meet certain criteria issued by the Secretary of Labor.
This new benefit to employees will be subject to the federal income tax as well as the employee payroll tax. The employer will not have to pay the 6.2% payroll tax on this benefit. As this is an emergency benefit, it ends on December 31, 2020.
Family Leave Credit
Another provision of the new bill would expand the Family and Medical Leave Act to provide benefits for employees with children who cannot work because of school and daycare facility closures. Employers with less than 500 employees would be required to provide up to ten weeks of paid leave for these employees. Employees would receive two-thirds of their pay, up to $200 daily.
Similar to the sick leave provision described above, some employers with fewer than 50 employees could be exempt from this new requirement. Participating employers would receive a payroll tax credit like the one provided for sick leave. This credit would also be fully refundable against the employer’s payroll tax liability. Also, the employee (and employer) taxation of this benefit would be identical to the provision described above for the sick leave credit.
Finally, this provision also ends at the end of this year.
Credit to the CUNA Advocacy team for this overview. Please consult your human resources and tax professionals before making any business decisions based on this legislation. Additional resources will become available at Treasury.gov, DOL.gov, and IRS.gov.