Families First Coronavirus Response Act Implications to Credit Unions as Employers
March 24, 2020
As a response to the COVID-19 outbreak, Congress passed H.R. 6201, the Families First Coronavirus Act (FFCRA), on March 18. President Donald Trump signed the FFCRA into law on the same day. The FFCRA had many provisions within the emergency supplemental appropriations intended to help families impacted by the COVID-19 outbreak.
Some of the provisions include:
- Providing paid family and medical leave for employees impacted by COVID-19;
- Providing paid sick leave for employees impacted by COVID-19;
- Providing free testing for COVID-19;
- Expanding food assistance;
- Expanding unemployment benefits; and
- Requiring employers to provide additional protections for health care workers.
As employers, the paid family/medical leave and paid sick leave are of particular interest. In addition, there are provisions that allow a payroll tax credit to cover the cost of the wages.
Q. Which employers do these provisions apply to?
A. The two paid leave provisions apply to employers with fewer than 500 employees. The Secretary of Labor has the authority to issue regulations for good cause to exempt small businesses with fewer than 50 employees from the paid sick leave related to school closure when the imposition of the requirement would jeopardize the viability of the business as a going concern.
Q. What are the Emergency Family and Medical Leave Act requirements?
A. The FFCRA builds upon the original Family and Medical Leave Act of 1993 (FMLA) and has added “qualifying need related to a public health emergency” as one of the reasons an eligible employee must be entitled to 12 workweeks of leave during any 12-month period. An “eligible employee” means an employee who has been employed for at least 30 calendar days by the employer.
A “qualifying need related to a public health emergency” is defined as when an “employee is unable to work (or telework) due to a need for leave to care for a son or daughter under 18 years of age if the school or place of care has been closed, or the child care provider is unavailable, due to a public health emergency.” The FFCRA defines a “public health emergency” as an emergency with respect to COVID-19 declared by Federal, State, or local authority.
An employee is entitled to 10 days of unpaid leave (the employee may choose to substitute accrued vacation leave, personal leave, or medical or sick leave during this period) and 10 weeks of paid leave at a rate two-thirds of the employee’s regular rate of pay at the number of hours that the employee is regularly scheduled to work. The paid leave shall not exceed $200 per day and $10,000 in the aggregate.
As with traditional FMLA, the Emergency FMLA is job-protected and the employer must return the employee to the same or equivalent position with equivalent employment benefits, pay and other terms and conditions of employment. The FFCRA does have an exception for employers with less than 25 employees if the employee’s job no longer exists due to the COVID-19 outbreak. In those cases, the employer needs to make reasonable efforts to restore the employee to an equivalent position.
Q. What are the Emergency Paid Sick Leave requirements?
A. Employers must provide employees with up to two weeks (80 hours) of paid sick leave regardless the length of employment to the extent 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 related 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 to quarantine or self-isolate or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is 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 childcare provider of such son or daughter is unavailable due to COVID-19 precautions; or
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Full-time employees will be entitled to 80 hours of paid sick time and part-time employees will be entitled to paid sick time equal to the number of hours the employee work, on average, over a 2-week period. The paid sick time under the FFCRA will not carry over from one year to the next.
In no event shall the paid sick time exceed:
- $511 per day and $5,110 in aggregate for a use described in reasons (1), (2), or (3) above; and
- $200 per day and $2,000 in aggregate for a use described in reasons (4), (5), or (6) above.
(As noted before, the Secretary of Labor has the authority to issue regulations for good cause to exempt small businesses with fewer than 50 employees from the paid sick leave related to school closure when the imposition of the requirement would jeopardize the viability of the business as a going concern. See item number 5 above.)
Other provisions of the Emergency Paid Sick Leave include:
- Paid sick time will end upon the employee’s next scheduled work-shift immediately following the termination of the need for paid sick time.
- Employers may not require employees to utilize other paid leave before accessing emergency paid sick leave.
- Employers are not required to pay out unused leave under the FFCRA upon separation of employment.
- Employee Notice: After the first workday that an employee receives paid sick time, an employer may require the employee to follow reasonable notice procedures in order to continue to receive paid sick time.
Explain to me about the employer Paid Sick and Paid Family Leave tax credits.
- Paid Sick Leave Tax Credit: Employers will be allowed a credit against their payroll tax in the amount equal to 100% of the qualified sick leave wages paid for each calendar quarter. The amount of sick leave wages for any individual must not exceed: $511 per day and $5,110 in the aggregate for described in reasons (1), (2), or (3) above; and $200 per day and $2,000 in aggregate for a use described in reasons (4), (5), or (6) above. The aggregate number of days for any calendar quarter must not exceed the excess (if any) of 10, over the aggregate number of days taken into account for all preceding calendar quarters.
- Paid Family Leave Tax Credit: Employers will be allowed a credit against their payroll tax in an amount equal to 100% of the qualified family leave wages paid for each calendar quarter. The amount of qualified family leave wages must not exceed: $200 per day and $10,000 in the aggregate. The credit allowed must not exceed the tax imposed for the calendar quarter on the wages paid with respect to all employees. If the amount of the credit exceeds the limitations for any calendar quarter, the excess will be treated as an overpayment and will be refunded.
Q. What are the notice requirements?
A. By April 2, each employer must post and keep posted in conspicuous places on the premises where notices to employees are customarily poste, a paid sick leave notice, to be provided by the Secretary of Labor. The Secretary of Labor has until March 25 to make this notice publicly available.
Credit unions should keep watching for an announcement once this notice is available.
Q. What are the important dates for the benefit period?
A. Within the FFCRA there are a number of important dates related to the benefit periods.
- January 19: The Benefit Period for paid leave begins on this date and will run through one year after the bill’s enactment.
- March 25: The Secretary of Labor is required to issue a Model Paid Sick Leave Notice for employers, no later than this date.
- April 2 (Or 15 days after Presidential approval): The effective date of the FFCRA.
- April 2: The Secretary of Labor is required to issue guidelines to assist employers in calculating the amount of paid sick time.
- December 31: The expiration date of the FFCRA and its requirements.
- March 18, 2021: The conclusion of the paid leave benefits program.
Q. Are the more changes coming out?
A. Yes. Additional amendments will be enacted making changes and expanding these provisions. The Secretary of Labor will be issuing regulations that will implement the provisions of the FFCRA.
Q. Where can I view the H.R. 6201 for myself?
A. You may view H.R. 6201 here.
Q. Who should I contact for assistance with implementing these requirements at my credit union?
A. Due to the complexities of tax and human resource laws, it is recommended that credit unions seek counsel from their human resources and tax attorneys.
If you have questions about the Families First Coronavirus Response Act, contact the NWCUA’s compliance team at 800.546.4465, or firstname.lastname@example.org.
Posted in Public Awareness.