Tax Services The FFCRA & Potential Economic Relief During the COVID-19 Pandemic
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We will update this information as needed. Last update: 3/26/2020, 7:30am CT

On Wednesday, March 18, 2020, President Donald Trump signed into law H.R. 6201, the Families First Coronavirus Response Act (FFCRA), which provides significant relief in the form of extended FMLA benefits, paid sick and family leave, and payroll tax credits. 

While H.R. 6201 is comprised of several different acts that contain important provisions designed to aid the economy, promote individual financial stability, and curtail the spread of COVID-19, this article will focus on three specific acts: the Emergency Family and Medical Leave Expansion Act, the Emergency Paid Sick Leave Act, and Tax Credits for Paid Sick and Paid Family and Medical Leave Act. Below are some key provisions included to help stabilize the country and its economy during the COVID-19 pandemic.

The US Department of Labor has provided key definitions and answers to frequently asked questions related to the Families First Coronavirus Response Act. If you have questions about the information provided on this FAQ, please contact us.

FFCRA Questions & Answers

Emergency Family and Medical Leave Expansion Act

This portion of H.R. 6201 involves changes to the Family and Medical Leave Act of 1993, commonly known as FMLA. Specifically, this act has the following effects:

  • Expand the existing entitlement to leave for eligible employees to 12 total weeks for a qualifying need related to a public health emergency.
    • This leave does not qualify for the general FMLA treatment as unpaid leave, though the first 10 days of such leave may consist of unpaid leave.
    • After 10 days, the leave will need to be paid leave equal to the amount not less than 2/3 of the employee’s regular rate of pay also taking into consideration the number of hours the employee would normally be scheduled to work.
    • This paid leave shall not exceed $200 per day and $10,000 in the aggregate per employee.
  • Importantly, a “qualifying need related to a public health emergency” means the 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 child’s school is closed or unavailable due to a public health emergency with respect to COVID-19.
  • For the purposes of this expansion, an “eligible employee” is one who has been employed by the employer for at least 30 calendar days prior to requesting the qualified leave.
  • In addition, this expansion shall apply to those employers with fewer than 500 employees.
  • While FMLA leave, including this expansion, generally requires that the employee be restored to their position upon return from FMLA leave, that restoration obligation will not apply with respect to an employer with fewer than 25 employees if certain conditions are met. Specifically, this restoration obligation will not apply if:
    • The employee takes leave for a qualifying need related to a public health emergency;
    • The position held by the employee when the leave commenced does not exist due to economic conditions or other changes that affect the employment and are caused by a public health emergency during the leave;
    • The employer makes reasonable efforts to restore the employee to an equivalent position; and,
    • If such reasonable efforts fail, the employer makes continued reasonable efforts to contact the employee if an equivalent position becomes available during a year-long period following the leave.

Emergency Paid Sick Leave Act

In addition to the FMLA expansion described above, H.R. 6201 also contains a provision requiring paid sick leave. Specifically, the Emergency Paid Sick Leave Act has the following effect:

  • Require employers, generally those with fewer than 500 employees, to provide each employee paid sick time to the extent that the employee is unable to work or telework for the following reasons:
    • Because the employee is subject to a federal, state, or local quarantine/isolation order related to COVID-19;
    • Because the employee has been advised by a health care provider to self-quarantine due to COVID-19 concerns;
    • Because the employee is experiencing COVID-19 symptoms and seeking a medical diagnosis;
    • Because the employee is caring for an individual who is under a governmental quarantine or healthcare provider isolation order;
    • Because the employee is caring for a child if school or childcare is unavailable due to COVID-19 precautions; or,
    • The employee is experiencing any other substantially similar conditions specified by the Secretary of Health and Human Services and other governmental officials.
  • Full-time employees shall be entitled to 80 hours of paid sick leave, while part-time employees will be entitled to paid sick leave based upon their average two-week work expectancy. This paid sick leave shall not carry over to any other years.
  • Importantly, the employer may not require an employee to use other paid leave before the employee uses this paid sick leave.
  • The paid sick time shall not exceed $511 per day (or $5,110 in the aggregate) as long as the employee is subject to quarantine, isolation, or is seeking medical treatment for COVID-19. In the event the employee is caring for an individual under such an order or caring for a child whose childcare is unavailable, the paid sick time shall not exceed $200 per day (or $2,000 in the aggregate).

Tax Credits for Paid Sick and Paid Family and Medical Leave Act

In addition to the above FMLA expansion and increase of paid sick time, H.R. 6201 will provide a payroll tax credit for both paid sick leave and paid family leave.

  • Credit for Paid Sick Leave
    • Employers will be allowed a payroll tax credit for 100% of qualified sick leave wages paid by the employer.
    • The wages taken into account for this credit are those wages which are authorized under the Emergency Paid Sick Leave Act, described above. In addition, the amount of wages eligible for credit for any individual shall not exceed $511 per day in the case of those employees subject to quarantine, isolation, or who are seeking medical treatment for COVID-19, and $200 per day for employees caring for an individual under such an order or caring for a child whose childcare is unavailable due to COVID-19. There are some overall limits that apply related to how many days can be taken into account for the credit.
    • If the amount of the credit for any calendar quarter exceeds the payroll tax liability for the quarter, the excess shall be refunded.
    • Employers will also receive an increased credit for the amount of the employer’s qualified health plan expenses (i.e., those expenses paid or incurred to provide and maintain a group health plan) as are allocable to the qualified sick leave wages.
  • Credit for Paid Family Leave
    • Like the credit for paid sick leave, employers are also entitled to a payroll tax credit for wages that are paid by reason of the Emergency Family and Medical Leave Act.
    • The wages taken into account for this credit shall not exceed $200 per day or $10,000 for all calendar quarters for any individual.
    • If the amount of the credit for any calendar quarter exceeds the payroll tax liability for the quarter, the excess shall be refunded.
    • Employers will also receive an increased credit for the amount of the employer’s qualified health plan expenses (i.e., those expense paid or incurred to provide and maintain a group health plan) as are allocable to the qualified family leave wages.

The above analysis of H.R. 6201 is not exhaustive and does not contain an analysis of the special provisions related to employment under multi-employer bargaining agreements or to self-employed individuals. P&N will continue to monitor this ever-evolving situation and bring you the latest updates on the Congress’ attempts to lessen the burden of the COVID-19 pandemic. Please contact your P&N tax advisor if you have questions.

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