March 20, 2020 Family First Coronavirus Act Summary

On March 18, 2020 President Trump signed into law the Family First Coronavirus Act (HR 6201, the “Act”) which is intended to ease the economic consequences stemming from the novel coronavirus disease (COVID-19) by providing family and medical leave, and sick leave, to employees and providing tax credits to employers and self-employeds providing the leave.

These rules apply only to wages paid with respect to the period beginning on a date selected by the Secretary of the Treasury which will be not later than 15 days after the date of the enactment of the Act (March 18, 2020) and ending on December 31, 2020.

Wages paid under EFMLEA or EPSLA are not considered wages under IRC 3111(a) (employer tax - old age, survivors and disability insurance portion of FICA; 6.2%) or under IRC 3221(a) (employer's railroad retirement tax).

Here are the details:

Emergency Paid Sick Leave Act (EPSLA)

• Private employers with fewer than 500 employees and public employers of any size, must provide 80 hours of paid sick time to full-time employees who are unable to work for specified virus-related reasons
• Part-time employees are entitled to sick time based on average hours worked over a 2-week period
• Amount is immediately available regardless of employee’s length of employment
• The amounts payable vary based on the reason for absence
  1. Payable at the regular rate up to a maximum of $511 per day ($5,110 total) for employees who are:
     1. Subject to a quarantine or isolation order,
     2. Advised by a health provider to self-quarantine, or
     3. Experiencing symptoms and seeking diagnosis
  2. Payable at 2/3 of their regular rate up to maximum of $200 per day ($2,000 total) for employees who are:
     1. Caring for an individual described in (a), (b), or (c) above,
     2. Caring for a son or daughter whose school is closed or childcare provider is unavailable, or
     3. Experiencing a “substantially similar condition” specified by the government
• Employers cannot require employees to find a replacement worker or use other sick leave before this sick time
• Employers may exclude health care providers and emergency responders
• DOL can issue regulations exempting businesses with fewer than 50 employees when the imposition of such requirements would jeopardize the viability of the business as a going concern
• The sick leave mandate takes effect no later than 15 days after March 18, 2020 and expires December 31, 2020
• Any employer who violates EPSLA shall be considered to have failed to pay minimum wages and be subject to penalties

Emergency Family & Medical Leave Expansion Act (EFMLEA)

• Required employers with fewer than 500 employees to provide both paid and unpaid emergency leave to certain employees through December 31, 2020
• Available to employees who have been employed for at least 30 days
• For employees who are unable to work or telework due to an emergency with respect to COVID-19 that is declared by a federal, state or local authority due to a need to care for a son or daughter under age 18 because:
  1. School or place of care has been closed, or
  2. Childcare provider is unavailable
• The first 10 days of leave may be unpaid and then paid leave is required, calculated as:
  1. 2/3 of regular pay at regular hours
  2. Not to exceed $200 per day and $10,000 in total
• There are exemptions and special rules that apply

 Employer Tax Credits

• • Tax credits are available to employers to cover wages paid to employees while they are taking time off under EPSLA and EMFLEA and are refundable to the extent they exceed the employer’s payroll tax. Refunds can be claimed using the new IRS form 7200.
  • These credits are not available if an employer is also receiving the credit for paid family & medical leave in IRC 45S
  • These credits have three components:
    1. (A) EPSLA Credit
       1. Amount per employee equal to the lesser of,
          • Amount of leave pay, or
          • Either $511 per day while employee is receiving paid sick leave to care for themselves, or $200 if the sick leave is to care for a family member or child whose school is closed
       2. An additional limit applies to the number of days per employee: the excess of 10 days over the aggregate number of days taken into account for all preceding calendar quarters
       1. (B) EMFLEA Credit
       1. Amount per employee is the amount of leave pay limited to $200 per day with maximum of $10,000
    2. EPSLA and EMFLEA Credits are increased by the portion of the employer’s “qualified health plan expenses” that are properly allocable to qualified sick leave wages or qualified family and medical leave wages. Only expenses that are otherwise excluded from gross income by the employees are allowed.
    3. EPSLA and EMFLEA Credits are increased by the amount of tax imposed by IRC 3111(b) (the 1.45% hospital insurance portion of FICA)
  • Comparable credit for self-employed individuals
    • Amounts paid under EPSLA:
      1. 100% of sick-leave equivalent, or
      2. 67% of the individual’s sick-leave equivalent amount if they are taking care of a sick family member, or taking care of a child following the child’s school closing for up to 10 days
      
      
      • The sick leave equivalent is the lessor of:
        1. Average daily self-employment income, or
        2. $511 per day while employee is receiving paid sick leave to care for themselves, or
        3. $200 if the sick leave is to care of a family member or child whose school is closed.
    • Amounts paid under EMFLEA
      • • Up to 50 days multiplied by lesser of,
          1. $200, or
          2. 67% of their average self-employment income paid

For specific questions related to your business, please give our tax professionals a call at (816) 743-7700.