Must Know Info: The New Coronavirus Paid Leave Law (Emergency FMLA)
By hire-up-staffing in Client ResourcesWritten by guest writer, Employment Law Attorney Ryan Eddings, at Littler
On March 18th the federal government enacted legislation that impacts all small and medium sized businesses. In response to the COVID-19 pandemic, the president signed into law the “Families First CoronaVirus Response Act” (Download the poster now), which will come into effect on April 1, 2020.
While the specific details of this act are outlined in the sections below, if you only take one thing away from this article let it be this – the vast majority of employers currently operating in the United States are going to be experiencing an unprecedented amount of employee leave/absence based on these new laws.
In this article we aim to share as much relevant information so that you can stay ahead of the curve, prepare for the impact of employee leave, and take immediate action to receive the full benefits entitled to you through the new laws.
We also share ideas on how to appropriately cover the gaps this will leave in your team in order to continue operating effectively.
Read on for more details on the specific laws.
Understanding the New Legislation
The new legislation comes in two parts, the “Emergency Family and Medical Leave Act” (E-FMLA), and the Emergency Paid Sick Leave Act (E-PSL).
Overview of E-FMLA
E-FMLA is an amendment to the existing FMLA that adds a new type of leave. This leave is paid and available to caregivers of children with closed schools. Furthermore, it applies only to businesses that retain fewer than 500 employees that have been employed for at least 30 days.
The first 10 days of leave are not covered under E-FMLA but employees retain the option to use their existing paid leave. Employers can not require that employees use their paid leave to cover those days.
Businesses with fewer than 50 employees may qualify for exemption if said leave puts the business in a position of jeopardy of viability. If your business could potentially not make it through this due to the extended absence of your employees, you may qualify for exemption to this law.
Qualifications for Benefits
In order to qualify for E-FMLA the employee must be unable to work or work from home (telework) due to their need to care for a minor (child) because the minor’s school or childcare facility has been closed or their normal care provider is unavailable to them due to this emergency (COVID-19). Employees must give notice of leave as soon as is practicable.
Benefit Information
- E-PSL allows employees to receive up to 80 hours of paid sick leave at their full salary or hourly rate.
- OR if an employee works part time, an an average of the hours worked per week for the previous 6 months or what is expected of the employee when hired and they can receive up to 10 day paid
- Employees that meet the above requirements (with the exception of child care) receive up to $511 per day or $5,111 in total per full-time employee .
- Those taking leave to care for a child are qualified to receive up their regular salary or hourly rate up to 80 hours or 10 working days (if part time). These benefits for childcare coverage are capped at $200 per day per employee and $2000 in total.
Overview of E-PSL
Emergency Paid Sick Leave is directly focused on addressing the health risks the virus has or could potentially have on your employees. It specifically covers the benefits awarded to any employee that is ill, quarantined, or otherwise unable to work as advised by a medical professional.
Qualifications for Benefits
In order to qualify for E-PSL an employee must be:
- Subject to local, state, or federal quarantine.
- Self-quarantined based on a health-care providers assessment
- Experiencing symptoms of COVID-19 and currently seeking medical testing/diagnosis
- Caring for an individual as outlined in the E-FMLA section above.
Benefit Information
- E-PSL allows employees to receive up to 80 hours of paid sick leave at their full salary or hourly rate.
- Employees that meet the above requirements (with the exception of child care) receive up to $511 per day or $5,111 in total per full-time employee .
- As outlined in the previous section, those taking leave to care for a child are qualified to receive up to two thirds of their regular salary or hourly rate. These benefits are capped at $200 per day per employee and $2000 in total.
Credits for Employers Under Emergency Legislation
Employers will “receive 100% reimbursement for paid leave pursuant to the Act.” Furthermore, “health insurance costs are also included in the credit. Employers face no payroll tax liability and self-employed individuals receive an equivalent credit.”
The federal government has made it clear that “reimbursement will be quick and easy to obtain”.
Additionally, “an immediate dollar-for-dollar tax offset against payroll taxes will be provided.
Where a refund is owed, the IRS will send the refund as quickly as possible.”
Law makers understand that this rapid deployment of new legislation may make absolute compliance difficult for many small businesses. For this reason, they have offered a “30-day non-enforcement period for good faith compliance efforts”.
Tax Credits Under the New Legislation
As mentioned above, all employers (private sector only) that provide their employees with the paid leave outlined in the sections above are to receive a 100% tax credit for their payments. This only applies up to the caps set forth and outlined in either section.
That means that if you pay more than the two thirds deemed a requirement by either for leave to care for a minor, anything above the required amount won’t be eligible for a tax credit. Additionally, these payments must be made within the applicable time period (April 1 – December 31, 2020).
In order to make tax preparation more efficient and file claims for credits, be sure to keep records of your paid leave payment
The IRS website gave the following examples to help businesses understand how tax credits work.
“If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.”
For more information about these credits and other relief, visit Coronavirus Tax Relief on IRS.gov.
Staffing Considerations During COVID-19
As mentioned above, the coronavirus outbreak and the new legislation may result in unprecedented numbers of PSL requests and unfilled positions on your team.
Fortunately, Hire Up Staffing and all temporary employees placed by our company are exempt from the benefits listed in this article.
What that means for you is that we’re the ideal solution to support your company during this emergency. We’ll be able to help you fill the gaps in your team and the experts we place in your open positions will not be able to receive these benefits or take leave.
We’re eager to help you through this difficult situation. We’re currently offering a Recruiting Strategy Session with one of our experts today so we can help you determine the best way to meet your needs in the face of this emergency.
Critical Information for Central Valley Businesses
Several counties are now requiring daily health checks to verify that their employees are well in coming into essential businesses.
Based on the size of your company, this can be a hard task to now administer daily and this is where Hire Up can help!
We have experienced candidates that can work temporarily during this time to manage this program for your organization.