Business/Mgmt & Tax Concepts

Our Highlights: Families First Coronavirus Response Act

February 25, 2021

On Wednesday, March 18, 2020, the federal government passed the Families First Coronavirus Response Act (FFCRA). This Act requires private employers with fewer than 500 employees and certain public sector employers to provide current employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19. (Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or childcare unavailability if the leave requirements would jeopardize the viability of the business).

On January 29, 2021, the Internal Revenue Service (IRS) posted News Release IR-2021-26 regarding the extended deadline of the Families First Coronavirus Response Act (FFCRA) tax relief credit. The COVID-related Tax Relief Act of 2020, enacted December 27, 2020, expands the availability of the FFCRA tax credits to eligible employers for paid sick and family leave provided to employees through March 31, 2021, previously available only until December 31, 2020.  While the FFCRA leave mandate was not extended, the tax credit was extended for eligible employers.  The updated FAQs can be found at COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs.

Emergency Paid Sick Leave Act (EPSLA)

  • Qualifying employers are required to provide paid sick leave to current paid employees under the following conditions:
    1. Employee is subject to Federal, State, or local quarantine or isolation as a result of COVID-19
    2. Employee has been advised to self-quarantine as a result of COVID-19
    3. Employee is experiencing COVID-19 symptoms and is seeking a medical diagnosis
    4. Employee is caring for an individual who is subject to quarantine as a result of COVID-19
    5. Employee is caring for a child whose school or childcare provider has been closed due to COVID-19
    6. 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 Secretary of Labor
  • Full-time employees are entitled up to 80 hours of paid sick time.
  • Part-time employees are entitled up to a number of hours equal to the number of hours typically worked over a 2-week period.
  • Employers must pay employees based on the higher of their regular rate of pay, or the applicable state or federal minimum wage at 100% (for qualifying reasons 1, 2, or 3 above), up to $511 per workday ($5,110 total), or two-thirds of their regular rate of pay (for qualifying reasons 4, 5, or 6 above) up to $200 per workday ($2,000 total).
  • Effective April 1, 2020, regardless of how long employee has been employed.
  • If employee wages ended prior to April 1, 2020 (or end any time after April 1), they are not eligible for this leave. They may be eligible for Unemployment.

Emergency Family and Medical Leave Expansion Act (EFMLEA):

  • If qualifying employees need to miss work to care for their child due to school closures or a childcare provider is closed or unavailable for reasons related to COVID-19, they are eligible for partially paid leave
  • Employers are required to grant up to 12 weeks of leave for employee-parents who have been employed for at least 30 calendar days prior to their first day of leave
  • Employers are not required to pay employees during the first ten business days, but must thereafter pay at least two-thirds of the employee’s regular rate of pay for hours regularly scheduled to work up to $200 per workday ($10,000 total). During the initial 10 days, employees may use emergency sick leave, or they may substitute any accrued vacation leave, personal leave, or medical/sick leave under the employer’s policy.
  • If employee wages ended prior to April 1, 2020 (or end any time after April 1), they are not eligible for this leave. They may be eligible for Unemployment.

Employer Tax Credits:

  • Eligible employers will receive 100% reimbursement for paid leave pursuant to the FFCRA Act
    • Health insurance costs are also included in the credit
    • Employers face no payroll tax liability
    • Self-employed individuals receive an equivalent credit
  • Eligible employers will claim the credits on their federal employment tax returns (e.g. Form 941, Employer’s Quarterly Federal Tax Return), but can benefit more quickly from the credits by reducing their federal employment tax deposits
  • If there are insufficient federal employment taxes to cover the amount of the credits, an eligible employer may request an advance payment of the credits from the IRS by submitting a Form 7200, Advance Payment of Employer Credits Due to COVID-19. The IRS expects to begin processing those requests during April 2020.
  • Requirements subject to 30-day non-enforcement period for good faith compliance efforts.

More information can be found here and the IRS FAQs can be found here. Employers are required to post this DOL poster in their offices (and, given the sweeping work-from-home mandates, employers are encouraged to post this electronically as well).

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