The Families First Coronavirus Response Act

What is it?

The FFCRA was signed into law on March 18th, 2020. It expands federally mandated paid sick leave and paid family and medical leave. It applies to leave taken after April 1st and before December 31, 2020.

Does it apply to me?

If run a business and you have fewer than 500 employees, yes.

What are the new requirements for sick leave?

As of April 1st if one of your employees is:

  1. Subject to a federal, state or local quarantine or isolation order

  2. Advised by their health care provider to self-quarantine

  3. Experiencing symptoms of Covid 19 and seeking a medical diagnoses

  4. Caring for a family member suffering from Covid 19

  5. Caring for a child who’s school or place of care has been closed due to Covid 19

  6. Experiencing a substantially similar condition

you must pay that employee their regular pay rate for two full 80 hour work weeks with the following limit:

  • Pay does does not have to exceed $5,110 ($511 per day) for the two weeks even if the employee’s regular rate would be higher

After those first two weeks you are still required to pay an employee subject to conditions 1-6 if they still apply. The rate for the period following the first 2 weeks is:

  • At least 2/3 of the employee’s regular rate at the amount of hours that would be scheduled under normal circumstances

  • This pay does not have to exceed $200 per day or $10k total.

How can I afford this?

Through a tax credit that refunds or retains the employer portion of employer payroll taxes such as federal withholdings employee and employer share of social security taxes and medicare taxes from all employees.

You can retain (not deposit) payroll taxes due equal to 100% of the amounts paid for qualified sick leave for each calendar quarter (starting after April 1st), plus a pro-rata share of the employer’s qualified health plan expenses.

If you don’t retain these funds they can be refunded to you.

Our current interpretation of “a pro rata share of the employer’s qualified health plan expenses” is that if you provide health insurance to your employees that is not included in their wages (pretax) you can increase the amount retained or refunded by the amount of these health insurance benefits allocable to the sick employee(s).

Example: if you have 12 employees, pay $1,200 a month in qualified health insurance premiums and one of your employees becomes sick, you can retain or get a refund for their sick pay as defined above, plus 1/12 (the sick employee’s share) of the health insurance premiums.

Are there reporting requirements?

Yes. Form 7200 (click for current version) is the relevant document. On it you report the total sick leave, family leave, employee retention credit (more info on that credit here) and the amounts by which you’ve reduced your payroll deposits. If you haven’t reduced them by enough to cover your costs, the excess is calculated and will be refunded to you.

I’m self employed, what if I get sick?

If you fall into one of these categories:

  • You are experiencing symptoms of Covid 19

  • You are caring for a family member suffering from Covid 19

  • You are caring for a child who’s school or place of care has been closed due to Covid 19

You qualify for a credit against your self employment taxes capped at

  • $200 per day

    OR

  • Two thirds of average daily self-employment income for the year

whichever is less.

However current guidance is that this credit is in the form of reduced estimated payments by you throughout the year. So you only have the retain option.

Is there an exemption?

A limited one. If:

  • you have 50 or fewer employees

    And

  • you feel it would jeopardize the viability of your business as a going concern

You do not have to provide the paid leave for specifically the circumstance wherein an employee is caring for a child who’s school or place of care has been closed due to Covid 19. There is no exemption for the other circumstances.