Small Business

What Families First Coronavirus Response Act means for small business

by Amy

The Families First Coronavirus Response Act (H.R. 6201) was signed into law March 18, 2020 in response to the  COVID-19 pandemic. There are a lot of provisions in this new law, so we've broken out the parts that matter most to you. Here's what it means for small businesses and employee benefits.

This new Families First Coronavirus Response Act (the FFCRA), the second of three pieces of legislation drafted to combat the COVID-19 outbreak, is intended to assist employees impacted by novel coronavirus (“COVID-19”) and applies to employers with fewer than 500 employees. 

It requires employers with up to 500 employees to provide paid sick leave and paid family leave while also providing a refundable payroll tax credit to employers to cover 100% of the cost of wages.

There is also a refundable income tax credit available for self-employed individuals. Employers with less than 50 employees must apply for a hardship exemption in order to qualify.

If you want to hear about the other legislative relief measures Congress has been working on, federal and local relief programs, tools to help you work at home, or small business FAQs for Coronavirus, check out our Coronavirus Roadmap for Small Businesses. 

We also found the Department of Labor's recently published FAQs to have lots of helpful information as well. 

Emergency Family and Medical Leave Expansion Act (FMLA)

The following represent amendments intended to expand the Family and Medical Leave Act of 1993.

  • Eligible employees are those who have been employed for at least 30 calendar days by the employer with respect to whom leave is requested.
  • Employers will be required to offer 12 weeks of paid family leave for employees who have been employed for at least 30 days with a minor child in the event of the closure of the child's school or place of care. The first 10 days are unpaid, but the employee can overlap this with the 10 days of paid sick leave.
  • The paid leave benefit can be no more than $200 per day and an aggregate amount of $10,000. The paid family leave credit offsets 100% of employer costs for providing mandated paid family leave.

 

Emergency Paid Sick Leave Act (aka the Emergency Pay Act)

Employers will provide paid sick time in the event that the employee is unable to work (or telework) due to: 

  • The employee being quarantined or isolated by the order of federal or state authority.
  • The employee has been advised by a health care provider to self-quarantine.
  • The employee is experiencing symptoms of COVID–19 and is seeking a medical diagnosis.
  • The employee is caring for an individual who is subject to the order as described above.
  • The employee is caring for a child if the school or place of care of the child has been closed or the child care provider of the child is unavailable.
  • Full-time employees will be entitled to up to 80 hours of paid sick leave.
  • Part-time employees will be entitled to their average number of hours worked over a two week period.
  • Employers must offer two weeks (10 days) of paid sick leave for COVID-19-related reasons. If the sick leave is for an employee who is sick or seeking a diagnosis, the benefit must replace all the employee's wages up to a maximum benefit of $511 per day.
  • If an employee is caring for another individual who is sick, the benefit must replace at least two-thirds of the employee's wages up to a maximum benefit of $200 per day.
  • The paid sick leave credit offsets 100% of employer costs for providing mandated paid sick leave. The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.
  • The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.  
  • Self-employed individuals will be provided refundable income tax credits in an amount of what self-employed workers would have received if they had been an employee receiving paid leave benefits pursuant to the mandates. For any given day that a self-employed worker could not work, they can claim a "rough justice" tax credit in the amount of their average daily self-employment income for the year.

This law will be in effect until December 31, 2020.

 

Families First Coronavirus Response Act FAQs

When does the new law take effect?

The law is will be effective April 2, 2020. The Secretary of Labor is expected to give further guidance before then since much is still unclear with the new law. 

 

Does the law apply to lack of work due to a business closure?

No it does not; employees who experience lack of work due to the virus are eligible for unemployment, but not employer sponsored paid time off under this law. 

 

What are the paid time of benefits provided under the Families First Coronavirus Response Act?

The law provides benefits under two parts: Emergency paid sick leave and Emergency medical and family leave (FMLA)

 

Emergency Paid Sick Leave FAQs

How does Emergency Paid Sick Leave work?

All employers with fewer than 500 employees are required to offer two weeks (or the hourly equivalent of an employee’s usual workload over the course of two weeks) of paid sick leave to all employees under certain circumstances in addition to any Paid Sick Leave they offered before the law was enacted. The requirement to provide federally mandated sick leave expires on December 31, 2020.  

 

What triggers Emergency Paid Sick Leave?

Employees are entitled to emergency paid sick leave if they are:

    1. Subject to a federal, state, or local quarantine or isolation order related to COVID-19; 
    2. Advised by a healthcare provider to self-quarantine due to COVID-19 concerns; 
    3. Experiencing COVID-19 symptoms and seeking medical diagnosis; 
    4. Caring for an individual subject to a federal, state, or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns; 
    5. They must care for their child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; 
      • THIS IS THE ONLY SCENARIO WHERE GRANTING 12 WEEKS OF FMLA  COMES INTO PLAY
    6. They experience any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

 

Which employees qualify for this benefit?

There is no length of service requirement for this benefit; all employees are eligible. However, health care providers and emergency responders are an exception to this.  

 

How many hours of sick time are available?

Full time employees are able to use up to 80 hours of paid sick leave. Part time employees are able to use paid sick leave for the number of hours they work, on average, over a 2-week period. This paid sick leave will NOT carry over to the following year. 

 

What is the sick leave rate of pay?

If the employee is using sick leave because they are…

  1. Subject to a federal, state, or local quarantine or isolation order related to COVID-19; 
  2. Advised by a health care provider to self-quarantine due to COVID-19 concerns; 
  3. Experiencing COVID-19 symptoms and seeking medical diagnosis; 

…then you must pay sick time hours at the employee’s regular rate. The amount of pay is capped at $511 per day up to $5,110 total per employee.

If the employee is using sick leave because they are…

  1. Caring for an individual subject to a federal, state, or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns; 
  2. Caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or 
  3. Experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

…then you must pay sick time hours at ⅔ of the employee’s regular rate. The amount of pay is capped at $200 per day up to $2,000 total per employee. 

 

What if I already provide paid sick leave?

Employees are entitled to use the paid sick time under this law before they begin using any additional paid time off benefits already offered by the employer. 

 

Emergency Family and Medical Leave FAQs

When does this benefit apply?

An employee is entitled to emergency FMLA if:

  1. The employee needs to care for their minor child because:
    1. The child’s school or place of care is closed, or
    2. The childcare provider is unavailable due to public health emergency 
  2. And the employee is unable to work or telework.

Having reasons for leave that fall under other FMLA criteria, or the Emergency Paid Sick Leave Act, do NOT qualify the employee for pay under emergency FMLA.

 

Which employers have to follow this requirement?

This law applies to all employers with fewer than 500 employees. 

**The Secretary of Labor may make regulations to exempt small businesses with fewer than 50 employees when the imposition of such requirements would jeopardize the viability of the business but this has not happened as of yet.**

 

Are there length of employment requirements for employees for Emergency FMLA?

Employees are eligible for this benefit if they have worked for the employer for at least 30 calendar days.

The Secretary of Labor may make regulations to exclude certain health care providers and emergency responders from the definition of eligible employees, but has not yet done so.

 

What benefits can an eligible employee receive?

Employees can take a total of 12 weeks of leave.

The first 10 days may be unpaid. However, if the employee has not used up their right to two weeks of pay under the emergency paid sick leave law, they can receive that pay during this initial 10-day period. If they do not have that time available, they can choose to use any other available employer provided benefits (PTO, vacation, sick leave). 

After the 10-day period, the employer must pay full-time employees at ⅔ the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled. There is a maximum payment cap of $200 per day and $10,000 in aggregate per employee. 

To determine the number of hours of Emergency FMLA pay for an employee who does not have a regular schedule:

    • Pay an amount equal to the average number of hours that the employee was scheduled per day over the 6-month period ending on the date on which the employee takes such leave, including hours for which the employee took leave of any type.
    • If the employee worked for less than 6 months, pay based on the employee’s reasonable expectation of hours at the time they were hired 

 

Does the employee have a right to their job at the end of their leave?

Employers with 25 or more employees are required to return the employee to the same or equivalent position upon their return to work. 

Employers with fewer than 25 employees are required to return the employee to the same or equivalent position upon the return to work, UNLESS:

  • The employee’s position no longer exists due to an economic downtown or other circumstances caused by a public health emergency during the period of Emergency FMLA. 

AND

  • The employer has made reasonable attempts to return the employee to an equivalent position. The employer must make efforts to return the employee to work for up to a year following the employee’s leave.

 

Will employers with less than 50 employees be required to participate? 

The law allows the Secretary of Labor to issue regulations exempting employers with less than 50 employees from providing the paid time off benefits required under the law.  However, these regulations have not yet been issued. Hopefully they will be before the April 2, 2020 effective date so that we can provide clearer guidance on whether your business is exempted.

Exemptions for healthcare employees: 

There is different language in the law surrounding this exemption for paid family leave benefits and paid sick leave benefits. 

Paid Sick Leave:

The law indicates that employers are able to exempt their healthcare provider and emergency response employees from the paid sick leave requirements under the law. 

For both of these items, the definition of “health care provider” is:

(a) a doctor of medicine or osteopathy who is authorized to practice medicine or surgery (as appropriate) by the State in which the doctor practices; or

(b) any other person determined by the Secretary to be capable of providing health care services.

Ultimately, what this means is that employers may not have to provide any of the paid time off benefits required under the law to their associate doctors, but whether this specifically applies to Dentists has yet to be determined.

Paid Family Leave:

The law allows the Secretary of Labor to issue regulations exempting health care provider (see definition above) and emergency response employees from receiving paid family leave benefits under the law.  However, these regulations have not yet been issued.  

Hopefully they will be before the April 2, 2020 effective date so that we can provide clearer guidance on whether you or your associate doctors may be exempted.

Tax Credits

100% Tax credits are available for employers who pay employees emergency Paid Sick leave and who pay employees emergency Paid Family And Medical Leave

Tax credit is only given for payments made as required under this law. So, if an employer chooses to pay an amount that goes above and beyond the cap provided by law, there’s no tax credit for that extra amount. If an employer is not subject to this law but chooses to offer pay, there is no available tax credit. 

You've got this!

Our team at Take Command Health helps businesses design reimbursement models to give their employees personalized benefits through QSEHRAs and ICHRAs. We believe in small businesses, we support them, and we are one ourselves. 

Don't miss our other helpful resources, including our blog on Small Business Health Insurance and Coronavirus, our take on how the CARES Act helps small businesses, as well as our Coronavirus roadmap for small business owners. Chat with us any time online.

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Hi, I'm Amy! I wrote this blog because I care about ideas (big and little) that can help fix our healthcare system. I used to work on projects for Kaiser Permanente and the Parkland Health & Hospital System so I've seen the system inside and out. It's so important that consumers keep up with industry shifts and changing health insurance regulations. I'm also Take Command Health's Content Editor and a busy mom. Learn more about me and connect with me on our about us page. Thanks!