ALERT: How the Coronavirus Relief Bill will impact Employers

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This blog post contains background information and details on the new law referred to as FFCRA.
Click here for the latest on this evolving situation as well as COVID-19 resources for employers.>

PLEASE NOTE: Late on March 24, the DOL announced the effective date as April 1. Based on the language in the bill, the effective date was widely believed to be April 2. However, this guidance indicates an April 1 effective date.


The Families First Coronavirus Response Act (FFCRA) was signed into law on March 18, 2020.  This is the second in what is expected to be a series of bills that aim to stimulate economic growth and ensure proper medical treatment and nutrition for those affected by COVID-19.

In the coming days and weeks, federal regulatory agencies, including the Department of Labor (DOL) and Health and Human Services (HHS), will provide guidance on how to execute or implement the new requirements. In the meantime, employers and advisors must rely on a good faith interpretation of the act’s text.  

For information on updates and changes, please check-in periodically with the CheckWriters FFCRA Resource Page.

Summary

The FFCRA provides new employee leave benefits, including paid leave options for employees who work for employers with fewer than 500 employees.

Employers will be able to take advantage of new tax credits to compensate for the costs associated with the paid emergency leave and sick leave benefits created under the bill, as well as providing credits for health plan expenses affiliated with emergency and sick leave wages.

Employees will be eligible for:

  • Up to 12 weeks of Emergency FMLA for school and daycare closures (10 days unpaid and then up to 10 weeks at 2/3 pay subject to daily maximums).
  • Up to two weeks of Emergency Paid Sick Leave (full pay for employee, 2/3 pay for family care -both leave type payments subject to daily maximums) for illness, quarantine, or school closures.

Effective Date of Law

  • The Emergency FMLA and Emergency Paid Sick Leave sections discussed below will go into effect on April 1, 2020 and expire December 31, 2020. PLEASE NOTE: Late on March 24, the DOL announced the effective date as April 1. Based on the language in the bill, the effective date was widely believed to be April 2. However, this guidance indicates an April 1 effective date.
  • There is no retroactive application.

Key Elements for Employers  

  • Emergency FMLA expansion.
  • Emergency Paid Sick Leave.
  • Notice Requirements.
  • Employer Payroll Tax Credits to offset the costs of the Emergency and Paid Sick Leave.
  • Employer Credits for Health Plan expenses related to Emergency and Sick Leave wages.
  • Group Health Plan Benefit mandate.

Emergency FMLA expansion

The framework of the existing Family and Medical Leave Act (FMLA) is utilized to provide certain employees with the right to take up to 12 weeks of job-protected leave.  

Covered Employees and Employers: For purposes of this leave, the FMLA definitions of covered employees and employers has been amended. Under the FFCRA, eligible employees include those who work for employers with fewer than 500 employees and the government.

The legislation further gives the Secretary of Labor the authority to exempt small businesses with fewer than 50 employees from the bill’s paid leave requirements if those requirements would jeopardize the viability of the business (guidance on these exemptions is expected by April 2).

Employees who work under a multi-employer collective agreement and whose employers pay into a multi-employer plan may access emergency paid leave.

Any employee who has been employed for at least 30 calendar days, although employers who are health care providers or emergency responders may elect to exclude their employees from the emergency FMLA provisions of the bill.

Covered Leave Purpose: Eligible employees may take leave if the employee is unable to work (or telework) because they must care for a child, under 18 years of age, whose school or daycare provider is closed or unavailable due to a coronavirus emergency as declared by a Federal, State, or local authority.

Duration: Up to 12 weeks of job-protected leave.

Compensation/Rate of Pay:

  • The first 10 days in which an employee takes emergency leave may be unpaid. An employee may elect, to substitute any accrued paid vacation leave, personal leave, or medical or sick leave for unpaid leave.
  • After 10 days, employers must pay 2/3 of the employee’s regular rate of pay for the number of hours they would normally be scheduled to work, capped at $200/day and $10,000 total.
  • For hourly employees whose schedules vary and the employer is unable to determine the exact hours the employee would have worked, the employee’s paid leave rate should equal the average number of hours that the employee was scheduled per day over the six-month period prior to the leave. If the employee did not work in the preceding six-month period, the paid leave rate should equal the “reasonable expectation” of the employee at the time of hiring with respect to the average number of hours per day that the employee would be scheduled to work.

Reinstatement to Position After Leave: The same reinstatement provisions apply as under traditional FMLA. However, restoration to position does not apply to employers with fewer than 25 employees if certain conditions are met:

  • The job no longer exists because of changes affecting employment caused by an economic downturn or other operating conditions that affect employment caused by a public health emergency.
  • The employer makes reasonable efforts to return the employee to an equivalent position; and
  • The employer makes efforts to contact a displaced employee if anything comes up within a year of when they would have returned to work.

Emergency Paid Sick Leave

Covered Employees and Employers: Eligible employees include those who work for employers with fewer than 500 employees and government employers.

The legislation further gives the Secretary of Labor the authority to exempt small businesses with fewer than 50 employees from the bill’s paid leave requirements if those requirements would jeopardize the viability of the business (guidance on these exemptions is expected by April 2).

Employees who work under a multi-employer collective agreement and whose employers pay into a multi-employer plan may access emergency paid leave.

All employees (no matter how long they have been employed), although Employers who are health care providers or emergency responders may elect to exclude their employees from the emergency paid sick leave provisions of the bill.

Covered Leave Purposes: Employers must provide employees with two weeks of paid sick time if the employee is unable to work (or telework) for the following coronavirus related reasons:

  1. The employee is subject to a Federal, State, or local quarantine or isolation order related to the coronavirus;
  2. The employee has been advised by a health care provider to self-quarantine due to concerns related to the coronavirus;
  3. The employee is experiencing symptoms of coronavirus and is seeking a medical diagnosis;
  4. The employee is caring for an individual who is subject to a quarantine or isolation order or advised to self-quarantine by a health care provider;
  5. The employee is caring for a child whose school or care provider is closed or unavailable due to coronavirus precautions; or
  6. The employee is experiencing any other condition substantially similar to the coronavirus, as specified by the U.S. Department of Health and Human Services (HHS).

Duration of Leave:

  • Full time employees are entitled to 80 hours of paid sick leave.
  • Part time employees are entitled to the number of hours that the employee works, on average, over a two-week period.
  • For hourly employees whose schedules vary and the employer is unable to determine the exact hours the employee would have worked, the employee’s paid leave rate should equal the average number of hours that the employee was scheduled per day over the six-month period prior to the leave. If the employee did not work in the preceding six-month period, the paid leave rate should equal the “reasonable expectation” of the employee at the time of hiring with respect to the average number of hours per day that the employee would be scheduled to work.

Compensation/Rate of Pay:

  • Sick leave due to reasons 1, 2, or 3 described above must be paid at the employee’s regular rate of pay or at the federal, state or local minimum wage, whichever is greater. In these circumstances, the paid sick leave rate may not exceed $511 per day, or $5,110.  This pay is for the employee’s own illness, quarantine, or care.
  • Sick leave due to reasons 4, 5, or 6 described above must be paid at two-thirds of the employee’s regular rate of pay or at the federal, state or local minimum wage, whichever is greater.  In these circumstances, the paid sick leave rate may not exceed $200 per day, or $2,000.  This pay is to care for a family member or to care for a child whose school (or childcare provider) has closed or is unavailable due to the coronavirus.

Interaction with Other Employer-Provided Paid Sick Leave and other Paid Leave:

  • This act does not preempt existing state and local paid sick leave requirements.
  • Employers cannot require employees to use other leave first.
  • Sick leave provided for under the act does not carry over from year to year, and the requirements expire December 31, 2020.

Notice Requirements

  • Employers must post a model notice, which will be provided by the federal government.
  • After the first workday (or portion of a day) an employee receives paid sick time, an employer may require the employee to follow “reasonable notice procedures” in order to continue receiving paid sick time.

Employer Payroll Tax Credits to offset Emergency Leave costs

  • Employers will receive 100% reimbursement for all FMLA Emergency Leave and Emergency Paid Sick Leave payments.
  • An immediate dollar-for-dollar tax offset against payroll taxes – employers can retain the payroll tax deposits they would otherwise pay to the IRS in an amount that does not exceed the leave payments.
  • If the payroll deposits are not enough to cover the cost of paid leave, the IRS will return the shortfall amount as quickly as possible.
  • The maximum reimbursement is equal to the employee payment caps for FMLA Emergency Leave and the Emergency Paid Sick Leave.
  • Details on this process are anticipated in advance of April 2.

Credit for Health Plan Expenses

  • FMLA Emergency Leave and Emergency Paid Sick Leave credits will be increased to include the amount the employer pays for the employee’s health plan coverage while they are on leave.
  • The employer’s group health plan expense must be properly allocated to the time an employee is on leave.

Health Plan Benefit Mandate

  • The act requires all insured and self-funded medical plans, including grandfathered plans, to cover diagnostic testing-related services for COVID-19 at 100 percent without any deductibles or co-pays.
  • Examples include services provided by doctors, emergency rooms, and urgent care centers leading up to the decision that testing is needed, along with the actual lab-based testing.
  • The mandate does not apply to treatment.


Read the full law here: US H.R. 6201


If you would like to speak with one of our HR Consultants regarding the specifics of this legislation as it pertains to your organization, please call 888-243-2555 and we'll put you in touch!

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Add a comment

Comment by Nancy M Psholka, PT DBA First Step Therapy |

How and when do I apply for an exemption--being under 50 employees?

Reply by Administrator

Hi Nancy!

Thank you for commenting.

So far, all the bill delineates is that there is an option to "exempt small businesses with fewer than 50 employees from the requirements of section 102(a)(1)(F) when the imposition of such requirements would jeopardize the viability of the business as a going concern." We do not have details as of yet on what the exemption process would be but will closely monitor the anticipated guidance as the situation unfolds, and update our readers accordingly!

Comment by Sovina MAn |

when it says that full-time employees will get 80 hours of sick leave, does it mean on top of the sick leave they already get?

Reply by Administrator

Hi Sovina,

Thanks for commenting!

Yes, that is correct. The bill expressly states that it does not preempt existing state or local paid sick leave entitlements. And, importantly, employers cannot require employees to use other leave first.

Comment by Melissa Oliveira |

Do any of these new pay codes have any type of tax implications? I understand you will get a tax credit on social security tax (just to verify, there will only be a tax credit on the 6.2% that employers match?) but this isn't built into the pay code, correct? The pay code is strictly for tracking purposes for when taxes are filed?

Reply by Administrator

Thank you Melissa for your question regarding the tax implications of the bill.

Please refer to this IRS guidance for the latest Tax Guidance for the FFCRA >

Comment by Sonia Bannon |

Could you please break down eligibility by code? That would be very help for Thermaxx to explain to our employees how to understand which code they are eligible for. we would like to update our time off forms for payroll.

Comment by Susan Gardini |

Everything I've been reading and learning on Webinars is saying the first 10 days are not paid for under the EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT. CheckWriters is stating:
The bill provides 12 weeks job-protected FMLA leave, of which the first 14 days may be unpaid.
Employees may use accrued personal or sick leave during the first 14 days, but employers may not require employees to do so.
Can you please help clarify? Also are the first 10 or 14 days calendar days or work days?
Thank you for all your help!

Reply by Administrator

Hi Susan!

Under the bill, the first 10 days in which an employee takes emergency leave may be unpaid. An employee may elect, or an employer may require the employee, to substitute any accrued paid vacation leave, personal leave, or medical or sick leave for unpaid leave.

So, 14 calendar days, but the law is 10 business days (aka 2 weeks for a full timer).

Comment by Ron Crozier |

How is the number of employees determined for the exemption of under 50 employees? I am a seasonal employer that is heavily weighted during the winter but only carry a few people during the spring, summer and falls months.

Reply by Administrator

Hi Ron,

Thanks for your question regarding the under 50 employees exemption. Small businesses with fewer than 50 employees may be exempted from offering emergency FMLA expansion benefits when the imposition of such requirements would jeopardize the viability of the business. Specific details what this exactly means, and on the process for exemption itself, have yet to be released. We expect to learn more soon and will keep you posted. In the meantime, visit the CheckWriters FFCRA Resource Page for the latest >

Comment by Alison Safholm |

I have a question about the verbiage: "Up to 12 weeks of Emergency FMLA for school and daycare closures (10 days unpaid and then up to 10 weeks at 2/3 pay subject to daily maximums)."

Does this mean that we may have to pay employees up to 10 weeks at 2/3 pay if daycares/schools remain closed for that amount of time? Or is it JUST the two weeks mandated pay?

Reply by Administrator

Hi Alison. We appreciate your question!

As you know, we must rely on a good-faith interpretation of the law while awaiting more detailed guidance. So, CheckWriters is interpreting as follows: if an employee qualifying for emergency FMLA must care for child(ren) because school or daycare is closed due to the COVID-19 emergency, and they remain closed for that 10-week period in which the employee is eligible for 2/3 pay, then yes, they would have to pay the employee for that amount of time.

Comment by Paul |

What happens when you have an employee who is quarantined before the April 2nd start date?

Reply by Administrator

Hi Paul, thank you for the excellent question.

PLEASE NOTE: Late on March 24, the DOL announced the effective date as April 1. Based on the language in the bill, the effective date was widely believed to be April 2. However, this guidance indicates an April 1 effective date.

An employee who is quarantined prior to April 1 may be offered remote work opportunities (if available) or can use available sick, vacation, PTO, etc., per the company policy. If those options are not available, they can be unpaid (with certain compliance maintained for exempt employees, per the FLSA). As a company, you may choose to pay the employee for this time, however you should not use the CheckWriters "CV Emergency Paid Sick Leave" codes prior to April 1. Current interpretation suggests that no tax credit will be available to employers until the April 1 effective date. Therefore, you must use the former options outlined above.

Please contact your Account Specialist if you have questions about the CheckWriters-created Emergency Sick and FMLA Codes.

Comment by Susan Byrne |

Quick question,
I had an employee ask me if they are actively working during this state of emergency in MA in one of the "essential businesses", are they entitled to to be paid time and half for all their hours worked? My employee referenced this as like a hazard pay. Is this a law? I have searched endlessly online and found no information. Please advise