President Trump has signed the Families First Coronavirus Response Act (the “Act”). The Act is considered to be “Phase Two” of the Coronavirus Stimulus Relief Package.
With the passage of the Act, there were very few changes made to the Act as passed by the House on March 17. Senators have said that they decided to pass the Bill substantially as it stood in order to be able to pass something quickly. The Senate is continuing to work on Phase Three of the Coronavirus Stimulus Relief Package which is expected to change some of the provisions of the Act.
Employers should note the following:
- Employers with 500 or fewer workers are required to provide to all employees two weeks of paid sick leave and up to twelve weeks of family and medical leave for employees affected by the coronavirus. The two weeks of paid sick leave applies to anyone told to quarantine, showing symptoms of Coronavirus infection, exposed to the virus, or trying to obtain a test or preventive care.
- Sick leave is to be paid at the usual pay rate but is capped at $511 per day.
- Family leave is to be paid at 2/3 of the employee’s average monthly earnings (based on the most recent year of wages) up to a cap of $4,000.
- The benefits are retroactive to January 19, 2020 (the date of the first US COVID-19 diagnosis).
- Applications must be filed no later than six months after the enactment of this legislation.
- The Act provides a tax credit to small-business owners to cover the costs for these benefits. The credit is applied to the tax the company normally pays for each employee’s Social Security. The credit is available to non-profits as well as for-profit businesses.
- If sick leave or the family and medical leave ends up costing more than the amount paid for Social Security, then the U.S. government will reimburse the employer to cover the remaining costs. This determination will be left up to the Treasury and the Internal Revenue Service.
- The Act grants the Labor Department the ability to exempt employers with fewer than fifty workers from having to pay these benefits if it “would jeopardize the viability of the business.”
- Union workers who are part of a “multi-employer” agreement must also be provided these benefits.
- Self-employed workers and independent contractors (e.g., Lyft and Uber drivers, caterers, or planners, etc.) are eligible for a tax credit of up to two weeks of sick pay at their average pay and twelve weeks of family leave pay at 2/3 their normal rate.
- Contractors can apply the tax credit against their income taxes, and it is refundable, meaning taxpayers will get a rebate if their sick or family leave pay was greater than their tax bill.
- Part-time employees must be paid sick leave equivalent to the number of hours they typically work during a two-week period. (For example, if a part-time worker works fifteen hours a week, then they are eligible for up to thirty hours of pay).
- The benefits are in place until December 31, 2020.
- Employers with existing policies that provide paid leave on the day before the date of the enactment shall make available the additional sick time under the Act in addition to the paid leave already in existence.
- An employer may not require an employee to use other paid leave provided by the employer before the employee uses the paid sick time offered under the Act.
Large companies with more than 500 employees are not covered by the bill but continue to be covered by the FMLA and may be covered by future legislation.