Families First Coronavirus Response Act for the Payroll and Accounting Services Industry: Questions and Answers

Published March 31, 2020

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The COVID-19 pandemic has put many employees and families in distress. In an attempt to offset the strain on US employees caused by the virus, the Families First Coronavirus Response Act (FFCRA) was introduced and will go into effect on April 1, 2020 and will remain in effect until December 31, 2020. This legislation includes provisions such as coronavirus testing and expanding food assistance, as well as paid sick leave and expanded family and medical leave.

 

Who does this apply to?

Public and private employers with fewer than 500 employees.

Who does this not apply to?

Employees of the Federal government are covered under Title II which was not amended by this Act therefore are not covered by the FFCRA.

Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or childcare unavailable if the leave requirements would jeopardize the viability of the business as a going concern.

What must covered employers provide?

Paid sick leave: Employers are required to provide two weeks (up to 80 hours) at the employee’s regular rate of pay due to quarantine, and/or experiencing COVID-19 symptoms and seeking a medical diagnosis.

Expanded Family and Medical Leave: Employers are required to provide two weeks (up to 80 hours) at two-thirds the employee’s rate of pay if they are unable to work because of a need to care for an individual subject to quarantine or to care for a child (under the age of 18) whose school or child care provider is closed or unavailable for reasons related to COVID-19 and/or the employee is experiencing a sustainably similar condition.

If an employee has been employed for at least 30 days, up to an additional ten weeks at two thirds of the employee’s regular rate of pay if an employee is unable to work due to a need to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.

*Note: Qualified Health Care is the amount paid or incurred by the employer to provide and maintain a group health plan, but only to the extent that those amounts are excluded from the gross income of the employees (after tax deductions). Contributions to HRA and health FSA (not QSEHRA) are included. H S A or MSA contributions are not considered Health Care plan Expenses.

If I am unable to work or telework, what are the qualifying reasons for leave?

  1. The employee is subject to Federal, State or local quarantine or isolation order related to COVID‐19.
  2. The employee has been advised by a health care provider to self-quarantine related to COVID‐19.
  3. The employee is experiencing COVID‐19 symptoms and is seeking medical diagnosis.
  4. The employee is caring for an individual subject to an order described in (1) or self‐quarantine as described in (2).
  5. The employee is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID‐19.
  6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

What is duration of the leave?

Paid sick leave:  If the employee is taking leave because:

    • The employee is subject to Federal, State or local quarantine or isolation order related to COVID‐19.
    • The employee has been advised by a health care provider to self-quarantine related to COVID‐19.
    • The employee is experiencing COVID‐19 symptoms and is seeking medical diagnosis.

Full-time employees are eligible for 80 hours and part-time time employees are eligible for the number of hours that the employee works on average over a two-week period.

Expanded Family and Medical Leave: If the employee is taking leave because:

    • The employee is caring for an individual subject to an order described in Federal, State or local quarantine or isolation order related to COVID‐19 or self‐quarantine as described as the employee has been advised by a health care provider to self-quarantine related to COVID‐19.
    • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

Full time employees are eligible for 80 hours and part-time employees are eligible for the number of hours that the employee works on average of a two-week period.

If the employee is taking leave because the employee is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID‐19, full time employees are eligible for 10 weeks of total leave at 40 hours a week. Part-time employees are eligible for leave for the number of hours that the employee is normally scheduled to work during the period. The employee can be paid under Sick Pay Act for the ten day leave prior to EFMLA will start at the 2/3 rate.

How is their pay calculated?

Paid sick leave:  If an employee is taking sick leave because they are unable to work or telework due to a need for leave because:

    • The employee is subject to Federal, State or local quarantine or isolation order related to COVID‐19.
    • The employee has been advised by a health care provider to self-quarantine related to COVID‐19.
    • The employee is experiencing COVID‐19 symptoms and is seeking medical diagnosis.

The employee is entitled to a maximum of $511 per day or up to $5,110 total during the entire paid sick leave.

Expanded Family and Medical Leave: If an employee is taking leave because they are unable to work or telework due to a need for leave because:

    • The employee is caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or an individual who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
    • The employee is caring for their child whose school or place of care is closed, or childcare provider is unavailable, due to COVID-19 related reasons
    • The employee is experiencing any other substantially similar condition that may arise, as specified by the Secretary of Health and Human Services

 They are entitled to compensation at 2/3 of the regular rate up to a maximum of $200 per day or $2,000 during the entire two-week period.

*Note: An employee may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for the first two weeks of partial paid leave under this section.

    • If the employee is taking leave because the employee is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID‐19,

   They are entitled to compensation at 2/3 of the regular rate, up to a maximum of $200 per day, $12,000 aggregate for the entire period.

*Note: Paid sick time provided under this Act does not carry over from one year to the next. Employees are not entitled to reimbursement for unused leave upon termination, resignation, retirement or other separation from employment.

Are the self-employed covered?

Paid sick leave: They are paid up to ten days, lesser of 100% of average daily self-employment income or $511 per day.

Expanded Family and Medical Leave: They are paid up to 50 days, lesser of 2/3 average daily self-employment income or $200 per day.

*Note: The average daily self-employment income equals net earning from self-employment for the taxable year divided by 260.

Are there any tax credits for providing sick leave and family and medical leave wages?

Yes, you may qualify for dollar for dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA, including expenses incurred to maintain health insurance, coverage plus the 1.45% match of Medicare tax.

Credits will be taken against 941 deposits then requesting advance refunds on Form 7200 for balance. Form 7200 can be faxed to 855-248-0552.

*Note: These wages are not subject to the social security match and this credit will be included in gross income of the employer in the year paid.

Should I post this information in the workplace?

Yes, covered employers must post a notice of the FFCRA requirements in a conspicuous place on its premises.

What are the penalties?

  • Violation of the first two weeks’ paid sick time or unlawful termination provisions of the FFCRA will be subject to the penalties and enforcement described in Section 16 and 17 of the Fair labor Standards Act. 29 U.S.C. 216; 217.
  • The Department will observe a temporary period of non‐enforcement for the first 30 days after the Act takes effect, so long as the employer has acted reasonably and in good faith to comply with the Act. For purposes of this non‐enforcement position, “good faith” exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department receives written communication from the employer to comply with the Act in the future.
  • Under the Expanded Family and Medical Leave: violation of the additional 10 weeks’ paid leave time will be subjected to the enforcement provisions of the Family and Medical Leave Act.

What else should I know?

  • Employers may not discharge, discipline, or otherwise discriminate against any employee who takes paid sick leave under the FFCRA and files a complaint or institutes a proceeding under or related to the FFCRA.
  • A written request from the employee for leave must be made and include:
    • The employee’s name.
    • The date or dates for which leave is requested.
    • A statement of the COVID-19 related reason the employee is requesting leave and written support for such reason.
    • A statement that the employee is unable to work, including the means of telework, for such reason.
  • Statements must include the name of the government entity ordering; or the name of healthcare provider advising self-quarantine; and if the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee.
  • Based upon school closing or child care provider unavailability; the statement should include the name and age of the child(ren), the name of the school/provider and a representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave and with respect to the employee’s inability to work or telework because of a need to provide care for a child older than 14 during daylight hours, a statement that special circumstances exist requiring the employee to provide care.

We’re here to help.

For more information on these loans, contact covidpr@mcmcpa.com and a member of MCM CPAs & Advisors COVID-19 Solutions Group will be in touch.

 

Nothing in this document should be construed as providing tax advice.  Please consult with your own professional tax advisor.  In addition, this document represents the information that we have up to the date the presentation was made and cannot be relied upon for additional updates beyond that date.

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