The Families First Coronavirus Response Act (“H.R. 6201”) was passed by the House of Representatives early Saturday morning, March 14, 2020, with the backing of the Trump administration. The Senate is expected to act on H.R. 6201 this week. Please note: H.R. 6201 is not yet law. We are providing this information to allow readers to begin to prepare based on information currently available and what could be placed into law shortly. Individuals affected by the novel coronavirus could receive paid leave, food assistance, and expanded unemployment insurance, in addition to increased Medicaid funding to states under the House-passed version of H.R. 6201.
The measure would provide tax credits to employers to offset the costs of providing emergency sick leave. It also would require insurers, Medicare, Medicaid, and other federal health programs to fully cover testing and related services for the virus.
Note that H.R. 6201 does not apply to private sector employers with 500 or more employees. Such larger employers remain subject to the Family and Medical Leave Act of 1993.
This article is intended to provide information relating to the expansion of emergency medical leave, emergency paid sick leave, and employer tax credits related to these expanded employee benefits.
Coronavirus Emergency Leave
H.R. 6201 would create an emergency paid leave program to directly respond to the coronavirus. Private sector employers with fewer than 500 workers and government entities would have to provide as many as 12 weeks of job-protected leave under the Family and Medical Leave Act (FMLA) for employees who:
- Comply with a requirement or recommendation to quarantine because of exposure to or symptoms of coronavirus.
- Provide care to a family member who is complying with such a requirement or recommendation.
- Provide care for a child younger than 18 whose school or day care has closed because of coronavirus.
The first 14 days of leave could be unpaid, though a worker could choose to use accrued vacation days, personal leave, or other available paid leave for unpaid time off. Following the 14-day period, workers would receive a benefit from their employer that will be at least two-thirds of their normal pay rate.
The measure also would modify the FMLA to allow individuals to use unpaid leave if they are diagnosed with the virus, caring for a family member, or caring for a child whose school or day care has closed because of a public health emergency through December 31, 2020.
The Labor Department would be authorized to issue regulations to:
- Exclude certain health-care providers and emergency responders from paid leave benefits.
- Exempt small businesses with fewer than 50 employees from the paid leave requirements.
Workers under a multiemployer collective bargaining agreement and whose employers pay into a pension plan would have access to paid leave.
Emergency Sick Leave
Private sector employers with fewer than 500 workers and government entities would have to provide employees with paid sick time off to:
- Self-quarantine because they have been diagnosed with coronavirus.
- Obtain a medical diagnosis or care if they are experiencing symptoms of coronavirus.
- Comply with a recommendation or order by a public official or healthcare provider that the employee’s physical presence jeopardizes the health of others, due to employee or family member exposure to, or symptoms of coronavirus.
- Provide care for a child whose school or day care has closed due to coronavirus.
Full-time employees would receive 80 hours of sick leave under the new emergency leave program and part-time workers would be granted time off that is equivalent to their scheduled or normal work hours in a two-week period. Workers would have to be paid at least their normal wage or the federal, state, or local minimum wage, whichever is greater. They would be paid, however, at two-thirds of their regular earnings for providing care to a family member.
Employers with similar existing paid leave policies would be required to provide workers with the emergency paid sick time. An employer couldn’t require a worker to use any other available paid leave before using the sick time.
Employers would be prohibited from:
- Requiring a worker to find a replacement to cover their hours during time off.
- Discharging or discriminating against workers for requesting paid sick leave or filing a complaint against the employer.
An employer could be subject to civil penalties for a violation of paid sick leave requirements. Workers under a multiemployer collective bargaining agreement and whose employers pay into a pension plan would have access to paid emergency leave.
Employer Tax Credits
The measure would provide payroll tax credits to employers to cover wages paid to employees while they are taking time off under the bill’s sick leave and family leave provisions, through the end of 2020. The tax credits would equal 100% of qualified wages paid, subject to the caps noted below. In addition, wages paid by reason of these sick leave and family leave provisions would not be subject to the employer’s share of FICA tax (i.e., these payments would not be considered to be wages for this purpose).
The credits would be claimed against the employer’s share of FICA tax, which funds Social Security, and is a 6.2% levy on wages imposed on both employers and employees. The employees’ share wouldn’t be affected by the bill, and thus are not refundable. The sick leave credit for each employee would be for wages of as much as $511 per day while the employee is receiving paid sick leave to care for themselves, or $200 if the sick leave is to care for a family member or child if their school is closed. The limit in a given quarter would be 10 days per employee less the aggregate number of days taken into account for all preceding calendar quarters.
The family leave credit for each employee would be for wages of as much as $200 per day while the employee is receiving paid leave, or an aggregate of $10,000.
The credit would be refundable if it exceeded the amount the employer owed in FICA tax on a quarterly payroll tax filing. The Department of the Treasury and IRS are in the process of preparing guidance for how to claim this refund as quickly as possible. Any credit claimed on a quarterly or refundable filing will increase the taxable income of the employer.
Employers couldn’t receive the credit if they’re also receiving a credit for paid family and medical leave established by the 2017 tax overhaul (Public Law 115-97). In addition, state and local governments are not eligible to claim these credits.
The Department of the Treasury would need to issue regulations or guidance to ensure employers don’t manipulate the credit, to minimize compliance and record-keeping burdens, to waive penalties for underpayments in anticipation of the credit, and to establish a process to recapture credits when there’s an adjustment.
Self-Employed Tax Credit
The measure would provide a similar refundable credit against self-employment tax. It would cover 100% of self-employed individuals’ sick-leave equivalent or 67% if they were taking care of a sick family member or child if their school was closed.
Their sick-leave equivalent amount would be the lesser of their average daily self-employment income, or $511 per day if caring for themselves or $200 if caring for a family member. It would be available for 10 days. Self-employed individuals could receive a family leave credit for as many as 50 days for the lesser of $200 or their average daily self-employment income.
Self-employed individuals would have to submit documentation, as required by The Department of the Treasury. The measure would establish alternate requirements for self-employed individuals who also receive sick-leave pay from an employer. It would also establish rules for the credit to be provided in U.S. territories.
We will continue to monitor the status of this bill, and will provide updates as quickly as possible, as warranted by any changes made. Please contact your GBQ representative if you have questions, and/or if you would like to discuss any of this information.