Over the weekend, the U.S. House of Representatives passed the “Families First Coronavirus Response Act” by a wide margin. The bill now heads to the Senate where it is expected to pass soon, with some possible changes, and be signed by President Trump. The bill has several critical components for employers, particularly in the areas of paid FMLA, paid sick leave, and unemployment insurance. The bill also provides tax credits to assist employers making sick time and leave payments, as well as potential exemption for businesses under 50 employees.
Here is a summary of the bill’s most important provisions for employers (but remember they are not in effect until the president signs the final bill approved by the Congress):
Expanded and Paid FMLA
The House’s bill significantly expands FMLA coverage, which requires employers to provide job-protected leave for employees, to all employers of fewer than 500 employees. Employees who have worked at least 30 days before the first day of leave would be entitled to take up to 12 weeks of emergency FMLA for the following reasons:
- To comply with a requirement or recommendation to quarantine due to exposure to or symptoms of coronavirus COVID-19;
- To care for an at-risk family member who must quarantine due to exposure to or symptoms of coronavirus; and
- To care for a child of an employee if the child’s school or place of care has been closed, or the childcare provider is unavailable, due to public emergency.
The first 14 days of leave would be unpaid. After the initial 14-day period, the employer must pay employees at two-thirds their regular rate of pay. The pay requirement only applies to the emergency FMLA reasons set out above.
Paid Sick Leave
Employers with fewer than 500 employees will be required to provide employees with 80 hours of paid sick leave at full pay for the same reasons set forth above (with the exception of two-thirds the regular rate of pay for childcare). Full-time employees get full pay. Pay for part-time employees is based on average wages.
The legislation provides $1 billion in 2020 for emergency unemployment insurance (UI) relief to the states.
Employers who are required to make emergency FMLA and sick time payments for the above reasons will be eligible for tax credits equal to 100 percent of qualified paid sick and family leave wages an employer pays for each calendar quarter. This is an area where tax professionals will be able to provide more guidance.
Most of these provisions take effect 15 days after the law is enacted and expire on December 31, 2020. There are many questions about how this unprecedented bill will work in practice. We will be following it closely and will provide more details as they emerge. This will certainly be the major focus of our webinar, Coronavirus Q&A for Employers, which is scheduled for Friday, March 20 at noon. Click here for register for our webinar.