by Romeo Chicco
Posted on March 29, 2020
With the passage of the Families First Coronavirus Response Act, two new refundable payroll tax credits are available to employers with fewer than 500 employees.
These refundable credits are designed to fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.
The Act allows two paid leaves for the employee’s own health needs or the care of family members. This will enable employers to keep their employees on payroll and ensure that employees are not forced to choose between their paycheck and the public wellbeing.
Companies with fewer than 500 employees, up to 2 weeks (10 days/80 hours) of paid family and sick leave to deal with coronavirus-related issues, including staying home to care for children whose schools are closed. The employee must be unable to work, or telework, due to a need for leave under one of the following six reasons;
Employers will receive a refundable payroll tax credit based on the employee’s regular rate of pay, but is limited to $511 per day and $5,110 total for employees based on their own condition. (Items 1-3 above.)
Employers will receive a refundable payroll tax credit based on two-thirds employee’s regular rate of pay, but is limited to $200 per day and $2,000 total for employees acting as a caregiver. (Items 4-6 above.)
Payroll tax credit includes employer health insurance and taxes related to wages paid under the Act.
Variable-hour employees will receive paid leave based on the average number of hours worked over the previous 6 month period ending on the date on which the employee takes the paid leave.
Part-time employees will receive paid leave in an amount of the average number of hours they work over a two-week period.
Exceptions exist for healthcare providers or emergency responders where the employer may exclude the employee from the Emergency Paid Sick Leave requirement.
Employers with less than 50 employees can file for exemption if the viability of their business would be in jeopardy. Form to file for exemption is not yet available. Failure to pay Emergency Paid Sick Leave will be found in violation of paying minimum wages under Section 6 of the FLSA.
This credit will remain in effect for Emergency Paid Sick Leave wages paid until December 31st, 2020
This is an expansion of the existing FMLA on a temporary basis. Currently, FMLA only applies to companies with 50 or more employees, but this Act will change those employers covered to fewer than 500 employees. Meaning if you have one employee, Emergency FMLA now applies to you. It also lowers the eligibility requirement where employees just need to have worked for at least 30 days prior to the designated leave.
Employees may take up to 12 weeks of job-protected leave if they are unable to work or telework, or to care for the employees child (under 18) if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency.
The first 10 days of Emergency FMLA may be unpaid, but the employee may elect to substitute any accrued-paid leave the company offers. After the 10 day period, the employer must pay full-time employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled.
If the employee has a variable schedule and the employer is unable to determine the number of hours the employee would have worked, the employee would use the following calculation to determine the hours:
Pay is limited to $200 per day and $10,000 in the aggregate per employee.
Employers will receive a refundable payroll tax credit based on the employer costs for providing the Emergency Family Medical Leave as well as the employer’s contributions for health insurance premiums and employer payroll taxes for the period of leave related to wages paid under the Act, uncapped.
Employers with fewer than 50 employees can be exempt from the requirements when the imposition of such requirements would jeopardize the viability of the business as a going concern.
Under the Act, an employee should receive a restoration of their position. However, if the employer has fewer than 25 employees the employer is not required to restore the employee’s position if the following conditions are met:
The Emergency FMLA will remain in effect until December 31st, 2020.