Covid-19 Financial Relief: Families First Coronavirus Response Act
Families First Coronavirus Response Act (FFCRA)
The Families First Coronavirus Response Act (FFCRA; “The Act”) was signed into law on March 18, 2020 and responds to the growing health and economic crises with provisions for paid sick leave, free testing, expanded unemployment benefits and more.
FFCRA also generally requires employers with less than 500 employees to provide a certain amount of paid sick and paid leave to employees affected by COVID-19, and provides affected employers with a corresponding employment tax credit. In addition, the FFRCA temporarily expands Family and Medical Leave Act (FMLA) requirements to offer protected leave related to the coronavirus.
The paid sick leave requirements take effect 15 days after enactment (April 2, 2020) and they expire on December 31, 2020.
The legislation follows a first emergency funding bill, which allocated roughly $8 billion for coronavirus prevention, preparation and response efforts. Congress and the Administration are now working on “phase three” to further stem the impact of the outbreak on families and the economy.
Highlights of FFCRA include:
- Expanded food assistance and unemployment benefits through supplemental appropriations for health programs.
- Expanded unemployment benefits through larger federal grants to the states to process and pay claims.
- Healthcare plans, including high deductible health plans, to provide for COVID-19 testing at no cost to the insured. This includes diagnostic testing, including visits to a provider, urgent care center or emergency room. There is also a waiver of Medicare, Medicare Advantage, Medicaid and CHIP cost-sharing. In conjunction with previously issued IRS guidance, a participant in a high deductible health plan receiving this benefit would still be eligible to contribute to a Health Savings Account on a tax-advantaged basis.
- Emergency Paid Sick Leave. A requirement that employers with 500 or fewer employees and government employers provide Emergency Paid Sick Leave to employees due to any of the following reasons:
- Subject to a quarantine related to COVID-19;
- Advised to self-quarantine related to COVID-19;
- Experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- Caring for an individual who is subject to quarantine;
- Caring for a son or daughter if the school or child-care provider is closed;
- Any other substantially similar condition as specified by the Department of Health and Human Services.
Full-time employees are entitled to 10 days of sick leave and part-time employees are entitled to the typical number of hours that they work in a typical two-week period, paid at two-thirds of the employee’s regular rate.
The sick leave amount is calculated based on the employee’s “required compensation” (i.e., the largest of (i) regular rate of pay, (ii) federal minimum wage, or (iii) local minimum wage) multiplied by the number of hours normally scheduled to work, but capped at (i) $511 per day ($5,110 in total) for those described above in items 1-3; and (ii) $200 per day ($2,000 in total) for other employees.
- Emergency Family and Medical Leave Expansion Act (Emergency FMLA Act). Employers with 500 or fewer employees and government employers must provide up to 12 weeks of job-protected Emergency Family and Medical Leave for a “qualifying need related to a public health emergency.” The technical corrections made to the original House bill limit the definition of a qualifying need to caring for a son or daughter under age 19 if their school or place of care has been closed or the child care provider is unavailable due to a public health emergency.
- Paid Leave is calculated for an employee at an amount not less than 2/3 of the employee’s regular rate of pay (using the Fair Labor Standards Act of 1938) multiplied by the number of hours the employee would normally be scheduled to work. Under a Technical Corrections Act clarification, this amount of required paid leave cannot exceed $200 per day and $10,000 in total for an employee.
- The law funds the Paid Sick Leave and Paid Family and Medical Leave for employers (including tax-exempt employers) through a refundable credit against payroll taxes. Self-employed taxpayers can receive a benefit through a refundable credit against income taxes for periods during which work cannot be done.
We are closely monitoring all COVID-19 developments. If you have any questions, please do not hesitate to contact your Warady & Davis LLP advisor at 847-267-9600.