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Business Owner Q&A: New COVID-19 Requirements

Warady & Davis LLP has compiled a list of questions and answers to help you navigate and manage the new requirements of the Families First Coronavirus Response Act (FFCRA).

UPDATE: 3.26.2020 – DOL Issues Emergency Paid Sick Leave Act (EPSLA) and Emergency Family Medical Leave Act (EFMLA) Guidance.  DOL guidance provides good news for employers struggling with state ordered closures.  It appears based on guidance points below that employers do NOT have to pay two weeks EPSLA due to lay-offs or state ordered closures either before or after FFCRA effective date (April 1, 2020).  Instead, employees may be eligible for expanded unemployment benefits

Please see our BUSINESS OWNER COVID-19 RESOURCE CENTER for timely information on lay-offs, unemployment, emergency loans and more.

 

On March 18, 2020, Congress passed, and the President signed into law, the Families First Coronavirus Response Act, an economic stimulus plan intended to cushion the impact of the COVID-19 outbreak on Americans and introducing paid sick leave and an expanded family and medical leave act to the nation’s employers. The Act includes many provisions applicable to employers, such as paid sick leave for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19.

Two provisions provide paid leave to employees forced to miss work because of the COVID-19 outbreak: (1) an emergency expansion of the Family and Medical Leave Act (FMLA); and (2) a new federal paid sick leave law.  Each provision has its own qualifying criteria.

Following are key questions and answers for EACH provision.

The Emergency Paid Sick Leave Act

Q. When does the Emergency Paid Sick Leave go into effect?

A. This program will become effective on April 2, 2020, and there is no expiration date.

Q: How do I know if my company is impacted?

A: The Emergency Paid Sick Leave Act (the paid leave provision) requires employers with fewer than 500 employees and public employers with at least one employee to provide employees with up to two weeks of paid sick leave. Employers of health care providers or emergency responders may elect not to provide this leave to those specific employees. In addition, the Secretary of Labor may exempt small businesses (defined as fewer than 50 employees) if the required leave would jeopardize the viability of their business.

Q: We are a small business (fewer than 50 employees). How can we apply for an exemption?

A: The latest DOL Guidance states:  To elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations..

Q: How long do employees need to be working at my company before they get emergency paid leave?

A: All employees, regardless of their tenure with the organization or full- or part-time status are eligible to receive this benefit.

Q: When do covered employers need to provide emergency paid leave?

A: Covered employers are required to provide emergency paid leave to an employee who is unable to work or work remotely because:

  1. the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;  The DOL clarified in its recent FFCRA guidance that State ordered closures and lay-offs DO NOT qualify employees for EPSLA.  Instead, they may be entitled to unemployment. See DOL Guidance.
  2. the employee has been advised by a health care provider to self-quarantine because of COVID-19;
  3. the employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
  4. the employee is caring for an individual subject (or advised) to quarantine or isolation;
  5. the employee is caring for a son or daughter whose school or place of care is closed, or childcare provider is unavailable, due to COVID-19 precautions; or
  6. the employee is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and

NOTE: Caring for another who is subject to an isolation order or advised to self-quarantine as described above is not limited to family members.

Q: How much pay are employees entitled to?

A: Covered employers are required to provide employees with two weeks of paid sick leave.

  • Full-time employees: 80 hours at their regular rate of
  • Part-time employees: the number of hours that the employee works, on average, over a two week

NOTE: Once the employee returns to work the employer is not required to provide any further emergency paid sick leave.

Q: Are the payments subject to caps?

A: Yes, payments are capped at $511 a day ($5,110 in total) for dealing with an employee’s own illness or quarantine (reasons 1, 2 and 3 above). Employees who are caring for an individual affected by COVID-19 and those whose children’s schools have closed (reasons 4, 5 and 6 above) receive up to two-thirds of their pay, and that benefit is limited to $200 a day ($2,000 in total).

Q: Do we still need to provide emergency paid sick leave if we have existing paid leave via sick days and PTO?

A: Yes. The emergency leave is in addition to any paid leave provided by employers.

Q: When can employees start using emergency paid leave?

A: The effective date is April 2, 2020. Any paid leave provided before the law is enacted cannot be credited against the employee’s paid leave entitlement.

Q: Do employees need to exhaust their PTO or sick leave before using emergency paid leave?

A: No. Employers may not require employees to exhaust their current sick leave, PTO or similar benefit before using this emergency paid sick leave.

Q: Will employees be entitled to this benefit in 2021?

A: No. Hours cannot be carried over after December 31, 2020 (when the legislation sunsets).

Q: Are employers eligible for reimbursement for providing these additional paid benefits to employees?

A: To ease some of the financial burden this will place on employers, a limited refundable tax credit will be allowed against the tax imposed by section 3111(a) (the employer portion of Social Security taxes), equal to payments made to the employee. For example, under the Emergency Paid Sick provision, employers can claim up to $511 or $200 for any day of absence for the reasons outlined above, to a maximum of ten days per employee for the year. Please consult your tax attorney or accountant for specific guidance on caps and credits.

Q: How does the refundable tax credit apply to tax-exempt employers?

A: In the past, other employer tax credit programs have been claimed as a credit against social security tax on all wages paid to employees, for tax-exempt employers. It is uncertain whether the IRS/SSA will follow suit and handle the Families First credits similarly; we anticipate employers will receive additional guidance on this.

Emergency Family and Medical Leave Expansion Act (EFMLA)

 

Q. When does the Emergency Family Medical Leave Expansion Act go into effect?

This program will become effective on April 2, 2020, and remain in effect until December 31, 2020.

Q: How do I know if my company is impacted by EFMLA?

A: The EFMLA expands the protections of the Family and Medical Leave Act (FMLA). The EFMLA requires employers with fewer than 500 employees and public employers with at least one employee to provide paid benefits in certain situations. Employers of health care providers or emergency responders may elect not to provide this leave to those specific employees. In addition, the Secretary of Labor may exempt small businesses (defined as fewer than 50 employees) if the required leave would jeopardize the viability of their business.

Q: We are a small business (fewer than 50 employees). How can we apply for an exemption?

A: At this time, guidance has not been issued on this aspect, however it is expected by the April 2nd effective date.

Q: How long do employees need to be working at my company before they are eligible to receive EFMLA?

A: Any full-time or part-time employee that has been on the employer’s payroll for 30 days prior to taking the leave is eligible. NOTE: This is a significant departure from the FMLA’s usual requirement that the employee work for the employer for 12 months and 1,250 hours in the 12 months prior to taking leave.

Q: When do covered employers need to provide EFMLA?

A: Employees will be entitled to take up to 12 weeks of job-protected leave if an employee is unable to work (or remote work) due to caring for the employee’s son or daughter (who is under 18) because the child’s school or place of care has been closed or his or her childcare provider is unavailable due to the public health emergency.

Q: How much pay are employees entitled to under EFMLA?

A: The EFMLA provides for a combination of unpaid and paid leave. The first 10 days of EFMLA may be unpaid. An employee may choose to take any existing pay benefit (i.e. PTO or sick leave) during the 10-day unpaid

period. After ten days of unpaid leave, employees are entitled to 10 weeks of job-protected leave of at least two- thirds their usual pay. The cap of this entitlement is $200 per day ($10,000 in the aggregate). Part-time employees are entitled to be paid based on the average number of hours worked for the six months prior to taking the leave.

Q: Have the employee protections changed?

A: As with the traditional FMLA, the EFMLA is job-protected leave. However, EFMLA’s job restoration requirements will apply to employers with 25 or more employees. For employers with less than 25 employees, job restoration is not required if:

  • The employee takes EFMLA;
  • The position held by the employee does not exist due to economic conditions or other changes in operating conditions that affect employment and are caused by a public health emergency during the period of leave;
  • The employer makes reasonable efforts to restore the employee to an equivalent position

NOTE: If no equivalent positions are available at the time the employee tries to return from leave, the employer must attempt to contact the employee if an equivalent position becomes available in the next year.

Q: What is the effective date and will employees be entitled to this benefit in 2021?

A: The EMFLA is effective on April 2, 2020, and will remain in place until the end of 2020, when the legislation sunsets.

Q: Are employers eligible for reimbursement for providing these additional paid benefits to employees?

A: To ease some of the financial burden this will place on employers, a limited refundable tax credit will be allowed against the tax imposed by section 3111(a) (the employer portion of Social Security taxes), equal to payments made to the employee. For example, under the EFMLA, employers can claim up to $200 for each day of qualifying leave up to $10,000 per employee for the year. Please consult your tax attorney or accountant for specific guidance on caps and credits.

Q: How does the refundable tax credit apply to tax-exempt employers?

A: In the past, other employer tax credit programs have been claimed as a credit against social security tax on all wages paid to employees, for tax-exempt employers. It is uncertain whether the IRS/SSA will follow suit and handle the Families First credits similarly; we anticipate employers will receive additional guidance on this.

We are Here For You

The COVID-19 situation is fluid and rapidly evolving.  We know that many of you have questions and concerns during this unprecedented time.  Please be sure to consult your attorney and do not hesitate to reach out to your Warady & Davis business advisor for help and guidance.    Call 847-267-9600 or email info@waradydavis.com.

 

SOURCE:  www.MRANET.org

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