On March 18, 2020, the Administration signed the Families First Coronavirus Response Act. Within the act were a number of provisions for employers.

General Group Health Plan Rules

Required coverage for COVID-19 Testing:

Group health plans will be required to covered by virtually all private group health plans at no cost share for the employee. While regulatory guidance is still pending on some of the details, funds are being allocated to help offset the cost to plans to implement this requirement. Additionally, previous guidance signaling that HSA eligibility will not be impacted by this rule.

Unknown at this time is whether actual treatment expenses for COVID-19 will be required to be covered at no cost share.

Emergency Paid Sick Leave Act

Effective: April 2, 2020- December 31, 2020

Waiting Period: There is no waiting period. Emergency paid sick leave is available as soon as the law goes into effect April 2, 2020.

Covered Employers:

  • Employers with under 500 employees
  • Public Agencies

While the Act does not specify how to determine the 500-employee threshold, it is reasonable to believe the DOL would utilize the threshold counts used under the FLSA and/or FMLA guidelines.

Covered Employees:

All employees, regardless of length of time worked for the employer.

Amount of Time:

Full-time employees are entitled to 80 hours of emergency paid sick leave. Part-time employees or employees who work an irregular number of hours are entitled two-weeks’ worth of pay based on average number of hours worked per week in the sixmonths prior to the leave. For employees who have not yet worked for the employer for six months, the number of hours should be based on the average number of hours the employee is typically scheduled for a two-week period.

Reasons for Paid Sick Leave:

Employee’s may take emergency paid sick leave if the employee is:

  1. Subject to federal, state, or local quarantine or isolation due to COVID-19
  2. Advised by a health care professional to self-quarantine due to COVID-19
  3. Seeking a medical diagnosis due to symptoms relating to COVID-19
  4. Caring for an individual who is quarantined due to a federal, state, or local order or due to a physician’s order
  5. Caring for their child due to the child’s school or care facility being closed
  6. Experiencing any other substantially similar condition specific by the Secretary of Health and Human Services in conjunction with the Secretary of Treasury and Secretary of Labor

Pay Rate:

  • For reasons 1-3 above, employees are entitled to 100% of their average pay, up to $511 per day/ $5,110 total.
  • For reasons 4-6, employees are entitled to 2/3 of their average pay, up tot $200 per day/ $2,000 total.

Overlap with Other Employer Provided Time Off:

This law requires employers to allow employees to first use time off under the emergency paid sick leave and then use any remaining accrued paid leave under other employer policies. Unlike under other laws, employers cannot require employees to first exhaust other accrued, unused time prior to taking leave under emergency paid sick leave.

Carryover:

There is no carryover provision. This law expires as of December 31, 2020, at which point any unused time would be forfeited.

What About Time Off Prior to the Effective Date?

Any paid leave provided prior to the effective date of April 2 cannot be counted against the employee’s paid leave entitlement under this law.

Tax Credits for Employers:

There are tax credits allowed against the employer portion of Social Security taxes under IRC section 3111(a). Employers will be reimbursed if their costs for qualified sick leave or qualify family leave exceeds the wages they would owe.

Employers may receive a refundable tax credit of 100% of the qualified sick leave time for each quarter that is paid under the Emergency Paid Sick Leave Act, subject to the applicable daily employee cap for up to 10 days per eligible employee.

Employers should consult their tax advisors with specific guidance on how the tax credit may apply to them.

Emergency Family and Medical Leave Expansion Act

Effective: April 2, 2020- December 31, 2020

Waiting Period: Employees have a 10-day, unpaid waiting period.

Covered Employers:

  • Employers with under 500 employees
  • Public Agencies

As with the Emergency Paid Sick Leave Act, this Act does not specify how to determine the 500-employee threshold, it is
reasonable to believe the DOL would utilize the threshold counts used under the FLSA and/or FMLA guidelines.

Covered Employees:

All employees, both full-time and part-time, who have been on the employer’s payroll for 30 days are eligible to take time under the Emergency Family and Medical Leave Expansion Act.

Employers can exclude employees who are health care providers or emergency responders. Employers with under 50 employees may be exempt if the required leave would jeopardize the viability of their business.

Amount of Time:

Eligible employees may take up to 12 weeks of job-protected leave under the Act.

Reasons for Leave Under the Emergency Family and Medical Leave Expansion Act:

Employees may take leave under this expansion due to a “qualifying need related to a public health emergency.” A “qualifying need” has been limited an employee being unable to work or telework in order to care for the employee’s minor child if the child’s school or place of care is closed due to a public health emergency. It is important to note that the final version that was signed does not include additional COVID-19 related reasons that were in the initial version of the bill that passed through the House.

Pay Rate:

The first 10 days (two weeks) of time under the expansion are unpaid. However, employees may opt to use accrued, unused paid time they may have, including time under the Emergency Paid Sick Leave Act. Effectively, in most cases, this waiting period will likely be paid, just not under the emergency expansion of FMLA. It is unclear if employers may require the use of accrued paid leave.

The remaining 10 weeks are paid at 2/3 of the employee’s average pay for the number of hours that the employee would
typically be scheduled to work, with a maximum of $200 per day/ $10,000 total.

Job Protections and Restoration:

Emergency FMLA expansion provides the same job-protections that standard FMLA does. For employers unfamiliar with the requirement, employees may maintain their benefits and continue to pay the employee-portion of the premiums while on leave. Additionally, employees must be restored to the same or equivalent position upon the employee’s return. However, the expansion does provide an exception for those employers with less than 25 employees. For employers with less than 25 employees, if the employee’s position no longer exists due to operational changes due to a public health emergency, they may not have to restore the employee’s job. However, if that occurs, the employer must make a reasonable effort for one-year to first contact impact employees if they are qualified for an equivalent position that becomes available.

Tax Credits for Employers:

There are tax credits allowed against the employer portion of Social Security taxes under IRC section 3111(a).

Employers may receive a refundable tax credit of 100% of the qualified time for each quarter that is paid under the Emergency Family and Medical Leave Expansion Act, subject to the applicable daily and total per employee cap.

Employers should consult their tax advisors with specific guidance on how the tax credit may apply to them.

Emergency Unemployment Insurance Stabilization Act of 2020

This part of the bill provides $1 billion for emergency grants for states for unemployment insurance under certain conditions. Most importantly for employers, this portion of the Act requires employers to provide notification to employees of potential unemployment benefit eligibility due to being laid off, furloughed, termination, or otherwise being impacted by a reduction in force (RIF).

Questions

While this bill provides some answers and provisions, several questions are left unanswered. There continue to be many moving pieces and daily changes relating to the COVID-19 pandemic. Assurance will continue to monitor the situation and will be updating our Coronavirus Resource Page as changes occur. 

Information contained herein is not intended to constitute tax or legal advice and should not be used for purposes of evading or avoiding otherwise applicable regulatory responsibilities as issued by the federal or state government(s) and/or taxes owed under the Internal Revenue Code. You are encouraged to seek advice from your legal or tax advisor based on your circumstances.