Paid leave and the Families First Coronavirus Response Act

Update: Employers are no longer required to provide paid leave under the FFCRA, but may do so voluntarily. Below is a quote from the US Department of Labor: 

“The Wage and Hour Division is attuned to the critical need for American workers and employers to understand this relief program as they deal with the effects of this crisis on the workplace,” said DOL Wage and Hour Division Administrator Cheryl Stanton in a statement released Dec. 31. “The guidance we issued today provides clarity around some of the novel issues that the FFCRA’s expiration raises.”

While it is no longer required to provide paid leave to employees, you can still continue to receive payroll tax credits for provided paid leave until March 31, 2021. This means that qualified employers can take a payroll tax credit in the first quarter of 2021 if:

• An employee took mandatory leave in 2020
• You voluntarily provide paid leave to an employee for one of the qualifying reasons in the first quarter of 2021.

On March 18, the Families First Coronavirus Response Act (FFCRA) was signed into law to help employees at small businesses get through the turmoil sparked by COVID-19.

The FFCRA has a lot packed inside, including free COVID-19 testing and expanded unemployment benefits. For small businesses with hourly workers, the most pressing sections are the new emergency paid sick leave and paid family leave requirements that go into effect on April 1.

The new law is long, and it might not all apply to your business. This article will break down the main things to know and do about the FFCRA’s leave requirements if you run a company with hourly staff.

Overview of the two new paid leave benefits under the Families First Coronavirus Response Act

Two paid leave benefits were introduced in the Families First Coronavirus Response Act—emergency paid sick leave and emergency paid family leave.

Employers with fewer than 500 employees are required to offer these benefits from April 1, 2020 until December 31, 2020. (It’s a temporary requirement to help people weather the storm, meaning you won’t have to offer this emergency leave in 2021.) 

You may not be required to offer these emergency benefits: 

• If your business has fewer than 50 employees, and the paid leave requirements “jeopardize the viability of the business.” 
• If you’re an emergency responder or health care provider and want to exclude certain employees from these provisions. However, the exemption for health care workers is optional, and the DOL encourages employers to be judicious when denying leave.

The Labor department hasn’t released further details about either scenario as of the publish date of this article. I’ll update this piece as we learn more about both exemption reasons.

All types of employees who work at eligible businesses are covered under the Families First Coronavirus Response Act—exempt and nonexempt and hourly and salaried.

I’ll get into the details in the next section, but here’s what the types of leave look like, at a glance:

Keep in mind that this emergency paid leave doesn’t replace your current PTO policy. It’s added on top of any current benefits you offer your team. Once these paid leave benefits are in effect, you can’t edit your existing leave benefits to try to avoid these new mandates.

Emergency paid sick leave under the FFRCA

Let’s break it down.

How much paid sick leave can eligible employees receive? 

• Full-time employees are eligible to receive up to two weeks (80 hours, which equals 10 days) of paid sick leave that’s paid at their regular rate of pay. The regular rate of pay is calculated by dividing the total wages your employee earned (including tips, commissions, or piece rate work) in any workweek by the total hours they worked.
• Part-time employees are eligible to receive paid sick leave that’s equal to the average number of hours they work over a two-week period. You can calculate that two-week number by looking at the average hours they worked over the previous six months. 

If you have hourly employees with variable schedules, the daily paid sick leave rate for those two weeks is the average hours your employee was scheduled per day over the previous six months. 

If your part-time employee hasn’t worked for at least six months, you can average the number of hours a day you would’ve typically scheduled that employee for.

Here are some example calculations for each scenario described:

When could an employee take paid sick leave for themselves?

The Families First Coronavirus Response Act outlines three main reasons:

• Quarantine or isolation requirement because of a local, state, or federal COVID-19 order
• A recommendation by a health care provider to quarantine
• Signs of COVID-19 symptoms

How much do I pay employees who take paid sick leave for themselves?

You have to pay them whatever amount is greatest: 

1. Their regular rate of pay
2. Their state or city minimum wage 
3. The federal minimum wage

There’s a cap of $511 a day in paid sick leave pay, which translates to $5,110 total across those two weeks.

When could an employee take paid sick leave for a family member?

The Families First Coronavirus Response Act also allows employees to take leave if they’re caring for a family member because of COVID-19 and they can’t work (including remotely). They include these two situations:

• If they’re caring for a family member who is quarantined or self-quarantined.
• If they’re taking care of a biological or adopted child, foster child, or stepchild whose school or daycare is closed or unavailable because of coronavirus orders. (This is the only situation where an employee could get up to 12 weeks of FMLA leave, in parallel with emergency paid sick leave, which I’ll get into below.)
• If they’re taking care of a child that may not be their own, but they take care of on a regular basis, like grandparents, aunts, uncles, or a neighbor.

How much do I pay employees who take paid sick leave for family members?

If your employee is taking leave for either of the covered reasons above, you’re required to pay them two-thirds (66.67%) of their regular rate, which is capped at $200 a day. That translates to $2,000 total across two weeks.

Expanded family and medical leave under the Families First Coronavirus Response Act

Under the Families First Coronavirus Response Act, small employers are also required to give eligible employees up to 12 weeks of paid family leave if they can’t work (including remotely) because their kids’ school or daycare is closed or unavailable because of this public health emergency. This is the paid leave defined in the Emergency Family and Medical Leave Expansion Act.

The first 10 days of the family leave can be unpaid, and your employees can choose to use their accrued PTO (vacation, personal, or sick leave) during this time. You can also require them to use their PTO during the 10-day period.   

If your employee hasn’t taken their two weeks of emergency paid sick leave under the FFCRA, they can receive that sick leave pay during this initial period.

Starting on the 11th day of leave, your employee needs to be paid at two-thirds their regular rate of pay. That amount can’t go beyond $200 a day or $10,000 total ($200 x a maximum of 10 weeks).

Which employees are eligible for emergency paid family leave?

Eligible employees need to have worked at least 30 calendar days at your business and have a child that’s under 18 years of age. 

3 common questions about the FFCRA’s paid leave provisions

Now, let’s answer a few common questions employers are asking about the Families First Coronavirus Response Act.

Are these two types of paid leave job-protected?

It depends on how big your business is. 

For companies with 25 or more employees

If you have 25 or more people on staff, both types of emergency paid leave are job-protected, meaning an employee has to get the same or similar position when they return. That typically means they have to receive the same pay, benefits, and other conditions.

For companies with fewer than 25 employees

If you have fewer than 25 employees, you aren’t required to follow this requirement if your employee’s position is obsolete because of operational changes caused by coronavirus. Or in other words, if you have to shut down or cut back part of your business, you don’t have to protect your employee’s role if a few conditions are met.

Specifically, you need to make a “reasonable effort” to protect their job, and if you can’t, you have reach out to them for up to a year if a similar role becomes available.

How can I afford to pay for this right now?

The leave is 100% covered, but you may be responsible for paying out the leave before getting reimbursed. If you’re unable to front the paid leave costs, you can request an advance from the IRS by submitting a claim form, which will be available soon.

The Families First Coronavirus Response Act includes a refundable payroll tax credit for the paid leave to help employers foot the bill. Business owners can take a payroll tax credit each quarter that equals 100% of the paid sick leave or paid family wages they have to pay out. The tax credit is put up against the employer’s portion of Social Security taxes.

Keep in mind that if you pay more than the pay cap for each type of emergency leave, you won’t receive an additional tax credit for that extra amount paid. 

How else do I comply with the Families First Coronavirus Response Act’s paid leave provisions?

There are a few important details to remember about the FFRCA:

• By April 1, you need to post a physical notice about the FFCRA in your workplace or distribute it electronically through email or an online portal. You can download the FFCRA poster here. For more details about this requirement, check out the DOL’s FAQ page.
• Keep documentation in case your business gets audited. For extended family leave, this might include a notice on a school’s website or an email from a school official explaining more about the closure.
• These new provisions aren’t available to employees who are furloughed, have reduced hours, or work at businesses that are closed (because of shelter-in-place mandates or from the economic slowdown).
• You can’t fire anyone for taking emergency paid leave.
• Requiring employees to provide a doctor’s note or an official notice from a closed school or daycare is not allowed.
• You can’t require employees to exhaust their PTO banks first before taking the emergency paid sick leave—you can require them to do this for the paid family leave. For paid sick leave, you can ask employees to use their accrued PTO once the paid sick leave is exhausted, if they need that time.
• Small employers are only potentially exempt from childcare leaves provided by the EPSL and EFMLA, like if providing leave would cause the employer to cease functioning at a minimal capacity. For example, if a single employee asks for intermittent childcare leave one day per week, but can work from home the rest of the week, it’s not likely that allowing the leave would be a financial burden that causes the employer to cease operations, and could be illegal for that employer to say they will not be granting any childcare leaves.
• It goes without saying, but you can’t retaliate or discriminate against an employee for using either type of leave benefits.
• None of the emergency leave can roll over, and it expires on December 31, 2020.

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It’s important to remember that the paid leave requirements in the FFCRA are temporary.

We’re going through a temporary moment of time, and because of that reality, parts of the act are still being explained and expanded upon. I’ll continue to update this article as I hear of more guidance that’s useful to small employers.