As you are aware on March 18, 2020, the Families First Coronavirus Response Act was signed into law. Yesterday, the Department of Labor issued additional guidance regarding the Emergency Paid Sick Leave portion of the Act. This memo outlines guidance for the Emergency Paid Sick Leave Act only. This law requires all public employers and private employers with fewer than 500 employees (measured at the time the leave is taken), to provide all employees with up to two (2) weeks of paid sick leave for qualifying COVID-19 related absences. The Department of Labor’s Wage and Hour Division will be administering and enforcing the Act.
As of March 25, 2020, the following updated guidance from the Department has been received:
- Effective date is April 1, 2020.
- The paid leave under this Act cannot be carried over and it expires December 31, 2020.
- The leave is available for immediate use and may be used by an employee regardless of how long they have been employed.
- Full Time employees are eligible for up to Eighty (80) hours of paid sick leave, paid at the employee’s “regular rate” of pay. Part time employees’ eligibility is calculated based on the average number of hours worked in a two-week period and is also paid out at the employee’s “regular rate” of pay.
- Eligibility – an employee is unable to work or telework due to a need for leave for the following reasons:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19.
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19.
- The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.
- The employee is caring for an individual who is subject to an order as described in (1) or has been advised as described in (2).
- The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID–19 precautions.
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
- Pay – the Act caps pay depending on the circumstances the employee needs to take leave under the Emergency Paid Leave Act.
- If the absence is for the employee him/herself, the employee gets their actual rate of pay or the applicable minimum wage, whichever is greater, with a cap of $511 per day or $5,110 total.
- If the absence is for the care of others (i.e. out of work to take care of children due to a school closure), the cap is 2/3 the employee’s minimum regular rate of pay or the applicable minimum wage, whichever is greater, with a cap of $200 per day or $2,000 total.
- Tax Credits – If you are a covered employer with eligible employees, you can retain federal payroll taxes to help offset the Emergency Paid Sick Leave. You are entitled to a refundable credit against Social Security and Medicare taxes for up to ten (10) days of each employee’s compensation. The daily tax credit is limited to either $511 or $200. Additionally, wages paid as a result of the Emergency Sick Leave Act should not be included for purposes of determining Social Security taxes owed. Finally, an allowance is provided for credit for certain qualified health plan expenses. “Qualified Health Plan Expenses” is defined as amounts paid or incurred by the employer to provide and maintain a group health plan but only to the extent that such amounts are excluded from the gross income of employees. There is a denial of double benefit restriction so we suggest consulting with your finance professionals on the tax credit. There is an exception contained in subparagraph (e)(4) of Section 7001 excluding the tax credit for any government of the State, or political subdivision thereof (i.e. local government).
- Employers cannot require employees to use other paid time off (vacation, sick, personal, compensatory time, etc.) prior to the emergency sick leave provided by this Act.
- The Act allows employers of “emergency responders” (i.e. police and fire) and “health care providers” (as defined in the Family Medical Leave Act) to exclude these employees from eligibility. We expect more information to be released regarding the definition of emergency responders.
- Penalties of this Act will be considered minimum wage violations under the Fair Labor Standards Act which includes lost wages, liquidated damages, and attorneys’ fees and costs. Intentional violations may be assessed a $10,000 fine.
- Notice must be provided to the employees. A copy of the Department of Labor’s Employee Rights Poster may be found at the following website:
https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf