On March 18, 2020, President Trump signed into law the Families First Coronavirus Relief Act. In addition to providing free COVID-19 testing, access to meals for children required to stay home from school and extended unemployment insurance, the bill includes benefits for employees and employers impacted by the pandemic, including:
Paid Emergency Family and Medical Leave
The bill expands the existing Family and Medical Leave Act of 1993 by requiring employers with fewer than 500 employees to provide up to 12 weeks of job-protected leave. The emergency leave is available when the employee is unable to work due to a need to care for a son or daughter under 18 years of age if the child’s school or place of care has been closed due to COVID-19.
The first two weeks of leave may be unpaid; after the first two weeks of unpaid leave, employers must continue paid leave at a rate of no less than two-thirds of the employee’s usual rate of pay. The paid leave is capped, however, at $200 per day or $10,000 in the aggregate per employee. Wages paid for family and medical leave are not subject to the employer’s 6.2% share of the Social Security tax.
It is worth noting that the Labor Department can exempt employers with fewer than 50 workers from having to pay these benefits if it “would jeopardize the viability of the business.” It is still unclear if exemptions will apply to this rule.
Paid Sick Leave
The bill also provides for up to 80 hours of paid sick leave to full-time employees, as well as paid leave to part-time employees based on a formula. Sick leave is available for the following six reasons:
Employers must compensate employees for any paid sick time they take at their regular rates of pay (unless the leave is being used to care for a family member or child as described in reasons 4-6 above, in which case the employee is only entitled to two-thirds of his or her regular rate of pay). Compensation is capped at $511 per day and $5,110 in the aggregate for employees taking sick leave for reasons 1-3 above, and $200 per day and $2,000 in the aggregate for employees taking leave for reasons 4-6. The sick leave is available for immediate use by employees, regardless of length of employment.
Wages paid for sick leave are not subject to the employer’s 6.2% share of the Social Security tax.
Tax Credits for Paid FMLA and Sick Leave and Grant of $1 Billion for Emergency Unemployment Insurance
To assist employers in providing the required family and sick leave, the bill provides a series of refundable tax credits, including:
The proposed leave and proposed sick leave changes, as well as the adoption of the new tax credits, take effect not later than 15 days after enactment and would remain in place until the end of 2020.
RubinBrown will continue to keep you up to date with relevant news and changing guidelines as they unfold. Please contact your RubinBrown team member if you have questions about how these provisions may affect you.
By: Tony Nitti, CPA, MST
Partner-In-Charge
National Tax
609.658.9593
tony.nitti@rubinbrown.com
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