Families First Coronavirus Response Act

On March 18th, 2020, Congress signed the Families First Coronavirus Relief Act into law to provide additional benefits to those impacted by COVID-19, giving employees paid leave, who may not have otherwise had any .  The law is expected to go into effect on April 2, 2020.  The law will remain in effect through 2020.  While there are still some details to be worked out, below is a summary of the law and the impact.

Who is affected:

  • Employers with less than 500 employees.
  • Employers with less than 50 may request an exemption if it will “jeopardize business viability.”  Employers requesting an exemption must reach out to Department of Labor.

What businesses must offer:

  • 80 Hours of Sick Leave (full-time employees):
    • Paid at full pay rate (or max amount of $511/day) if:
      • Employee was exposed to virus and required to quarantine
      • Employee exhibits symptoms of virus and is seeking diagnosis
      • Employee was told to quarantine by medical professional
      • Employee is subject to state/federal quarantine
    • Paid at 2/3 rate (or max amount of $200/day) if:
      • Employee must care for relative who was exposed to virus or has symptoms
      • Employee must care for child(ren) due to school/daycare closures
    • Part time employees would receive equivalent sick leave to the average hours worked in two-week period (calculated based on prior 6 months) – eligibility the same as full-time. 
  • Additional Family Leave: 12 Weeks of Leave for Childcare
    • Employee must have worked at least 30 days
    • Max amount is $200/day and $10,000 total
    • First 10 days may be unpaid leave (but sick leave may be used during this period)
    • Pay based on normally scheduled hours
    • Paid at 2/3 of regular rate (or max amount)
    • This may be extended further if deemed needed

How the expense will be covered:

  • Businesses will front the cost.
  • Businesses will receive a credit through payroll taxes.  The credit is equivalent to the amount paid to employees.
  • The tax is credited quarterly (most likely on the 941 returns).
  • These wages are exempt from the employer portion of Social Security tax
  • A tax credit will be available to offset the employer Medicare taxes.
  • The credits received will be included in the income of the business.

You can see full details of the bill here.

Erin Ryan, Controller