On March 18, 2020, the U.S. Senate passed the House Coronavirus Bill (H.R. 6201) in a 90-8 vote. The act has now been signed into law by the President.
This is the second of three packages from Congress providing relief due to the Coronavirus outbreak. Congress is currently working on the third package, all of which are aimed at reducing the impact of the Coronavirus outbreak on families and businesses.
H.R. 6201 provides for (1) mandated paid emergency sick leave, and (2) paid family and medical leave for many American workers. Employers will receive a payroll tax credit intended to offset wages paid under this program.
Emergency Paid Sick Leave Act (EPSLA)
The new law requires government entities and private employers with fewer than 500 employees to offer emergency paid sick leave to employees who are unable to work or telework, with immediate paid sick time off if they are affected by COVID-19.
Full-time employees requesting emergency sick leave due to COVID-19 that meet one of the following requirements are entitled to receive 80 hours (up to two weeks) of paid sick leave:
- Diagnosed with COVID-19 by a health care provider (paid at 100% of regular pay).
- Self-quarantined per a health care provider’s advice (paid at 100% of regular pay).
- Adhering to a federal, state or local quarantine or isolation order (paid at 100% of regular pay).
- Caring for an individual who is in quarantine (paid at 67% of regular pay).
- Caring for a child whose school or daycare is closed due to COVID-19 (paid at 67% of regular pay).
- Part-time employees are also eligible based on the number of hours they would normally work in a two-week period. This is paid at the same rates listed above based on the applicable requirement.
If an employee meeting one of the above requirements requests emergency paid sick leave, employers are required to adhere to the following emergency sick leave provisions:
- Part-time employees must be offered paid time off equivalent to their normal work hours in a two-week period.
- Emergency paid leave assistance is capped at $511 per day (maximum of $5,110 per affected employee) for a worker’s diagnosis or quarantine due to COVID-19.
- Emergency paid leave assistance is capped at $200 per day (maximum of $2,000) for a worker to provide care for an individual or child.
- An employer cannot require an employee to use other available paid leave before using this emergency sick leave. However, after an employee has used the emergency paid sick leave, they are able to use other available paid leave.
Please contact your employment law attorney for more information and guidance.
Emergency Family and Medical Leave Expansion Act (EFMLEA)
Employees may also qualify for emergency paid leave (for weeks three through twelve) under the new Family and Medical Leave Expansion Act (EFMLEA). Employees are eligible for the EFMLEA expansion benefits if the employee is unable to work or telework because they must care for a child who is under age 18 whose school or daycare has been closed or is unavailable due to COVID-19, as declared by a federal, state or local authority.
Paid leave is calculated for an employee at an amount not less than 67% of the employee’s regular rate of pay multiplied by the number of hours the employee would normally be scheduled to work. The amount of required paid leave cannot exceed $200 per day for a total of $10,000 per employee.
This provision also applies to employees of companies with less than 50 employees that are not otherwise required to offer FMLA benefits. Employers with less than 25 employees are not required to restore the employee to the same or equivalent position upon return to work (provided the employee’s position no longer exists following the leave). In addition, employers with fewer than 50 employees may petition to receive an exemption from providing leave if it would jeopardize the continuity of their business.
Please contact your employment law attorney for more information and guidance.
Social Security Taxes
Any wages paid as a result of the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act are not subject to the employer portion of social security taxes.
Payroll Tax Credits
Employers that provide emergency paid sick leave or paid family and medical leave to employees under this act are entitled to refundable payroll tax credits equal to the mandated benefits. The employer is entitled to claim a credit against the employer’s portion of Social Security and Medicare tax in an amount equal to 100% of the qualified sick leave. If the total sick leave paid exceeds the employer’s share of FICA and Medicare tax, the difference is refundable. The timing of when an employer can reduce payroll tax deposits to take advantage of the credit is unclear at this time.
Self-employed taxpayers are allowed a credit against self-employment tax as well. However, the credit is subject to a daily limit of $200.
The window for these payroll tax credits is brief. They are available for employee wages paid for the period beginning on the date selected by the Treasury Secretary (which will be within 15 days of the March 18, 2020 enactment date) and ending on December 31, 2020. Depending on the date selected, the payroll tax credit could be available for all of second quarter 2020. Employers need to work closely with their payroll service to ensure compliance with these provisions and to ensure they are receiving the full credit available.
