1. What is the Families First Coronavirus Response Act?

On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was signed into law.  FFCRA will be effective on April 1, 2020, until December 31, 2020.  In addition, the American Rescue Plan (ARP), signed into law on March 11, 2021, extends the tax credits established by the Families First Coronavirus Response Act (FFCRA) if employers choose to continue to voluntarily offer paid leave in qualifying circumstances through September 30, 2021.

FFCRA has two major provisions that affect employers:

• Emergency Paid Sick Leave
  • Applies to
    • Private employers with fewer than 500 employees
    • Public employers with 1 or more employees
    • Exemptions may be granted to employers with less than 50 employees only if making the payments would jeopardize the viability of the business
  • Benefit
    • Employers must provide 2 weeks (80 hours) of paid sick leave for full-time employees.
    • Part-time employees must be provided paid sick leave based on the average number of hours they work in a two-week period.
    • This paid sick leave must be provided regardless of the length of employment.
    • An employer is in compliance if the employer already has a paid leave policy that meets or exceeds the benefits specified in the FFCRA.
  • Reasons for Leave
    1. Employee is subject to a federal, state or local quarantine related to COVID-19.
    2. Employee has been advised by a health care provider to self-quarantine.
    3. Employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
    4. Employee is caring for an individual who is subject to quarantine pursuant to 1 and 2.
    5. Employee must care for a child or children (under 18 years of age) whose school or care provider is unavailable due to COVID-19.
    6. Employee is experiencing a similar condition as specified by HHS, DOL or Treasury.
  • Wage Requirements
    • For Reasons #1-3 above: Employees should be paid at their regular rate. Pay is capped at $511/day and $5,110 total.
    • For Reasons #4-6 above: Employees should be paid at 2/3 of their regular rate. Pay is capped at $200/day and $2,000 total.
  • Tax Credit
    • Private sector employers with fewer than 500 employees may obtain a credit for wage replacement:  The paid sick leave credit offsets 100% of employer costs for providing mandated paid sick leave. The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.
    • Self-employed individuals are provided refundable income tax credits in an amount of what they would have received if they had been an employee receiving paid leave benefits under the mandates. For a given day that a self-employed worker could not work, they can claim a "rough justice" tax credit in the amount of their average daily self-employment income for the year.

 

• Emergency Family and Medical Leave
  • Applies to
    • Private employers with fewer than 500 employees
    • Exemptions may be granted to employers with less than 50 employees if making the payments would jeopardize the viability of the business
  • Benefit
    • Employers must provide 10 weeks of paid family and medical leave for employees who have been employed for at least 30 days.
  • Reasons for Leave
    • Employee is unable to work (or telework) due to a need for leave to care for a son or daughter under 18 years of age if the school or place of care has been closed, or the child care provider is unavailable, due to a public health emergency.
  • Wage Requirements
    • Not less than 2/3 of regular rate of pay based on the typical number of hours scheduled to work. Pay is capped at $200/day and $10,000 total.
  • Tax Credit
    • Private sector employers with fewer than 500 employees may obtain a credit for wage replacement:  The paid sick leave credit offsets 100% of employer costs for providing mandated paid sick leave. The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.
    • Self-employed individuals are provided refundable income tax credits in an amount of what they would have received if they had been an employee receiving paid leave benefits under the mandates. For a given day that a self-employed worker could not work, they can claim a "rough justice" tax credit in the amount of their average daily self-employment income for the year.

The ARP (mentioned above), which extends FFCRA tax credits, makes some additional changes:

Emergency Paid Sick Leave (EPSL):

• It adds new reasons to qualify for leave, including vaccine appointments, complications from receiving the vaccine, and wait times for test results or diagnoses.
• It resets the previous caps on hours/time off after March 31, 2021, so employees who have used their full 80 hours of paid sick leave or 10 weeks of paid family leave have a new bank to pull from starting in April.

Emergency Family Leave Expansion Act (EFMLA):

• The ARP also changes the entitlement to EFMLA pay. Now, all 12 weeks of EFMLA can be paid where previously the first 2 weeks were not paid.
• The benefits have now been expanded to include all of the reasons an employee can take emergency paid sick leave and are no longer limited to only school or childcare issues.

For both programs:

• It adds non-discrimination rules that make FFCRA credits only available to employers who provide them to all employees.In other words, it must be offered to newly hired employees and part-time employees and not just highly-compensated employees, full-time employees or employees who have a certain tenure.
• If an employee is provided EPSL, that is a separate benefit and does not reduce the amount of leave provided under the EFMLA. So, an employee could take up to 14 weeks of paid leave and the employer could qualify for the full tax credit for this period if they elect to extend the EPSL and EFMLA benefits after April 1, 2021.
• It increases the cap on paid family leave from $10,000 to $12,000.

 

2. Has the DOL provided any guidance on FFCRA?

The DOL has put out some guidance and resources on their website: https://www.dol.gov/agencies/whd/pandemic

This information includes the following:

• Employer Fact Sheet: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave
• Employee Fact Sheet: https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave
• FFCRA Q&A: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

Please note, the DOL is requiring that employers keep a posted notice about sick leave.  The different versions of the poster are available at the main link above.

 

3. How should we track if an employee needs to go out on an FFCRA leave?

We are recommending clients set up separate GL accounts to track the wages, taxes, and benefit costs associated with FFCRA leaves.

If BFG is your payroll provider, please let us know as soon as someone goes out on one of these leaves, so we can set up the pay types and link them to whatever new GL accounts you create.

Our payroll system is ready to track the leave mandated by the FFCRA.

 

4. In FFCRA, what is meant by “calculated based on the employee’s regular rate of pay for the number of hours the employee would otherwise be normally schedule to work”?

The lookback period is 6 months. If the employee did not work that long, then it reverts to, “the reasonable expectation of the employee at the time of hiring of the average number of hours per day the employee would normally be scheduled to work.” The Act is leaving it to the employee’s expected hours at the time of hire, not the employer’s.

 

5. If we have reduced hours and pay, on April 1^st, would the FFCRA calculation be based on the reduction or prior to the reduction?

You would be taking a high risk by using the reduced wages and/or hours.If an employee were to file a complaint, the DOL could require the employer to turn over all current and past payroll records and possibly conduct employee interviews.If the DOL calculates it differently, an employer would at minimum owe the difference to everyone from April 1st forward.

 

6. My business is closed due to local and state emergency mandates.  Are my employees eligible for the emergency sick leave established in FFCRA?

It depends on the order. The San Antonio and Bexar County stay at home orders as they are currently written do not meet the requirements to be considered as a quarantine or isolation order, though some cities and states are drafting their orders so they would meet these criteria. Therefore, employees in Bexar County not working on April 1st for any reason other than one of the six listed in the EPSL are not eligible for sick pay under FFCRA’s Emergency Paid Sick Leave (ESPL). If the employee is home because of the child care issue then the employer must begin paying them on April 1^st because this is a qualifying reason.

 

7. I had to furlough my employees for economic reasons.  Are they eligible for Paid Sick Leave under FFCRA?

Generally speaking, employees who are terminated or furloughed due to economic reasons after April 1st are not eligible for FFCRA’s Emergency Paid Sick Leave (ESPL).

However, employees who were already home taking care of school-age children whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19, may be eligible for up to 12 weeks of leave (two weeks of paid sick leave followed by up to 10 weeks of paid expanded family & medical leave) at 40 hours a week, and a part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.

You may want to consult an HR Consultant or Attorney for how to handle your situation if these circumstances exist.

 

8. If my employees would qualify for 2/3 pay under FFCRA, could I supplement to bring them up to full pay?

Employers may elect to pay the additional 1/3 of pay through PTO, but they cannot get credit for it.

 

9. How does the expanded FMLA work?

The Emergency Family and Medical Leave Expansion (EFML) Act expands the FMLA’s 12 weeks of job protected leave to include employers under 500 and employees with only 30 days of service, and adds to the list of qualifying reasons. The amendment is only effective from 4/1/20 to 12/31/2020. The EFML Act provides paid sick leave after the first two weeks at the greater of 2/3 regular pay, federal minimum wage, or the state or local minimum wage for 10 weeks. The act says the employee can choose from a list of paid time off options offered through the employer or take it unpaid. One of the options is “sick pay.” Some policies define sick pay to only be used by the employee for their own illness. Because the government cannot change a company’s sick pay policy, the Emergency Sick Pay Policy Act provides sick pay through the employer for reasons 1-6 (listed below). If the reason a person is out is to care for a school-age child while schools are closed due to COVID-19, the term “sick pay” includes EPSL up to 2/3 of the employee’s regular pay. Therefore, beginning 4/1/20, the employee can receive up to 2/3 of their regular pay for up to 12 consecutive weeks. The first two through EPSL and the next 10 through EFML.

1. Employee is subject to a federal, state or local quarantine related to COVID-19.
2. Employee has been advised by a health care provider to self-quarantine.
3. Employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
4. Employee is caring for an individual who is subject to quarantine pursuant to 1 and 2.
5. Employee must care for a child or children (under 18 years of age) whose school or care provider is unavailable due to COVID-19.
6. Employee is experiencing a similar condition as specified by HHS, DOL or Treasury.

 

10. Has the IRS provided any guidance on FFCRA?

The IRS Guidance is available at: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs.  Below are some highlights.

• Eligible employers will receive a credit for the amount of qualified sick leave wages paid to employees, qualified health plan expenses, and the employer's share of Medicare taxes imposed on those wages.

• Reimbursement: Employers will claim the tax credits on their federal income tax returns. If an advance is needed, employers should retain an amount of their employment taxes equal to the amount of paid sick leave and family leave wages rather than depositing these amounts with the IRS. Employers may not reduce their deposits of payroll taxes and request advance payments for anticipated tax credits. Where there are not sufficient payroll taxes to cover the cost of the EPSL and EFMLA leave tax credits, employers may file Form 7200 to request an advance payment from the IRS.

• Documentation: To support claims for tax credits, employers must be sure to retain all information provided by employees seeking to take either EPSL or EFMLA, including the following:
  • the employee's name
  • the dates for which leave is requested
  • a statement providing the reason for which the employee is requesting leave, along with written support (a note from the employee's medical provider, or the medical provider of the person for whom they are caring) for such reason
  • a statement that the employee is unable to work, including telework
  • In addition,
    • For leave based on a quarantine order or self-quarantine advice, documentation should include:
      • the name of the governmental entity ordering quarantine
      • the name of the healthcare professional advising self-quarantine
      • if the person subject to the quarantine is not the employee, that person's name and relation to the employee
    • For leave based on school closure or childcare provider's unavailability, documentation should include:
      • the name and age of the child (or children) to be cared for
      • the name of the school that has closed or place of care that is unavailable
      • a statement that no other person will be providing care for the child during the period of requested leave
      • for children older than 14 requiring care during daylight hours: an explanation of the special circumstances that exist requiring the employee to provide care

 

11. How is BFG’s payroll system tracking Emergency Paid Sick Leave and Paid Family Leave?

Emergency Paid Sick Leave (PSL) is for someone who has been quarantined or is being treated for COVID-19.  It is paid at their full pay rate, not to exceed $511 per day or $5,110 in total for all 80 hours.

Our clients will notice there is a new line on the bottom of the timecard showing hours of PSL that have been used.  This will let clients know when an employee has reached their cap of -80 hours.  Once it reaches the cap, you can still put it in by mistake, but the system will not pay it.

There is a second new pay type: PFL (Paid Family Leave).  PFL is for someone who cannot work because their child’s school is closed (child must be under 18), and they do not have access to day care, or they are caring for a child under the age of 18 who is being treated for COVID-19.  It is paid at 2/3 of their regular pay rate, not to exceed $200 per day or $12,000 in total for up to 480 hours. (12 weeks).

PFL will be another new line on the bottom of the timecard showing the hours of PFL that have been used.  This will let clients know when employees have reached their cap of -480 hours.  Once it reaches the cap, you can still put it in by mistake, but the system will not pay it.

This information will flow into BFG’s payroll system and will create the tax credit, which will equal the gross wages, employer Social Security and Medicare taxes, and the pro rata employer cost of medical insurance if the employs has it.  The credit will be against the 941 payment for the payroll it runs in.  Therefore, the company will be immediately reimbursed for the PSL/PFL.