Category Archives: COVID-19

Employer’s Guide to the new FFCRA Paid Sick Leave Requirements

With the flurry of new legislation in response to the COVID-19 pandemic, many companies are concerned about what benefits they have to provide their employees regarding paid sick leave, especially related to COVID-19, and what, if any, programs are available to help them bear the costs of these new employee benefits.

In short, while employers are obligated to grant employees paid sick time in accordance with these new laws, the employer will receive immediate reimbursement in the form of a credit against any Federal withholding tax amounts due to the IRS and an additional cash refund if the credit is insufficient to offset the paid leave granted to employees.

Employee Rights and Benefits

The Families First Coronavirus Response Act (“FFCRA”) granted broad, new paid sick leave rights to employees of qualified employers – namely any private business with fewer than 500 employees. These new provisions, at least currently, are limited in time and only apply from April 1, 2020 through December 31, 2020.

Importantly, the FFCRA established six qualifying reasons for an employee to take leave. These reasons are:

  1. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
  2. The employee has been advised by a health care provide to self-quarantine related to COVID-19;
  3. The employee is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
  4. The employee is caring for an individual subject to an order described in section 1 or self-quarantine as described in section 2;
  5. The employee is caring for his or her child whose school or place of care is closed or unavailable due to COVID -19-related reasons; and
  6. The employee is experiencing any other substantially similar condition specified by the U.S. Department of Health and Human Services.

Further, the FFCRA provides that an employer must provide up to two weeks of paid sick leave to qualified employees, paid at:

  • 100% of their regular rate of pay (up to $511 per day and $5,110 total) if the leave is for any of reasons 1 through 3 above; or
  • 2/3 of their regular rate of pay (up to $200 daily and $2,000 total) if the leave is for reasons 2 or 6 above.

Additionally, if the employee is taking leave due to reason 5, they are entitled to up to 12 weeks of paid leave at 2/3 their hourly rate (up to $200 daily and $12,000 total). If the employee has been employed for at least 30 days, the employee may be entitled to an additional 10 weeks of 2/3 pay if it is being taken for reason 5.

For part-time employees, the regular rate of pay is calculated based on the normal hours that the employee would have been expected to work during that weekly time period.

As with the FMLA, the employee must provide notice and that notice must only be given within a reasonable time given the circumstances. However, given the reasons for leave, reasonable notice could very well be shortly before or even shortly after the leave begins. Further, the employer may require that the employee provide documentation to support the leave. In fact, as discussed below, the IRS may request this documentation when the employer applies for reimbursement.

Finally, the employer must post in a conspicuous place notice of these FFCRA requirements. The Department of Labor poster containing these rights is available here.

Employer Benefits, and Potential Exemptions

While the FFCRA imposes significant financial obligations on small businesses as described above, it also ensures that those financial obligations are 100% refundable. Following the passage of the FFCRA, the IRS issued guidance to businesses as to how to obtain refunds. This guidance was adopted into law with the passage of the CARES Act.

Importantly, the FFCRA provides that employers who provide the leave and pay described above are entitled to 100% reimbursement. This reimbursement includes the employer’s share of the Medicare tax imposed on those wages and its cost of maintaining health insurance coverage for the employee during the leave period. To ensure that businesses already struggling due to the COVID-19 pandemic receive this reimbursement quickly, the IRS has set up a two-pronged process for reimbursement.

The first prong allows employers to deduct from their Federal payroll taxes the amounts they spent complying with the employee sick leave portion of the FFCRA. Thus, employers will immediately receive reimbursement up to the amount of their payroll taxes.

To the extent the reimbursement exceeds the payroll taxes, the IRS has created a second prong that allows the employer to submit forms for reimbursement of costs above the amounts covered by the payroll tax withholding, and even allows for advanced reimbursement for anticipated overages. The IRS is working on drafts of these forms and they are expected to be final in the very near future. Further, the IRS is promising a fast turn-around time on these refunds (two weeks), to help ensure that employers are getting these refunds quickly.

As mentioned above, the IRS is requiring that employers who claim this credit maintain sufficient documentation to show that the employee’s leave was for one of the qualifying reasons.

Finally, if the company has less than 50 employees, it may be eligible for an exemption to the requirement that the employer cover leave for reason number 5. To qualify, the employer must believe that providing said leave would “jeopardize the viability of the business as an ongoing concern.” While the Department of Labor is in the process of drafting regulations related to this exemption, it recommends that any business seeking to utilize this exemption keep detailed records supporting the reasons for the exemption.

Conclusion

If you need any assistance in implementing the new FFCRA sick leave provisions, obtaining the refund, or determining if you qualify for the exemption, you should contact an attorney at Smith & Associates to discuss your rights and options.

Coronavirus Impacts on Employers and Employees: Overview of Federal, State and Local Mitigation and Assistance Programs

The Coronavirus pandemic poses unprecedented challenges for employers and employees as more stringent measures and restrictions are imposed almost daily by federal, state and local officials seeking to control the spread of the virus. The possibility of large geographic areas being ordered to “Shelter in Place” and not leave their homes is taking hold as cities and states continue to evaluate their options.

As of the date of this article, all public schools in Florida have been closed, most likely for the reminder of the school year; restaurants have been ordered to operate only at 50% of seating capacity; bars and nightclubs have been ordered to close for at least the next 30 days; Disney and Universal Studios, as well as other tourist attractions, have been closed until at least the end of the March, and likely beyond; the cruise industry has effectively shut down; and now the prospect of closing down Florida’s beaches seems to be on the horizon. Aside from the drastic government measures, the fear among the populace is palpable as many people now practicing social distancing by refusing to eat out at restaurants and limiting all but essential shopping and commercial activities. The impact on Florida’s business is already devastating on the state’s tourism and hospitality industries. As this crisis grows, business owners and employers are evaluating options and strategies to try to save their businesses. Employees are facing lay-offs with unemployment projected to reach the highest level since the Great Depression. Given the devastating consequences and economic dislocation, employers and employees alike should consider available assistance and mitigation programs available. A few possible options are:

The Florida Small Business Emergency Bridge Loan Program: The Florida Department of Economic Opportunity will administer the Program in partnership with the Florida SBDC Network and Florida First Capital Finance Corporation to provide cash flow to businesses economically impacted by COVID-19. The short-term, interest-free loans help bridge the gap between the time the economic impact occurred and when a business secures other financial resources, including payment of insurance claims or longer-term Small Business Administration (SBA) loans. Up to $50 million has been allocated for the Program. The application period for this short-term interest-free loan opened on March 17, 2020 and will continue at least through May 8, 2020. The highlights of the program are:

  • Short-term interest-free loans in an amount up to $50,000 for business owners.
  • Loans to be repaid without interest within one year.
  • Interest rates after one year go to 12%.
  • Purpose of the Program is to provide short-term liquidity to small business owners to remain open despite economic impacts of the Coronavirus pandemic.

“Families First Coronavirus Response Act” (H.R. 6201): This emergency federal legislation passed the House overwhelmingly with bipartisan support and is expected to pass the Senate today. The key features place new responsibilities on employers to assist employees who are affected when the employee or a family member is affected by Coronavirus. The Bill includes the following:

  • Applies to businesses with fewer than 500 employees.
  • Paid Family and Medical Leave for 12 weeks (the first 14 days are to be paid under sick leave provisions).
  • This leave benefit covers employees who have been working for at least 30 calendar days.
  • Among other uses, employees may use the leave to respond to quarantine requirements or recommendations, to care for family members who are responding to quarantine requirements or recommendations, and to care for a child whose school has been closed as a result of the COVID-19 pandemic.
  • After the first 14 days, employers must compensate employees in an amount that is not less than two-thirds of the employee’s regular rate of pay. These pay requirements apply to only the COVID-19-related leave reasons listed above.
  • The provisions will go into effect 15 days after the date of enactment and expire on December 31, 2020.
  • Paid Sick Leave provisions of the Bill also require employers with fewer than 500 employees to provide full-time employees two weeks (80 hours) of paid sick leave for specific circumstances related to COVID-19 (e.g., self-isolating, doctors’ visits, etc.).
    Part-time employees are also covered and entitled to paid sick leave for the number of hours equal to the number of hours they work, on average, over a two-week period.
  • Employers must compensate employees for any paid sick time they take at their regular rates of pay.
  • Employers will be required to post a notice informing employees of their rights to leave.
  • As currently drafted, the Bill expressly provides that it does not preempt existing state or local paid sick leave entitlements.
  • Employers will be provided with tax credits to offset their costs in meeting the new paid leave mandates.
  • The provisions will go into effect 15 days after the date of enactment and expire on December 31, 2020.
  • The Bill provides $1 billion in emergency unemployment insurance (UI) relief to the states: $500 million for costs associated with increased administration of each state’s UI program and $500 million held in reserve to assist states with a 10 percent increase in unemployment. Besides demonstrating an increase in unemployment, in order to receive a portion of this grant money, states must temporarily relax certain UI eligibility requirements, such as waiting periods and work search requirements.

Additional Federal Legislation Under Consideration: Additional legislation will be adopted to provide relief to employees who are dislocated by the impacts of the pandemic. As of this writing, the proposal is likely to include a cash payment directly to every American worker in an amount of $1,000.00. The overall price tag of this Bill is projected to be in excess of $1 Trillion. Details of the program will be posted in subsequent updates to this article.

Conclusion:

There is absolutely no question that Coronavirus will pose new challenges for both Employers and Employees. In assessing their business strategy for meeting new obligations, and navigating the process to seek assistance, both employers and employees should consider consulting with qualified legal counsel. If you have questions about any of the issues contained herein, you should contact an attorney at Smith & Associates to discuss your rights.