As of December 31, 2020, FFCRA paid leave benefits are no longer mandatory. But, employers who voluntarily continue providing the paid leave to employees can claim the FFCRA tax credit until March 31, 2021.
Businesses big and small are changing up operations due to federal and state coronavirus-related mandates. One thing small businesses must legally do is offer paid leave to employees impacted by the coronavirus disease (COVID-19).
The Families First Coronavirus Response Act (FFCRA), signed into law on March 18, 2020, requires that qualifying businesses provide this benefit starting April 1, 2020.
Here’s what you need to know about your paid sick and paid family leave responsibilities.
The 411 on providing paid leave
Here’s a snapshot of what you need to know relating to the coronavirus paid sick and family leave:
- Employers with fewer than 500 employees must provide paid sick time or paid family leave to eligible employees
- Some employers with fewer than 50 employees may be exempt from providing paid sick leave
- Employees are entitled to their regular rate of pay for 10 days if they can’t work because they are in quarantine or isolation due to a federal, state, or local government order; the advice of a healthcare provider; or have coronavirus symptoms and are seeking a medical diagnosis
- Employees are entitled to two-thirds their regular rate of pay for 10 days if they are using paid sick time to care for someone who is in quarantine or isolation due to a federal, state, or local government order or the advice of a healthcare provider
- Employees are entitled to two-thirds their regular rate of pay (after 10 days, which employees can cover with paid sick leave or accrued time off) for 10 weeks if they are using paid family leave to care for a child whose school or childcare provider closed due to the coronavirus
- Employers who provide paid leave to employees are entitled to an employer tax credit, worth 100% of the paid leave, plus 100% of the employer Medicare share associated with the leave wages
- Employers do not have to pay the employer Social Security tax share on leave wages
- The leave benefits are not retroactive
Do you use Patriot’s payroll software? Check out our help article, “Paying Employee Paid Leave in Patriot Software Due to COVID-19.”
Read on for more details on the Families First Coronavirus Response Act and your potential employer responsibilities.
What is the Families First Coronavirus Response Act?
The Families First Coronavirus Response Act is an emergency initiative in response to the impact of coronavirus on American workers and businesses.
The House of Representatives passed the legislation on March 14, and the Senate passed it on March 18. It was signed into law by the president on March 18.
There are a number of relief measures the FFCRA provides, including:
- Paid sick leave/time
- Paid family and medical leave
- Family and Medical Leave Act (FMLA) expansion
- Employer tax credits
- Unemployment insurance expansion
- Nutrition aid
According to the act, these effects begin taking place “no later than 15 days after the date of enactment,” which was March 18.
The paid sick and family leave laws are in effect until December 31, 2020.
Mandatory paid sick leave during COVID-19: Q & A
There’s a lot of COVID-19 information out there. And as a small business employer, you may just be looking for the bottom line.
So, here’s some information on what the Families First Coronavirus Response Act means for your business.
In a nutshell, what are the paid leave laws?
The Families First Coronavirus Response Act requires that certain employers provide eligible employees with paid sick and paid family and medical leave.
Paid sick leave/time provides full-time employees with 10 days of paid time off—at their regular wage rate—if they have to quarantine or isolate due to the coronavirus. It also provides employees with 10 days of partial paid time off—at two-thirds their regular wage rate—if they are caring for someone who must quarantine or isolate due to the coronavirus.
Paid family and medical leave provides full-time employees with up to 10 additional weeks of paid time off—at two-thirds their regular wage rate—if they must care for a child, under the age of 18, whose school or place of care is closed in response to the coronavirus. This benefit is known as the Emergency Family and Medical Leave Expansion Act (EFMLEA).
Which employers must provide paid leave?
The emergency paid sick leave and paid family and medical leave laws apply to private employers with fewer than 500 employees. Certain public employers are also covered by the law.
If you have fewer than 500 employees, you must provide paid sick and family leave to eligible employees.
However, there is an exception for some qualifying small businesses. If you have fewer than 50 employees, you may qualify for exemption from providing paid leave. To qualify, you must document and prove that the FFCRA requirements would jeopardize your business’s success.
Health care providers and emergency responders may also opt out of providing paid sick and family leave.
How do I know if my small business is exempt?
The Department of Labor released guidelines outlining who can qualify for the small business exemption.
To qualify for the paid leave exemption, you must meet the following DOL requirements:
- You employ fewer than 50 employees
- The employee is asking for leave because their child’s school or place of care is closed or their child care provider is unavailable due to COVID-19 related reasons
- An authorized officer of the business determines that one of the following conditions is met:
- The paid leave provision would cause your small business to cease operating at a minimal capacity due to your expenses and financial obligations being more than your available revenue
- Your employees’ absence or request for paid leave would entail a substantial risk to your business’s financial health or operational capabilities because of their specialized skills, knowledge of the business, or responsibilities
- There are not enough workers who are able, willing, qualified, and available to perform labor or services at the time and place needed to cover the employee(s) requesting paid leave, and your small business needs these labor or services to operate
Do not send anything to the Department of Labor if you are seeking paid sick and family leave exemption. Simply document why you meet the criteria.
How do employees qualify?
All employees, regardless of how long they’ve been at a business, are eligible for paid sick leave. However, only employees who have been employed by an employer for at least 30 calendar days are eligible for paid family leave.
Employees must meet the paid sick leave and paid family leave requirements to be eligible.
Paid sick time applies to employees who are:
- Subject to a federal, state, or local quarantine or isolation order relating to the coronavirus
- Advised by a healthcare provider to self-quarantine due to coronavirus concerns
- Experiencing coronavirus symptoms and seeking a medical diagnosis
- Caring for someone who is subject to a quarantine or isolation order or advice from a healthcare provider
- Experiencing a substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor
Paid family and medical leave applies to employees who are:
- Caring for a child whose school, place of care, or childcare provider is closed or unavailable due to coronavirus precautions
How many days do I have to provide?
Again, the number of days you provide depends on whether the employee needs paid sick or paid family leave.
Paid sick time: You must provide 10 days off, or 80 hours, to full-time employees who need to use paid sick time.
And, you need to offer paid sick time to part-time employees. Part-time employees receive paid sick time at a rate of the average number of hours they work over a two-week period. For example, someone who averages 64 hours of work over a two-week period would be entitled to 64 hours of paid sick time.
Paid family leave: You must provide up to 10 weeks of paid family leave to employees who need to use it. The first 10 days can be unpaid, or the employee can use 10 days of FFCRA paid sick leave at two-thirds their regular rate. If applicable, employees can also use their accrued time off if they want to. Keep in mind that you cannot force employees to use their accrued time off if they don’t want to.
If employees and employers agree on a schedule, employees might be able to create a flexible schedule using paid family leave time (e.g., working Monday and Friday and using paid family leave on Tuesday, Wednesday, and Thursday).
Do I have to give employees their regular pay rate?
The rate depends on the reason the employee is taking leave.
Paid sick leave:
- Employees taking paid sick leave because they are quarantined or isolated due to the coronavirus are entitled to their regular rate of pay. The maximum daily rate is $511, or $5,110 over 10 days.
- Employees taking paid sick leave because they are caring for someone who is quarantined or isolated due to the coronavirus are entitled to two-thirds of their regular rate of pay. The maximum daily rate is $200, or $2,000 over 10 days.
Paid family and medical leave:
- Employees taking paid family leave to care for a child whose school or childcare center has closed are entitled to two-thirds of their regular rate of pay. The maximum daily rate is $200, or $10,000 over a 10-week period.
In short, you must give employees their regular rate of pay if they use paid sick leave because they have qualifying coronavirus symptoms or are in isolation because of it.
You must give employees two-thirds their regular rate of pay if they use paid sick leave to care for a family member with coronavirus symptoms or in isolation because of it OR if they use paid family leave to care for a child whose school or center is closed in response to COVID-19.
What kind of documentation should I ask employees for?
Before paying employees for sick or family leave, you can ask for documentation.
The Department of Labor says that the types of documents you ask employees for before they take paid sick leave depend on the IRS.
The type of documentation you require for paid family leave must correspond with “conventional FMLA” leave requests, according to the Department of Labor.
Documents you can ask employees for include:
- Notices posted on a government, school, or day care website
- Notices published in a newspaper
- Emails from a staff member at a school or place of care
What am I entitled to for providing paid sick leave benefits?
For many small business employers, providing these benefits, particularly during a global pandemic, is challenging.
Therefore, the government is providing two employer benefits for providing paid sick and family leave payments:
- Exemption from employer Social Security tax
- Employer payroll tax credits, equal to 100% of the leave wages
Normally, employers are responsible for paying 6.2% of each employee’s wages for Social Security tax. But, the employer Social Security tax exemption means that you do not have to pay 6.2% on the paid sick or paid family wages you dole out.
The refundable employer payroll tax relief lets you receive a credit worth 100% of the paid wages you provide, up to $511 or $200 depending on the type of leave.
So, how does this work? Employers are required to withhold federal income, Social Security, and Medicare taxes from employee wages. Employers are also required to contribute the employer share of Social Security and Medicare taxes. But, the payroll tax credit lets you use withheld payroll taxes to cover the amount you owe an employee for paid sick or family leave.
Let’s look at an example. Say you owe an employee $3,000 in paid sick leave. You owe $4,000 in payroll taxes to the IRS. Rather than depositing the $4,000 with the IRS, you can take a $3,000 credit to cover your sick employee’s wages. Then, you would only owe $1,000 to the IRS.
The tax credit also lets you take 100% of the employer share of Medicare tax on the leave wages as an additional credit.
If your payroll tax liability doesn’t cover the cost of paid sick and family leave, you can request an accelerated credit from the IRS. Use Form 7200, Advance Payment of Employer Credits Due to COVID-19 to do so.
To claim the credit, you must hold onto necessary documents in your records. You will report your total qualified leave wages and related credits for each quarter on Form 941, Employer’s Quarterly Federal Tax Return.
Are the paid leave benefits retroactive?
Employees are only entitled to paid sick and family leave taken between April 1, 2020 and December 31, 2020, according to the Department of Labor.
The paid sick and family leave benefits are not retroactive. Employees who take sick or family leave prior to April 1 are not entitled to the paid time off requirements of the Families First Coronavirus Response Act.
Is there anything else I should know?
The Department of Labor created a poster outlining employee rights under the Families First Coronavirus Response Act. You must hang the poster in a conspicuous place in your workplace.
If your business is remote, you can email or mail the notice to your employees. You can also add the notice to another channel employees have access to.
You cannot discharge, discipline, or discriminate against employees who qualify for paid sick time or paid family leave. If you do, you will be subject to penalties.
If you fail to provide paid time to qualifying employees, you will also be subject to penalties.
Additionally, if you provide paid time off to employees already, you can’t force them to use that leave before the mandated paid leave.
And last but not least, you must report any paid sick or family leave wages you give an employee in Box 14 on Form W-2 or in a statement provided with Form W-2, according to the IRS.
|Looking for more coronavirus-related info? Check out our COVID-19 Resources Center.|