Businesses big and small have changed up operations due to federal and state coronavirus-related mandates. One thing small businesses can 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, required that qualifying businesses provide this benefit between April 1, 2020 – December 31, 2020.
The Consolidated Appropriations Act extended the FFCRA paid leave and corresponding tax credit until March 31, 2021. The American Rescue Plan extended leave and the tax credit until September 30, 2021. However, offering COVID-19 paid leave between January 1, 2021 – September 30, 2021 is optional. You are not required to offer paid leave under these pieces of legislation.
Read on to learn about the paid sick and paid family leave program.
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 were required to provide paid sick time and paid family leave to eligible employees between April 1, 2020 – December 31, 2020
- Employers with fewer than 500 employees can choose to provide paid sick time or paid family leave to eligible employees between January 1, 2021 – September 30, 2021
- Some employers with fewer than 50 employees may have received exemption from providing paid sick leave when it was required in 2020
- Employees can receive 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; have coronavirus symptoms and are seeking a medical diagnosis; or are receiving a COVID-19 vaccination or dealing with vaccination complications
- Employees can receive two-thirds of 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 can receive two-thirds their regular rate of pay for 12 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 wages to offset the costs (until September 30, 2021)
- Employers do not have to pay the employer Social Security tax share on leave wages
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 Consolidated Appropriations 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 mandatory FFCRA paid sick and family leave laws are in effect until December 31, 2020.
What is the Consolidated Appropriations Act?
The Consolidated Appropriations Act is a bill that was signed into law on December 27, 2020.
It extended a number of COVID-related programs from 2020, including the FFCRA paid leave, the Employee Retention Credit, and the Paycheck Protection Program.
Under the Consolidated Appropriations Act, employers can choose to continue providing employees with paid sick and family leave between January 1, 2021 – March 31, 2021.
What is the American Rescue Plan?
The American Rescue Plan is a bill that was signed into law on March 11, 2021.
Under the American Rescue Plan, employers can choose to offer employees paid sick and family leave between April 1, 2021 – September 30, 2021 and receive the tax credit.
Further, the American Rescue Plan made some changes to the program, including:
- “Resetting” the paid leave limit on March 31, 2021
- Increasing paid family leave days from 50 to 60, and increasing the limit from $10,000 to $12,000
- Expanding paid sick leave eligibility to let employees who are receiving a COVID vaccination or dealing with vaccination complications take time off
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, Consolidated Appropriations Act, and American Rescue Plan mean for your business.
In a nutshell, what are the paid leave laws?
Here’s a breakdown of what the paid leave laws are all about:
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 or take time to receive a vaccine or deal with vaccination complications. 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 12 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 were required to provide paid sick and family leave to eligible employees until December 31, 2020.
However, there was an exception for some qualifying small businesses. If you had fewer than 50 employees, you may have qualified for exemption from providing paid leave.
Again, paid leave under the Consolidated Appropriations Act and American Rescue Plan is optional. Employers with fewer than 500 employees who choose to offer employees the benefit can claim the payroll tax credit.
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
- Receiving a COVID vaccine or dealing with vaccination complications
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 to provide depends on whether the employee needs paid sick or paid family leave.
Paid sick time lets employees receive 10 days off, or 80 hours if they need to use paid sick time.
Part-time employees are also eligible for paid sick time. 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 lets employees receive up to 12 weeks of paid family leave if they need to use it.
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 $12,000 over a 12-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, are in isolation because of it, or are receiving the vaccine or dealing with vaccination complications.
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 depends 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 per day 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.
You can claim this credit until March 31, 2021.
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.|