Families First Coronavirus Response Act (Benefit Minute)

Posted in: Benefit Minute, Employee Benefits

On March 18th, President Trump signed into law the Families First Coronavirus Response Act (the Act). The relief granted by the Act is very specific.  Effective no later than April 2, 2020, the Act will provide short-term financial support in the form of paid leave to individuals employed by covered employers (private employers with fewer than 500 employees and all government employers) who cannot work or telework due to specific reasons as described below. It also extends FMLA protection to individuals who cannot work due to child care issues.  It does not apply to terminated employees.

Although it obligates covered employers to provide paid leave in certain circumstances, most of the cost will ultimately be borne by the federal government as private employers will be reimbursed for the cost of providing the leave (including health benefits) via a tax credit that will be applied against payroll taxes that the covered employer would otherwise owe.

It also requires all health insurance issuers and group health plans (both self-insured and fully insured) to cover certain expenses related to diagnosis of the Coronavirus for free.

Emergency Family & Medical Leave Expansion Act

The Act adds a new section for which leave may be taken under the FMLA, available for a qualifying need related to a public health emergency.  This specific part of FMLA covers any employee who has been employed for at least 30 days; none of the other FMLA eligibility provisions apply to leave taken for this purpose (e.g. hours worked or 75 mile radius).  General FMLA requirements including continuation of health benefits and job restoration (in most cases) will apply.

The leave is required to be provided by all private employers with fewer than 500 employees and all government employers, including employers not otherwise subject to FMLA. Currently there is no specific guidance as to how to determine the 500 employee threshold.  In general, FMLA uses an integrated employer test to determine employer size. Employers of health care providers or emergency responders may elect to exclude these employees from this expanded FMLA provision.

A qualifying need related to a public health emergency means only that an employee is unable to work or telework due to a need for leave to care for the 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.  A public health emergency is defined as any declared emergency by a federal, state or local authority related to COVID-19

The first 10 days of this FMLA leave may be unpaid; however, an employee may substitute any accrued leave including Emergency Paid Sick Leave as described below.  After 10 days, the leave shall be paid at not less than 2/3 the employee’s regular rate of pay, capped at $200 per day and $10,000 in the aggregate.  Employers will be entitled to a tax credit as described below.

Up to 12 weeks of protected leave is provided.  It is not clear how this leave coordinates with other FMLA leave that may have already been taken or will be taken in the 12 month period for other reasons.  It also provides job restoration requirements, but for employers with fewer than 25 employees, there are exceptions.

Emergency Paid Sick Leave Act

The Act also includes a new paid sick leave provision for all private employers with fewer than 500 employees and all government employers.  Any employee shall be able to use this leave immediately, without consideration of how long they have been employed.  Employers of health care providers or emergency responders may elect to exclude these employees from receiving this leave.  Paid sick leave must be provided when an employee is unable to work or telework because:

  1. Employee is subject to a federal, state or local quarantine or isolation order due to COVID-19;
  2. Employee has been advised by a health care provider to self-quarantine due to COVID-19
  3. Employee is experiencing symptoms and seeking diagnosis of COVID-19;
  4. Employee is caring for one who falls under (1) or (2) above.
  5. Employee is caring for a son or daughter if the school or place of care has been closed, or the childcare provider is unavailable due to COVID-19 precautions; or
  6. Employee is experiencing any substantially similar condition specified by the Secretary of HHS.

Employers may not require employees to use other paid leave prior to using this emergency paid sick leave. The amount of paid sick leave time shall be 80 hours for full time employees and pro rata for part time employees based on number of hours the employee works, on average, during a 2 week period. For reasons (1), (2) and (3) above, leave shall be paid at the employee’s regular rate of pay, capped at $511 per day and $5,110 in the aggregate.  For items (4), (5) and (6), leave shall be paid at 2/3 the employee’s regular rate of pay, capped at $200 per day and $2,000 in the aggregate.

This emergency paid sick leave is in addition to any other leave the employee may be entitled to under an employer’s policy.  Notice requirements apply.  Employers will be entitled to a tax credit as described below.

Employer Tax Credits

The Act provides private employers with a payroll tax credit equal to 100% of the wages paid under both the Emergency Family & Medical Leave Expansion Act and the Emergency Paid Sick Leave Act.  The amount of the credit  shall not exceed the dollar limits stated above on a per employee basis.  In addition, the amount of the credit will be increased by the employer’s qualified health plan expenses that are allocable to the leave paid under the Act.  Additional guidance is needed to determine how to calculate the credit related to qualified health plan expenses.

The amount will be credited against the employer’s quarterly payroll taxes, and if the credit exceeds the amount owed, the excess shall be treated as an overpayment of taxes which will be refunded to the employer.

Health Provisions

The Act also requires group health plans (both fully insured and self-insured) to provide free coverage for the following, effective March 18, 2020:

  • Diagnostic procedures for the detection of COVID-19
  • Any visit to a health provider or facility that results in an order for a COVID-19 diagnostic procedure.

This is an unprecedented and quickly evolving situation.  Additional guidance on the Act and related matters will be forthcoming from the agencies responsible for implementation. This information is current as of March 20, 2020.

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