On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (FFCRA) into law. The Act provides taxpayers a range of benefits including paid sick leave, expanded family and medical leave coverage, updates to unemployment insurance, increased Medicaid funding, free coronavirus testing, and new employer tax credits to help business fund these initiatives.
Under the Act, employers with fewer than 500 workers are to provide 80 hours (two weeks) of paid sick leave to all covered full-time employees directly impacted by COVID-19. Part-time employees are eligible for two weeks of paid sick leave based on the average hours the part-time employee works.
Eligible circumstances include:
(1) If the employee is experiencing COVID-19 symptoms,
(2) The employee is advised by medical personnel to self-isolate or quarantine, or
(3) If the employee’s child’s school or daycare has closed due to COVID-19.
View and Download PDF of Coronavirus Scenarios and Applicable Leave [Updated March 25, 2020]
Employees taking leave for their own health reasons are eligible for full pay (up to $511 per day; $5,110 total). An employee taking leave to care for a family member is eligible for two-thirds pay (up to $200 per day; $2,000 total). An employer cannot require an employee to use other paid leave before using this paid leave
If an employee has worked for an employer for at least 30 days, they are entitled to 12 weeks of job-protected leave to care for a child who’s school or daycare has closed. The first 10 days are to be unpaid, unless the employee has time accrued or paid sick leave available. Employers are to pay family leave eligible employees two-thirds of their wages (up to $200 per day) up to $10,000 total for the remaining 10 weeks. Employers may elect to exclude health care workers and first responders from taking this public health emergency FMLA.
Both mandates become effective on April 1, 2020 and expire on December 31, 2020. It is up to the Department of Labor if small businesses with less than 50 employees can be exempted, providing it would jeopardize the viability of the business.
To help employers pay for these emergency provisions, the law provides a refundable payroll tax credit for 100% of qualified COVID-19 paid sick leave wages paid by an employer. The amount of credit is limited to $200 per day. The credit increases to $511 per day if the employee is on leave due to quarantine or COVID-19 symptoms. Employers also are eligible for a refundable tax credit for 100% of qualified family leave wages paid by the employer. The 100% credit against the employer’s share of payroll tax is limited to $200 per day with an aggregate of $10,000 limit. Both tax credits are permitted against the employer portion of Social Security (OASDI) payroll taxes.
The credit can be claimed on a quarterly basis. Any additional wages paid under the sick leave requirement would not be subject to the employer portion of the payroll tax.
The self-employed are eligible to receive similar tax credits allowed for employers.
If the self-employed individual takes leave for their own COVID-19 health reasons or quarantine order, the law provides a refundable tax credit for 100% of qualified sick leave wages. If the leave is for an ill family member or child whose school or day care is closed due to COVID-19, the tax credit is for two-thirds of qualified wages. This tax credit is allowed against income taxes.
Alloy Silverstein continues to be operational and strives to update our business clients and partners with the latest tax news and happenings. Have questions on the FFCRA, extended tax deadline, or other business concerns? Contact us for guidance specific to your individual situation.
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