Coronavirus-related paid leave for workers and tax credits for businesses

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (FFCRA) – a set of legislation that provides relief for individuals who have been exposed to the COVID-19 virus. There are two critical aspects to the FFCRA regarding leave for employees and paid benefits: the Emergency Family and Medical Leave Expansion Act (EFMLE) and the Emergency Paid Sick Leave Act (EPSLA).

Emergency Family and Medical Leave Expansion Act

EFMLE is a temporary amendment to the Family and Medical Leave Act of 1993 that allows for an employee that is unable to work (or telework) due to a need to care for a family member to take up to 12 weeks of leave.

Employers can offset the cost of the mandated pay under this act through quarterly payroll tax credits. The legislation provides separate credits for the two types of pay mandated under the acts. If the amount of the quarterly credits exceeds the payroll taxes against which the credits may be applied for the quarter, the excess credit amount is treated as an overpayment of tax that is refundable to the employer.

For an employee who is caring for a child because of unavailable child care due to the coronavirus, eligible employers may claim a tax credit for two-thirds of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days.

Emergency Paid Sick Leave Act

The EPSLA act permits full-time employees to take up to 80 hours of paid sick time if they are unable to work (remotely or otherwise) for any of the qualifying uses below.

  • The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19;
  • A healthcare provider has advised the employee to self-quarantine due to concerns related to COVID-19;
  • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  • The employee is caring for a family member who is subject to a federal, state or local quarantine or isolation order, or advised by a healthcare provider to self-quarantine, due to COVID-19;
  • The employee is caring for their child due to a COVID-19-related school/childcare provider closure; or
  • The employee is “experiencing any other substantially similar condition” specified by the Secretaries of the Department of Health and Human Services, Treasury Department and Department of Labor.

Eligible employers may receive a tax credit up to $511 per day and $5,110 in the aggregate, for a total of 10 days for an instance where an employee is unable to work because of Coronavirus quarantine, self-quarantine, or is experiencing Coronavirus symptoms and is seeking a medical diagnosis.

Eligible employers are entitled to an additional tax credit that determined based on costs of maintaining health insurance coverage for eligible employees during the leave period.

Businesses with less than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability, provided that the employer can show that compliance would jeopardize the ability of the business to continue. The Department of Labor will be providing emergency guidance establishing simple and clear criteria defining the circumstances that will meet the criteria of jeopardy to the viability of an employer’s business as a going concern.