Important Employment Law Update
Families First Coronavirus Response Act (FFCRA)
by NAGEL & PADILLA, LLC
Nagel & Padilla LLC, Certified Public Accountants, Business, and Financial Advisors
You and/or your family may be affected, as an employer, an employee, a self-employed worker, or all three, by these changes.
On Wednesday, March 18, 2020, Congress passed and the President signed into law, the Families First Coronavirus Response Act (FFCRA). These new requirements apply to private employers with fewer than 500 employees.
The new law will go into effect by April 1, 2020 and these provisions will apply through December 31, 2020.
The FFCRA requires certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to Coronavirus as well as tax credits for employers that provide Coronavirus-related paid sick leave.
Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closing or child care unavailability if the leave requirement would jeopardize the viability of the business as a going concern.
Paid leave entitlements: Employers covered under the FFCRA must provide employees:
- Up to two weeks (80 hours, or a part-time employee’s two-week equivalent) of paid sick leave based on the higher of their regular rate of pay, or the state or Federal minimum wage, paid at:
- 100% of applicable wage rate
- For Reasons 1-3, below, up to $511 daily and $5,110 total;
- 2/3 of applicable wage rate
- For Reasons 4 and 6, below, up to $200 daily and $2,000 total; and
- Up to 10 weeks more of paid sick leave expanded family and medical leave paid at 2/3 of applicable wage rate
- For Reason 5, below, for up to $200 daily and $12,000 total
- 100% of applicable wage rate
A part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.
Employees who have been employed for at least 30 days prior to their leave request may be eligible for up to an additional 10 weeks of partially paid expanded family and medical leave for Reason 5.
Qualifying reasons for leave related to Coronavirus: An employee is entitled to take leave related to Coronavirus if the employee is unable to work, including unable to telework, because the employee:
Reason 1: Is isolated due to a Federal, State, or local quarantine or isolation order related to Coronavirus
Reason 2: Has been advised by a health care provider to self-quarantine related to Coronavirus
Reason 3: Is experiencing Coronavirus symptoms and is seeking a medical diagnosis
Reason 4: Is caring for an individual subject to an order described in Reason 1 or self-quarantine as described in Reason 2
Reason 5: Is caring for his or her child whose school or place of care is closed (or child care provider is unavailable) due to Coronavirus-related reasons
Reason 6: Is experiencing any other substantially-similar condition specified by the U.S. Department of Health and Human Services
Employer payroll tax credit for required paid sick leave: Employers will receive a tax credit equal to 100% of the wages paid out to employees for sick or expanded FMLA leave under this act. The credits are subject to the limitations regarding total hours of leave that can be taken, as well as the caps on the total payout to a given employee for a given purpose.
Health insurance costs are also included in the credit. To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.
Self-employed workers: Credit for sick leave for certain self-employed individuals provides a refundable tax credit equal to 100 percent of qualified sick leave equivalent amount for eligible self-employed individuals who must self-isolate, obtain a diagnosis, or comply with a self-isolated recommendation with respect to Coronavirus.
For eligible self-employed individuals caring for a family member or for a child whose school or place of care has been closed due to the virus the FFCRA provides a refundable tax credit equal to 67 percent of a qualified sick leave equivalent amount.
The credit is allowed against income taxes and is refundable. Eligible self-employed individuals are individuals who would be entitled to receive paid leave pursuant to the Emergency Paid Sick Leave Act if the individual was an employee of an employer (other than himself or herself). For eligible self-employed individuals who must self-isolate, obtain a diagnosis, or comply with a self-isolation recommendation, the qualified sick leave equivalent amount is capped at the lesser of $511 per day or the average daily self-employment income for the taxable year per day.
For eligible self-employed individuals caring for a family member or for a child whose school or place of care has been closed due to Coronavirus, the qualified sick leave equivalent amount is capped at the lesser of $200 per day or the average daily self-employment income for the taxable year per day.
For more information:
- Contact your Nagel & Padilla Professional Tax Advisor
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- Subscribe to our Newsletter – http://nagelpadilla.com/newsletter.php
- Visit the US Department of Labor: https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave
- Visit the Centers for Disease Control and Prevention:https://www.cdc.gov/
- Visit the Oregon Health Authority: https://www.oregon.gov/oha/Pages/index.aspx