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Coronavirus Bill Requiring Paid Employee Leave Signed Into Law, Tax Credits for Employers

SIMA Financial Group > Benefits  > Coronavirus Bill Requiring Paid Employee Leave Signed Into Law, Tax Credits for Employers

Coronavirus Bill Requiring Paid Employee Leave Signed Into Law, Tax Credits for Employers

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (the Act) into law. The Act requires employers to provide paid leave for some employees related to the coronavirus (COVID-19) pandemic, among other measures and also provides for a series of tax credits to employers and self-employed individuals to help cover lost income due to the COVID-19 crisis. The Act takes effect no later than 15 days after it is signed by the president.

Emergency Paid Sick Leave

The Act requires two weeks of paid sick leave for government workers and employees of companies with fewer than 500 employees. Leave must be made available to workers who are symptomatic or are under an order or advice to quarantine or self-isolate, who have to care for a family member under such an order or advice, or who have a child whose school or child care provider or facility has closed or is unavailable due to the coronavirus.

The Act provides that future regulations issued by the Dept. of Labor may exempt health care providers and small businesses with fewer than 50 employees from the paid sick leave requirement.

An employee may use emergency paid sick leave under the bill for any of the following purposes:

  1. Quarantine — to comply with a federal, state or local quarantine or isolation order related to COVID-19
  2. Self-Quarantine — to self-quarantine, if the employee has been advised to do so by a local healthcare provider
  3. Diagnosis or Treatment — to obtain a medical diagnosis or treatment if the employee is experiencing symptoms of COVID-19
  4. Care for a Quarantined Individual — to care for an individual required to be quarantined or advised to be quarantined
  5. Child Care — to care for an employee’s child if the child’s school or child care provider has been closed or is unavailable due to COVID-19-related issues
  6. Substantially Similar Care — to care for a substantially similar condition, as determined by the secretary of health and human services

Emergency Family and Medical Leave Act

The Act provides FMLA rights for some employees of companies with fewer than 500 employees, requiring up to 12 weeks of partially paid or paid family and medical leave after 10 days for affected employees that have been employed with the company for at least 30 days. Affected employees include employees that are unable to work or telework due to school or child care closures related to the coronavirus. Employees must be compensated for at least two-thirds of their regular compensation, although for each employee there is a limit on the amount of total paid leave allowed – paid leave may not exceed $200 per day and $10,000 collectively.

Other Provisions

The Act provides funding for economic assistance and requires health plans to cover COVID-19 testing at no charge. A refundable tax credit for employers that provide paid leave benefits as required by the Act is also included. The U.S. Treasury is expected to use its regulatory authority to advance funds to some small businesses to cover the cost of providing paid sick leave.

Emergency leave benefits for workers provided under the Act would expire December 31, 2020.

Tax Credits for Employers & Self Employed Individuals

The Act provides employers and self-employed individuals with a series of tax credits to help cover lost income due to the COVID-19 health crisis.

The paid sick time payroll tax credit can be claimed on a quarterly basis, equal to 100 percent of the amount of sick leave wages paid.

If an employee is taking time off to care for themselves, the credit is limited to $511 per day ($5,110 total). If the leave is to care for a minor child whose school has closed or an individual who is quarantined or showing symptoms of a COVID-19 infection, the credit is limited to $200 per day ($2,000 total). The credit is refundable if it exceeds the amount the employer owes in payroll tax.

HR Considerations for employers regarding compliance in the workplace can be found here: HR Resource – Coronavirus in the Workplace.

This Legal Update is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2020 Zywave, Inc. All rights reserved.