COVID-19 Federal Law Compliance: Families First Coronavirus Response Act & Coronavirus Aid, Relief, and Economic Security Act

Families First Coronavirus Relief Act (FFCRA)

• Was first introduced on March 11, 2020 and went into effect as law April 1, 2020
• Department of Labor release a Frequently Asked Questions on March 26, 2020
  • The regulations are how the law would be applied to real life situations
  • There will be more regulations this month
• Main Attributes
  • Paid sick leave and family and medical leave with health benefits intact
  • Tax credits given to employers to assist with the new leaves
    • Capped for PST and PFML
  • Public health and medical plan related parts
• No retroactivity
  • April 1, 2020 – December 31, 2020
  • No year-end carry over
• Applies to private employers with LESS THAN 500 employees
• Prior to FFCRA, there were no federally mandated statutes regarding paid sick time or paid family medical leave for private employers
• Emergency Paid Sick Leave Act (FFCRA Mandate)
  • Employers must provide ALL employees
    • 2 weeks of paid sick leave at the employee’s regular rate of pay when the employee is not able to work or telework because the employee has been quarantined (on order of a healthcare provider or Federal, State, or local government order) and/or the employee is experiencing COVID-19 symptoms awaiting diagnosis.
    • 2 weeks of paid sick leave at 2/3 the employee’s regular rate of pay when the employee is not able to work or telework because the employee must care for an individual subject to quarantine or need to care for a child whose school or child care provider is closed or unavailable related to COVID-19 OR the employee is experiencing a substantially similar condition.
  • Medical benefits must be maintained
  • Employers with less than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would potentially jeopardize the business continuity
    • This is not an automatic pardon and there will need to be documentation about why the business meets the criteria set by the Department of Labor
    • Exemption may be considered if the employer has fewer than 50 employees, leave is requested because a child’s school or place of care is closed due to COVID-19 related reasons, or an authorized officer of the business determines one of the following three conditions have been met:
    • Provision of leave could result in the employer’s financial responsibilities exceeding the business’ available revenues
    • The absence of employee(s) requesting leave would cause significant risk to the operational standards of the business
    • There are not enough employees available to perform the labor necessities needed to operate at minimum capacity
  • Employers cannot require employees to use company-provided PTO before they apply for FFCRA paid leave
    • Any paid sick leave would be in addition to any other leave provided under Federal, State, or local law and the company’s provided PTO
  • Employers cannot require employees to find replacement/job coverage before they take leave
  • There is no payout upon termination or separation with the employer
  • Employees are entitled to continue their medical coverage during FFCRA paid leaves
    • This includes any coverage for dependents
    • Employees are still generally responsible for funding their contributions during their leave
    • If they do not return to work, COBRA will be offered if applicable
    • Employees must still meet waiting period requirements during FFCRA leaves
  • FFCRA does not protect employees from actions such as layoffs that would affect employees regardless of if they were to take leave
    • Layoffs are permitted for legitimate business reasons such as closure of business or worksite
    • Employer must demonstrate that the layoff would have taken place regardless of an employee taking leave
  • If a business or worksite closes while an employee is on FFCRA paid leave, the employee is no longer entitled to paid leave as of the date of business or worksite closure and may now become eligible for unemployment
  • If a business or worksite remains open, but an employee is placed on furlough after April 1, 2020, they are not entitled to take FFCRA paid leave
• Qualifying Reasons for Leave
  • Is subject to Federal, State, or local government quarantine or isolation order related to COVID-19
  • Has been advised by a health care provider to self-quarantine related to COVID-19
  • Is experiencing COVID-19 symptoms and is seeking medical diagnosis
    • All employees are eligible
    • Duration: up to 2 weeks
    • Up to 80 hours of leave for full-time employees
    • The number of hours that the employee works in a two week period for part-time employees
  • Employees taking leave must be paid at their regular rate with a maximum of $511 per day and $5,110 total
• Qualifying Reasons for Leave: Part II
  • Is caring for an individual subject to a quarantine order
  • Is experiencing any substantially-similar conditions specified by HHS
    • All employees are eligible
    • Duration: up to 2 weeks
    • Up to 80 hours of leave for full-time employees
    • The number of hours that the employee works in a two week period for part-time employees
    • Employees taking leave must be paid at 2/3 their regular rate with a maximum of $200 per day and $2,000 total
• Qualifying Reasons for Leave: Part III
  • Is caring for a child whose school or place of care is closed or unavailable for reasons related to COVID-19           
    • All employees are eligible for the first two weeks of leave
    • Additional ten weeks of leave only provided to employees employed for at least 30 calendar days
    • Duration for FT employees: up to 2 weeks of leave at 40 hours per week then up to 20 additional weeks of leave at 40 hours per week if applicable
    • Duration for PT employees: the number of hours that the employee is normally scheduled to work over that period
    • Employees taking leave shall be paid 2/3 their regular rate with a maximum of $200 per day and $2,000 or $12,000 total
    • Employees employed less than 30 days will have 2 weeks leave only capped at $2,000
    • Employees employed 30+ days will have 2 weeks of paid sick leave, followed by up to 10 weeks of paid expanded family and medical leave capped at $12,000
• Department of Labor Enforcement
  • Starts April 17, 2020 (30 days after March 18, 2020)
  • Employers must have acted reasonably and in good faith effort to comply with these new laws
  • Employers may not eliminate employment or seek discipline against any employees that take paid sick leave under FFCRA
• Tax Credits and Accessing Funds under FFCRA
  • Employers can qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under FFCRA
  • Subject to per day ($511 or $200) and aggregate payment caps ($5,110; $2,000, $10,000)
  • Tax credits can also extend to any payments or incurred debts to maintain medical insurance coverage
  • This allows for businesses to retain and access funds they would have normally paid to the IRS in payroll taxes
  • If an employer’s COVID-19 leave payment is greater than its payroll tax liability, the employer will file for refund
  • The IRS plans to release more information on these credits as we progress
  • Employers can pay employees beyond what is mandated by FFCRA, but will not receive applicable tax credits for any additional amounts

Coronavirus Aid, Response, and Economic Security Act- CARES Act

• Signed into law March 27, 2020
• $2.3 trillion stimulus package including one-time payments to individual direct from the federal government, strengthening of unemployment insurance, providing additional health care funding, and loans and grants to businesses to keep people employed.
  • $510 billion for large businesses, governments
  • $377 billion for small business loans and grants
  • $290 billion for direct payments to individuals and families
  • $280 billion for cuts to business taxes
  • $260 billion for expanded unemployment benefits
  • $180 billion for hospitals and healthcare
  • $150 billion for state and local governments
  • $42 billion for food stamps and child nutrition
  • $12 billion for housing programs
  • $45 billion for child and family services
• Direct Payments to Individuals and Families
  • $1,200 for individuals, $2,400 for couples, $500 for children given to households with total income at or below $75,000 (couples at or below $150,000)
  • Additional $500 per child
  • Tax rebates reduced by $5 for every $100 of income that exceeds the above limits
  • No rebates for individuals whose income exceeds $99,000 ($198,000 for couples)
• Expands unemployment coverage to the self-employed, independent contractors, and furloughed workers
  • Increases unemployment benefits by $600 per week for 4 months
  • 13 additional weeks of unemployment to those in need
  • Waives normal waiting period of one week
• All testing for coronavirus is to be covered by private insurance
  • No cost sharing
  • Fully-insured and self-insured
  • Inclusive of all medical services in relation to COVID-19
• Private health plans must provide cost-free testing beyond testing solely approved by the FDA
• High Deductible Health Plans
  • Can cover virtual services prior to patient reaching deductible
  • This is in effect until 12/31/2021
• Inclusion of over the counter medical products for those with FSA, HSA, HRA
  • Also now includes menstrual care products
• ERISA filing deadlines can be postponed by the DOL for up to one year in the case of a public health emergency
• Paycheck Protection Program
  • Small employers, self-employed individuals, and workers (less than 500 employees)
    • Hospitality industry can be eligible if there are fewer than 500 employees per location
  • No cost to apply
  • Administered through SBA
  • Provides 8 weeks of cash-flow assistance through federally guaranteed loans
  • Employers must maintain payroll at this time and the loan is to cover payroll costs, interest on mortgage obligations, rent, and utilities
  • Businesses eligible for a loan of 2.5x their average monthly payroll costs
    • In business February 15, 2019 – June 30, 2019, 2.5x average monthly payroll costs during that time
    • Not in business February 15, 2019 – June 30, 2019, max loan is 2.5x average monthly payroll costs from January 1, 2020 to February 29, 2020
    • Limit of $10 million
    • Maximum 10 year term and 4% interest
  • Forgivable loan
    • You can apply for forgiveness on your loan with documentation verifying payroll, mortgage/lease obligations, and utilies
  • If you took out an Economic Injury Disaster Loan between February 15, 2020 and August 8, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding amount to the payroll sum
• Deferral of Employer Social Security Tax Payments
  • Employers can elect to defer payments of employer share of Social Security
  • Employer Social Security tax is paid at a rate of 6.2% of the first $137,700 in wages for each employee
  • Applies to all liabilities incurred until 12/31/2020
  • Deferred taxes must be repaid within two years
    • 50% due by 12/31/2021
    • Any remaining taxes due by 12/31/2022
  • This is available to any employer regardless of size, unless the employer is taking advantage of the Paycheck Protection Program
• Tax Cuts
  • 50% payroll tax credit for businesses affected by COVID-19
  • Employers would also be able to defer the payment of taxes if necessary
  • Loosened tax deductions for interest and operating losses
  • Suspending penalties for people who use retirement funds early
  • Tax write-offs to encourage charitable donations and to encourage the payoff of student loans
  • Waiving of federal tax on distilled spirits to make hand sanitizer
• Ban on foreclosing federally backed mortgages through mid-May and a four-month ban on evictions by landlords who rely on federal housing programs

Resources:

• Department of Labor FFCRA Q&A
• FFCRA Employer Fact Sheet
• FFCRA Employee Fact Sheet
• U.S. Government Ways & Means CARES