The Families First Coronavirus Response Act is a new Federal law that will take effect on Wednesday, April 1st, 2020. Your employees may be eligible for these benefits, and it could have an impact on your business.
*Please note that the effective date was moved up one day from April 2, 2020 to April 1, 2020
Here is a quick summary
Businesses with less than 500 employees, with a possible exception for businesses with fewer than 50 employees.
In order for your employees to claim these benefits, your business must still be in operation and the employee claiming the benefits must be currently working.
Temporarily expands Family and Medical Leave and Paid Sick Time to those affected by COVID19.
- Sick time: 80 hours for F/T employees on top of what is already offered, capped out at $511/day and up to $5,110 per employee, for any employee currently working.
- Paid Family Leave: up to 12 weeks with the first 10 days unpaid. The employer has to pay at least 2/3 of the regular salary capped at $200/day or $10,000 total per employee, for any employee working 30 days or longer at the business. The law provides tax credits to businesses to reimburse them for 100% of the wages paid out in the benefits, but the businesses must pay up front. Please note: This is not in addition to regular FMLA that an employee may have taken in the past 12 months. For example, if an employee took 6 weeks of FMLA in the previous 12 months, they may only take 6 weeks of Emergency Paid Family Leave.
- Required poster: If you have less than 500 employees and haven’t been granted an exception, you must post this poster in a conspicuous place on your premises, USPS mailing or emailing it to employees, or posting the notice on an internal or external website. Spanish version isn’t available yet but will be posted here when it is.
Becomes effective 4/1/20 and lasts until 12/31/20.
How will the tax credit reimbursement work?
While the details are still being worked out by the IRS, it is proposed to be a dollar for dollar offset via payroll tax credits. If you pay less payroll taxes than you pay out in benefits there is proposed to be an expedited process for reimbursement, although we don’t know fully what that looks like yet. The IRS has promised speedy reimbursement. See more here: IRS FFCRA Tax Credit Info Page. Please see the FAQ about reimbursement below as well.
If I have fewer than 50 employees, can I get an exemption?
Possibly. The process to apply for one with the IRS is being finalized. We know you will have to prove that providing these benefits will “jeopardize the ability of the business to continue” and that you will have to prove his impact using criteria that the Department of Labor will elaborate on soon.
Official information is here.
We also recommend this great summary.
As we see it
There are pros to the new bill— it allows you to keep and accommodate the real needs of your current employees during this difficult time and build on the time you’ve already invested into training them.
It also affords you 100% reimbursement for the wages you pay to fulfil the sick and leave time employees take under this law.
On the negative side, there is a high burden to pay for the up front costs of the sick and family leave provided by this law. Once the law goes into effect, your employees will be entitled to this leave and you won’t be able to lay them off to avoid them requesting it.
Q&A / Some Reimbursement Details
1.) Q: Let’s say a business had an employee who made $300/day and they paid 10% payroll taxes. If that employee went on the new FLMA, the business would have to pay them $200 (2/3 of their regular pay) and would normally pay $20 in payroll taxes. Under the new law, they could hold back on paying the $20/day. According to the law, however, they would still be owed $180/day to be paid back. This is the situation outlined in the NP article under “What if an employer’s payroll tax deposits are less than the amount of qualifying paid leave that they provide?” Our question is: Will they be paid in cash for the extra amount? Is that what is meant by the accelerated payments? Do you have any sense of the process yet or of the reliability of the availability of the extra money within a 2 week period?
A: Correct. The business would not deposit the $20 that it otherwise normally would have to deposit in connection with its payroll. The employer will be able to apply directly to the IRS for the $180 to be received in cash from the treasury. They have not yet announced the procedures for doing so, but they said it would be this week. They have indicated that such payments would be proceed and paid within 2 weeks.
2.) Q: Let’s say a company has 50 employees but only 10 are taking the new FLMA. Can the company keep all of the payroll taxes from all 50 employees to recoup the wages paid to the 10 employees?
3.) Q: Let’s say the employee actually makes more than $300/day and so 2/3 of their wages is more than the daily cap. Does the company have to pay the difference between $200 and 2/3 of their daily wage, or is that difference part of the reimbursement provided?
A: No, they would only have to pay up to the cap of $200.
If you have any questions, please e-mail Claire, Director of Workforce & Hiring at SFMade.
Don’t forget to consult our main COVID-19 resource page for manufacturers.
- Originally posted 3/27/20 at 3pm
- Updated: 3/30/20 at 9am
- Updated: 4/1 2pm
- Updated: 4/2 4pm