News, Articles & Updates

Federal Relief Bill Information – 3.23.2020

On March 18, 2020, President Trump signed into law H.R. 621, which provides crucial relief to employees and their families who are forced to take leave from work due to being infected by COVID-19, those who have to care for loved ones infected by COVID-19, and those who have to care for children who must remain home due to COVID-19 related school and child care closures.

H.R. 621 also provides tax credits to employers and self-employed individuals in order to offset the burden of providing paid leave. Below please find summaries of the Emergency Family and Medical Leave Expansion Act of 2020 and the Emergency Paid Sick Leave Act of 2020, which are the provisions in H.R. 621 that provide for paid employee leave due to incidents related to the COVID-19 pandemic. Emergency Family and Medical Leave Expansion Act of 2020

This is essentially a temporary expansion of the eligibility requirements for existing FMLA provisions.

Eligibility

  • Applies to companies with more than 50 employees.
  • Covers employees forced to take leave to either care for a family member infected with COVID-19 or children under the age of 18 who are home due to COVID-19 related school or childcare closures.

Requirements

  • Employees are required to provide the employer with notice of leave as soon as practicable.
  • The first ten days of leave are unpaid under this provision. However, employees on leave would likely receive pay under the simultaneously-enacted Emergency Paid Sick Leave Act (discussed below). Otherwise, employees may either elect to use employer provided sick leave, vacation time, PTO, or go unpaid for the first ten (10) days of the leave.
  • Employers are required to pay 2/3 of the employee’s regular pay rate for every day the employee remains on leave after the first ten (10) days. If the employee works an irregular schedule, the employer is required to pay the employee for the average number of hours worked per day over the six (6) months immediately preceding the employee’s leave. If the employee did not work over the previous six months, the employer is required to pay the employee based on the number of hours the employee reasonably expected to work per day upon being hired.
  • Note that the new law relaxes the existing FMLA reinstatement requirements, if the employee’s position is eliminated due to a change in economic or operating conditions attributed to the public health emergency.

Applicable Tax Credits

  • Employers may credit against their quarterly payroll taxes 100% of the family leave wages paid to employees under the Emergency Family and Medical Leave Expansion Act with the following limitations:
    • credits are limited to $200 in wages per employee per day; and
    • the aggregate amount of the credit that can be taken with respect to all calendar quarters is $10,000.

Emergency Paid Sick Leave Act of 2020
Please be advised that the Emergency Paid Sick Leave Act of 2020 goes into effect on Thursday, April 2, 2020, fifteen (15) days after the bill was signed by the President and sunsets December 31, 2020.

Eligibility

  • Employers with fewer than 500 employees are covered under the Emergency Paid Sick Leave Act of 2020.
  • Employers are required to provide each employee paid sick time if the employee is unable to work (or telecommute) due to the employee:
    • being subject to federal, state, or local quarantine or isolation order due to COVID-19;
    • advised by a healthcare provider to self-quarantine due to COVID-19 related concerns;
    • the employee is experiencing symptoms of COVID-19 and is seeking a diagnosis;
    • the employee is caring for someone who is under quarantine due to COVID-19 concerns or who has been ordered to isolate by the government due to COVID-19 concerns;
    • the employee is caring for a son or daughter, if the son or daughter’s school or regular child care provider is closed or unavailable due to COVID-19 precautions; or
    • the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Requirements

  • Full-time employees are entitled to eighty (80) hours of paid sick leave.
  • Part-time employees are entitled to paid sick leave equal to the total number of hours that the employee works on average in a 2-week period.
  • Paid sick time provided under this Act shall cease immediately up the employee’s next scheduled work shift following the termination for the employee’s need for sick leave.
  • Employers cannot force employees to use other paid leave provided by the employer or another source before using leave provided under this Act. Thus, in the event of a protracted shutdown, employees should first be paid sick leave under this Act, followed by sick leave required by any local ordinance (e.g., San Francisco OLSE regulations), and then the employee’s own accrued sick time, if any.

Employers cannot terminate employees for using paid sick leave under this Act.

Limitations on Paid Sick Time

  • Employers may pay up to $511 per day ($5,110 in the aggregate) to employees who are subject to a government mandated quarantine, the employee is advised by a health care provider to self-quarantine, or the employee is experiencing symptoms of COVID-19 and is seeking a diagnosis.
  • Employers may pay up to $200 per day ($2,000 in the aggregate) for employees who are caring for children home due to school and child care facility closures attributed to COVID-19, the employee is caring for someone who is quarantined due to COVID-19 concerns or who has been ordered to isolate by the government due to COVID-19 concerns, or the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Applicable Tax Credits

  • Employers may credit against their quarterly payroll taxes 100% of the family leave wages paid to employees under the Emergency Paid Sick Leave Act with the following limitations:
    • credits are limited to $200 in wages per employee per day, or $511 if the employee is subject to a government mandated quarantine, the employee is advised by a health care provider to self-quarantine, or the employee is experiencing symptoms of COVID-19 and is seeking a diagnosis; and
    • the aggregate number of days taken into account for any calendar quarter shall not exceed the excess of ten (10) over the aggregate number of days so taken into account for the preceding calendar quarters.

Tax Credit Relief Available to Self-Employed Individuals
H.R. 621 also provides tax credits to self-employed individuals who are unable to provide services due to COVID-19. These tax credits are available under Emergency Family and Medical Leave Expansion Act of 2020 and the Emergency Paid Sick Leave Act of 2020.

Emergency Family and Medical Leave Expansion Act of 2020

  • Self-employed individuals may utilize a tax credit against any self-employment taxes owed if the self-employed individual took leave they would have qualified to receive pay for under this Act if they were an employee. The amount of the credit is determined by the product of
    • The number of days in the tax year, not to exceed 50, that the individual is unable to provide services due to having to care for a family member infected with COVID-19 or a child under 18 who is home due to school or child care closures attributed to COVID-19; multiplied by the lesser of
    • $200; or
    • 67% of the average daily self-employment income for the applicable tax year. The average daily self-employment income is determined by dividing the net earnings of the self-employed person for the applicable taxable year by two hundred sixty 260.

Emergency Paid Sick Leave Act of 2020

  • Self-employed individuals may utilize a tax credit against any self-employment taxes owed if the self-employed individual took leave they would have qualified to receive pay for under this Act if they were an employee. The amount of the credit is determined by:
    • the lesser of $200 per day (or $511 per day if the employee is subject to a government mandated quarantine, the employee is advised by a health care provider to self-quarantine, or the employee is experiencing symptoms of COVID-19 and is seeking a diagnosis);
    •  or 67% of the average daily self-employment income for the applicable tax year. The average daily self-employment income is determined by dividing the net earnings of the self-employed person for the applicable taxable year by two hundred sixty (260).
  • The maximum number of days the self-employed person can take into account for the purposes of the tax credit are ten (10) days over the number of days the self-employed person was unable to perform services in the preceding tax year.

Please reach out with any questions or concerns about the resources highlighted in this email. We will continue to provide you with updates and resources to get you through this challenging time. Please be advised that this email was prepared for information purposes only. This email does not constitute legal advice.

Please contact The Mitzel Group if you have any specific questions regarding your business and the COVID-19 pandemic response.