Paid Leaves Effective 4/1/2020

Employers with 1 to 500 employees are subject to this new federal law (H.R. 6201). Effective 4/1/2020, it provides temporary benefits for employees who are directly impacted by COVID-19 (coronavirus).

• Both part-time and full-time employees are eligible.
• Employees are NOT eligible for these benefits if they are on a leave of absence or furlough and are not working at the time they become eligible.

We expect to hear that companies with under 50 employees may be excluded if the required benefits would jeopardize the viability of the business. Clearer guidelines are expected soon. It appears the exemption would only be for the childcare leave within the Emergency FMLA (see below). This law is set to expire on 12/31/2020.

Emergency Paid Sick Leave

Employers must pay employees for up to 80 hours (or two weeks) of paid sick leave at the regular rate for qualified full- or part-time employees. The regular rate is calculated from the average compensation over the past six months. There is no minimum length of employment to be eligible and prior absences do not count against this leave.

The company must provide two weeks (up to 80 hours) of additional paid sick leave to qualified employees. This is in addition to any balance they may have. If you do not provide “new” sick time, you cannot be reimbursed for it.

Qualified employees must have certification showing they are:

• Subject to quarantine or an isolation order related to COVID-19 (full pay up to $511/day; $5,110/employee) – This does not apply to the general work closures or Federal, State or local directive to shelter in place. The employee must provide you a copy of the order they receive.
• Advised by a doctor to self-quarantine (full pay up to $511/day; $5,110/employee) – The employee must provide you a certification from the doctor.
• Showing COVID-19 symptoms and getting a medical diagnosis (full pay up to $511/day; $5,110/employee) – The employee must provide you a certification from the doctor.
• Caring for an individual subject to a quarantine or isolation order or one who has been advised by a doctor to self-quarantine (2/3 pay up to $200/day; $2,000/employee). – The employee must provide you a certification from the doctor of the person they are caring for.
• Caring for their child due to school closure or childcare provider is unavailable due to a public health emergency (2/3 pay up to $200/day; $2,000/employee) – The employee must provide you with the notice or email they received citing the closure.
• Other substantially similar conditions specified by the federal Secretary of Health in consultation with the Secretaries of Treasury and Labor (2/3 pay up to $200/day; $2,000/employee) – This is not yet available.

Certification

The employee must provide appropriate certification to qualify for the Emergency Paid Sick Leave. While you don’t need the certification immediately, make sure you have it before paying the employee.

Without the proper certification, you will not be able to withhold payroll taxes to reimburse you for the money spent on this EPSL. You may need to provide this to IRS at tax time.

The certification must include:

• Employee name
• Qualifying reason for leave
• A statement that the employee is unable to work (or telework) for that reason
• Dates of the requested leave
• Documentation of the reason for the leave, such as the quarantine or isolation order, the name of the healthcare provider advising the employee to self-quarantine, or the posted notice or email of the closure of the school or childcare provider

Emergency Family and Medical Leave (EFMLA)

Any company with 1 – 500 employees is subject to this component of the law, unless the company has received an exemption.

• Eligibility:
  • Full- and part-time employees who have been employed by you for at least 30 calendar days.
• Childcare Leave – The eligible employee is unable to work (or do remote work) because closures have resulted in a need for childcare leave.
  • Up to 12 weeks total time off.
  • The first 10 days are unpaid but the employee may use any available paid time off.
  • After 10 days, the employer pays the employee 2/3 of their regular rate of pay and usual number of hours. The pay is capped at $200/day or $10,000/person.
  • The employee’s job is protected in companies of 26 or more employees.
  • This is not available if the employee has been put on a furlough.

Tax Credits for Paid Leave

The law allows a tax credit for 100% of the qualified Emergency Paid Sick Leave and Caregiver Leave wages paid by the company. The company and employee must meet the qualifications to be eligible for the tax credits. Companies may deduct those wages from their normal tax payments made to the IRS by retaining withheld federal income taxes and both the employer and employee Social Security and Medicare taxes. Talk with your payroll provider about:

• Creating new earning codes for the EPSL and EFMLA because you want to keep that money trackable for the IRS.
• What paperwork they need to stop submitting the relevant taxes to the IRS after you have had to start paying anything out for EPSL or EFMLA.