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Corona Virus Sick Leave Updates

As more information comes available here is the latest we can provide on what we do know and what we don’t know about the new sick leave bill, The Families First Coronavirus Response Act was passed and signed into law on March 18 to become effective April 2.

  1. Only for time off incurred after April 2: At this point, it appears the law is not retroactive and will expire Dec 31, 2020 so everything you do prior to April 2 comes under existing law.  This means if you pay any benefits for a period of work prior to April 2 they are not covered even if paid in a paycheck dated after April 2.
  2. Applies to all small businesses: The new law applies to all employers with under 500 employees so every small business needs to become informed.
  3. The law grants ONLY three types of Emergency Family and Medical Leave:
    1. Emergency Sick leave wages for your own personal use:
      1. Only three qualifying reasons:
        1. Subject to a federal, state or local quarantine or isolation related to COVID-19
        2. Advised by a health care provider to self-quarantine due to COVID-19 concerns
        3. Experiencing COVID-19 symptoms and seeking medical diagnosis.
      2. Max pay is $511 per day up to $5,110 for any individual
  • Pay rate is higher of regular rate of pay or fed/local minimum wage
  1. Emergency Sick leave for family medical to care for others:
    1. Only three qualifying reasons:
      1. Caring for an individual subject to one of the three sick leave rules above.
      2. Caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency.
      3. Experiencing any other substantially similar condition specified by specific government agencies listed in the act.
    2. Max pay is $200 per day up to $2,000 for any individual
  • Pay rate is higher of 2/3 of the regular rate of pay or fed/local minimum wage.
  1. Extended Family Medical Leave: Any employee may request 12 weeks of job-protected leave to care for the employee’s child under age 18 if the child’s school or place of care is closed or the childcare provider is unable due to public health emergency.  Employers with 25 or more employees must return the employee to the same or equivalent position upon return to work.    Employers with fewer than 25 employees are generally excluded from this requirement if the position is no longer exists due to an economic downturn or other circumstances caused by a public health emergency.

 

An employer is not required to pay for the first 10 days of emergency leave but the employee may use existing sick leave or vacation to pay for this first 10 days off.  After this 10 day period, the employer generally must pay full-time employees at two-thirds the employee’s regular rate of pay.  This amount is limited to $200 per day and a maximum of $10,000 per employee.

 

  1. Employers will be reimbursed for these costs by reducing the payment to the IRS of the employer portion of the social security payroll tax deposit. Employers are entitled to a refundable credit of any leave payments made but not reimbursed by reducing the social security tax deposits.  It appears this refundable credit will be a part of the filing of the quarterly payroll tax forms.
  2. Combined benefits from all the above is 12 weeks per employee.
  3. There is a similar credit for self employed but details will follow how and where to claim.

 

What we don’t know:

We don’t know if the above payments will be considered taxable wages.

We don’t know if the employer has to withhold and match social security & Medicare tax

(some sources say it is taxable for Medicare but not social security)

We don’t know if the employer will be reimbursed for any matching payroll taxes

We don’t know if these wages will qualify for 401k/pension plan contributions

We don’t know if these wages will be subject to federal and/or state unemployment

We don’t know if the payroll software will be prepared to handle all these options.

 

All eyes are on the Secretary of Labor to issue regulations to clarify this new law before April 2.

 

This new law has nothing to do with unemployment.  Those rules are state-specific and continue as they have in the past.  The above benefits are available to any employee who has been employed for 30 days.

 

There are lots of interpretations out there on this bill.  This is simply our best understanding based on information we have read to this point.  Please watch for the official guidance from the Secretary of Labor.

 

Every day is a new day and we strive to provide accurate information as soon as we can so you can adjust accordingly in your business.

 

God Bless everyone and be safe.

Bert Doerhoff

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