As an employer navigating these uncertain and unprecedented times, you have a lot on your plate. You are probably wondering how to best protect your business and employees while following the latest regulations about the coronavirus. We are here to break it all down so you can be sure your business remains in good standing.
The good news is that the government recently enacted the Families First Coronavirus Response Act (FFCRA). This law requires employers to provide employees with paid sick leave or expanded family and medical leave for reasons related to COVID-19. These benefits are intended to help businesses help their employees by providing additional leave and supplemental income during this time—at no additional cost to employers!
In this post, we’re diving into the details and answering all your FAQ’s about one aspect of this legislation, the Emergency Paid Sick Leave Act. Watch our video summary of the paid sick leave benefit, then continue reading our complete guide. Be sure to stick around until the end for downloadable resources.
Emergency Paid Sick Leave Fast Facts
- Covers certain public and private businesses with less than 500 employees
- Required for all employees immediately, regardless of length of employment
- Applies through December 31, 2020
- Addition to employer’s existing sick leave policy
- NOT available to businesses on a temporary shutdown
- NOT retroactive – began April 1st
Employers are required to provide one of two benefits to all employees:
- Pay at the employee’s regular rate for two weeks (up to 80 hours) when the employee is unable to work because they are quarantined and/or experiencing COVID-19 symptoms and seeking a medical diagnosis
- Pay at ⅔ or 66.66% of employee’s regular rate for two weeks (up to 80 hours) because they are unable to work due to:
- A need to care for an individual subject to quarantine
- A need to care for a child whose school or childcare provider is closed or unavailable for reasons related to COVID-19
- And/or the employee is experiencing a substantially similar condition
What employees are covered?
Under the FFCRA, an employee qualifies for paid sick leave if the employee is unable to work (or telework) because:
- The employee is subject to a federal, state, or local quarantine or isolation order;
- The employee has been advised by a health care provider to self-quarantine;
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- The employee is caring for an individual to which points 1 or 2 apply;
- The employee is caring for a child if the child’s school or place of care has been closed 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 Secretaries of Labor and the Treasury.
How does it work?
Next, let’s take a look at how to calculate emergency paid sick leave for your employees.
Full-time employees are eligible for up to 80 hours of leave, while part-time employees are eligible for the number of hours they work on average over a two-week period.
For Qualifying Reasons 1-3 listed above (i.e., if the employee directly is sick/under quarantine):
- Maximum of $511 per day
- Maximum total = $5,110 (over a 2 week period)
For Qualifying Reasons 4-6 listed above (i.e., if the employee is caring for someone else):
- 2/3 (66.66%) of employee’s regular rate of pay
- Maximum of $200 per day
- Maximum total = $2,000 (over a 2 week period)
How should I manage this benefit?
First, make sure you post the required notice of the FFCRA requirements in a conspicuous place on your premises. We recommend posting it in the same area as your labor law posters. We’ve included a download of the Department of Labor’s model notice for you.
As for the process, your employees should notify the appropriate manager of their need for leave and the reason. We’ve also included a downloadable sample emergency sick leave policy with a request form. You can edit this policy with your business details and distribute it to your employees.
How will I pay for it?
This is the part where you can breathe a sigh of relief because you as the employer will be reimbursed for 100% of the costs!
The government is providing business owners with a dollar-for-dollar tax credit for all qualifying wages paid under the FFCRA. Qualifying wages are those paid to an employee who takes leave under the Act for a qualifying reason, up to the maximum payments listed above.
To answer another question, yes, you are still responsible for an employee’s health benefits during emergency paid sick leave. Fortunately, applicable tax credits extend to amounts paid or incurred to maintain health insurance coverage.
Ok great, so how do I get reimbursed?
Let’s walk through it with an example calculation:
You (the employer) paid $5,000 in sick leave and your next quarterly payroll taxes would total $8,000.
$8,000 (payroll taxes)
– $5,000 (sick leave)
$3,000 (remaining payroll taxes you’re responsible for)
Did you pay your taxes before this act was finalized and discover you actually owed less? No worries! You can simply submit a form for an immediate tax credit. The good news is that you don’t need to wait until the end of the year to do this, but can submit the form on your next regular deposit date.
Bonus Tax Tips:
- Double-check with your payroll specialist, CPA, and/or tax accountant to ensure your taxes are calculated correctly with the new expanded leave policies.
- Create a new deduction code in your payroll system to keep your records and paperwork clean.
Stay Compliant and Protect Your Employees
There is a lot of legislation and information being released and updated daily, but this is no reason to get overwhelmed! These programs are intended to protect both businesses and employees.
Check out our blog post on the Expanded Family and Medical Leave Act for more information and guidance on the second aspect of the FFCRA.
If you have additional questions or concerns, please contact BlueLion at 603-818-4131 or email us at [email protected]. We are currently offering FREE services to small employers regarding COVID-19 related issues. We are happy to help your company stay compliant and come out successful on the other side of this.