The Families First Coronavirus Response Act (FFCRA) took effect in April 2020. It provides employers with a refundable tax credit for dispensing paid leaves to employees. Also, the FFCRA provides employees affected by COVID-19 with paid sick leave and other paid leaves.
A business is eligible for the Act if it has less than 500 employees, including temporary employees and day laborers. However, certain employers with fewer than 50 staff members may be exempt from the FFCRA’s requirements to provide paid sick leaves and expanded family and medical leaves.
This article will discuss the provisions of the FFCRA, the tax credit implications on your practice, and the next steps you can take.
Provisions under the FFCRA
Employers need to take note of two types of paid leaves: the Emergency Paid Sick Leave Act (EPSLA) and the Extended Family and Medical Leave Expansion Act (EFMLEA).
Under the EPSLA, eligible employers are mandated to grant employees up to two weeks, or 80 hours, of paid sick leave. Staff members are eligible for sick leave benefits if they meet the following situations that require absence from work:
- Self-isolation because the employee was diagnosed with COVID-19.
- The employee is seeking a diagnosis or preventive care because of COVID-19 symptoms.
- Compliance with a recommendation or order from a healthcare provider or public health official to stay home.
Under these conditions, employees must receive their regular pay rate, up to $511 per day.
Other instances that fall under EPSLA include caring for a family member who is quarantined due to a COVID-19 diagnosis, exhibiting symptoms, or seeking medical care. In this instance, employers must grant paid leaves to workers at two-thirds of their regular pay (up to $200) if their team members cannot work.
The EFMLEA, on the other hand, applies to employees who have worked at least 30 days before the designated leave. It applies to an employee taking care of a child or children whose school has been closed or if a childcare provider is inaccessible due to COVID-19. Team members who require absence from work, or are unable to telework, may avail of this benefit.
Employers must offer at least 10 unpaid leaves; however, staff members can use accrued paid leave (either sick pay or vacation pay) as they see fit. Employees are also entitled to receive two-thirds of their regular income (up to $200 a day) as an additional benefit.
What to keep in mind
Requests for leaves must be documented properly. When granting leaves, the following information must be provided:
- The name of the employee
- Requested dates
- The reason for leave, and
- A statement from the employee that he or she is unable to work because of the aforementioned reason.
In the event of school closures and/or unavailable childcare providers, practices must note the following:
- The name of the child being cared for,
- The name of the school, place of care, or childcare provider, and
- A statement from the employee that no other suitable person is available to care for the child.
Tax implications
Employers can receive a refundable tax credit due to the required payout of the sick leave or family leave pay. Tax credits are dollar-for-dollar and will be taken on Form 941 for each quarter.?
If you are utilizing a third-party payroll provider, you must inform them of the payouts you will make to separately track the information. Your payroll provider should be able to handle documentation accordingly.?
Tying it all together
Given that government legislations are often subject to change, please keep posted through the Department of Labor website for the most up-to-date information on the FFCRA. If you have any concerns about tax implications and employee concerns, stay in touch with your CPA and HR provider.?
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