The Families First Coronavirus Response Act is intended to relieve some of the tremendous economic harm caused by Covid-19. It provides family and medical leave as well as sick leave to employees. It also provides tax credits to employers and self-employed individuals to reimburse them for the additional cost of the Act.
This portion of the act requires employers with fewer than 500 employees to provide both paid and unpaid public health emergency leave to certain employees through December 31st, 2020. This leave is available to employees who are unable to work or telework due to the need to care for a dependent who has been affected by a school closure. The first 10 days of absence may be unpaid. Then, after 10 work days, paid leave of at least 2/3rds of the employee's regular rate is required. This rate may not exceed $200 per day per employee or $10,000 in total for the Company.
Private employers with fewer than 500 employees, and public employers of any size, must provide 80 hours of paid sick leave to full-time employees medically affected by Covid-19. Part-time employees are entitled to sick leave equivalent to two weeks worth of hours. This paid sick leave is immediately available to all employees regardless of length of time employed.
The amount that employees can claim varies based on why they are missing work. If they are sick or seeking treatment, they must receive their regular rate (up to $510 a day and $5110 total). Employees staying home to care for dependents affected by school closures are entitled to 2/3rds of their regular rate (up to $200 a day and $2,000 in total).
Employers CANNOT require employees to find a replacement worker OR use other sick time before this sick time. This sick leave mandate expires on December 31st, 2020.
The government is offering tax credits to employers to offset these costs. Payments to employees covering sick leave and family care within the bounds of this Act will generate equivalent tax credits for the employer. So, if an employee is paid $2,000 under the EPSLA, the employer will be entitled to a $2,000 tax credit from the federal government. These credits are refundable so long as they exceed the employer's payroll tax.
This Act also provides tax credits for the self-employed. If the individual is taking sick leave, he or she is entitled to a tax credit worth 100% of his or her regular rate (up to $511 a day). If the individual is caring for a dependent affected by a school closure, he or she is entitled to a tax credit worth 67% of his or her regular rate (up to $200).
Self-employed individuals may also claim a credit for up to 50 days of family sick leave under EMFLEA. The rate is 67% of the individuals average income, up to $200 a day.
We encourage our clients to contact us with their questions and concerns.
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