Employer Incentives Under the New Federal Coronavirus Response Act

 Last week, you probably felt inundated with COVID-19 information and updates.  Everything – and I mean everything – seems to be evolving rapidly.  On March 18, the President signed an emergency law (the “Family’s First Coronavirus Response Act”) to provide initial relief to workers in the wake of the pandemic. The law expands federal FMLA and grants paid sick leave.  It becomes effective April 2, 2020 and expires on December 31, 2020.  Since it’s passage, there have been a slew of articles about the Response Act’s implication for workers and employees.  Perhaps rightfully so.  But, what about employers?  Here’s some information that you should know:

The law provides refundable tax credits.

Employers are eligible for a refundable payroll tax credit covering 100% of both sick leave and FMLA wages paid to employees.

For sick leave wages paid to employees, employers will be reimbursed for up to 10 days of payment to employees who are under self-quarantine or are getting tested for COVID-19.  The credit is a maximum of $511 per day and a total of $7,156 per employee.

For FMLA payments to employees under the new law, employers will again be reimbursed for up to 10 days of payment to employees who are caring for a family member affected by the coronavirus or a child following the child’s school closing.  The credit is a maximum wage of $200 a day and a total of $10,000 per employee.

Both of these credits may be claimed each quarter.

A refresher on the key components of the law. 

The paid sick leave component of the law requires employers with fewer than 500 employees to provide sick leave at 100% of the employee’s pay for the following reasons:

• The worker has a current diagnosis of COVID-19; or
• The worker is quarantined (including self-imposed quarantine), at the instruction of a health care provider, employer, or government official, to prevent the spread of COVID-19.

Employers must provide sick leave at 2/3rds of the employee’s pay for the following reasons:

• The worker is caring for another person who has COVID-19 or who is under a quarantine related to COVID-19; or
• The worker is caring for a child or other individual who is unable to care for themselves due to the COVID-19-related closing of their school, child care facility, or other care program.

The emergency expansion of the FMLA leave component of the law requires employers with fewer than 500 employees to provide 12 weeks of paid leave for a worker employed longer than 30 days for:

• The care of minor children who need care because of the closure of a school or daycare; or
• Other qualified reason due to the inability to work due to the COVID-19 pandemic.

The paid benefits are available after two weeks (10 days) of leave, covered either by the sick leave covered under the new law, an employer’s sick preexisting sick leave, or unpaid time. These benefits are to be paid at a rate of 2/3rds of the employee’s regular rate up to $200 per day and $10,000 in aggregate.