The Families First Coronavirus Response Act (FFCRA or Act) is part of the federal government’s effort to minimize the economic impact felt by American families dealing with the COVID-19 global pandemic.
Together with the Coronavirus Aid, Relief and Economic Security (CARES) Act, also enacted by the U.S. Congress this March, FFCRA seeks to address the following stark realities:
- For many businesses, operations have ceased entirely or have been severely restricted in the wake of the pandemic.
- Without enough incoming revenue, many businesses struggle to pay employees or pay rent on commercial leases, for example.
- Many employees are out of work, either temporarily or permanently, because of furloughs and lay-offs. This has placed many households across the U.S. under incredible financial strain.
- Other employees are unable to work because:
- They’ve been exposed to, show symptoms of, or test positive for COVID-19 and are thus under a quarantine or isolation order from local/state/federal government – or have been advised to quarantine or self-isolate from a health-care provider.
- They’re caring for a sick individual who is under governmental or health care provider orders to self-isolate or quarantine to prevent the spread of infection to someone else.
- They no longer have a source of childcare because of school or childcare closures.
For this post, we’ll focus on what small- to medium-sized businesses need to know about the FFCRA, by explaining in greater detail:
- What the Act is designed to do
- How this legislation affects your company
- How it benefits your employees
About the Families First Coronavirus Response Act (FFCRA)
The FFCRA – which was passed by Congress and signed by the President on March 18, 2020 – went into effect on April 1, 2020, and sunsets on December 31, 2020.
- Provides federally mandated emergency paid sick leave
- Expands the federal Family and Medical Leave Act (FMLA) and provides emergency provisions for coverage and eligibility
- Expands unemployment insurance benefits
- Provides employer tax credits to qualifying employers for certain costs related to the implementation of this law
While noting that employees who can telework and certain healthcare providers and emergency responders aren’t eligible for the benefits described within this law, let’s take a closer look at each of the above items.
Federally mandated paid sick leave
Usually the laws of the individual states, counties and municipalities in which you operate your business determine whether you’re required to provide paid sick leave to employees.
Under the FFCRA, however, if your business has fewer than 500 employees, you’re required to provide all eligible employees with paid sick leave – regardless of the length of their employment.
6 qualifications for paid sick leave:
- When an employee is quarantined or isolated subject to federal, state or local quarantine or isolation order.
- When advised by a health care provider to self-quarantine (due to concerns related to COVID-19).
- When experiencing symptoms of COVID-19 and seeking a medical diagnosis.
- When caring for an individual doing No. 1 or No. 2 (2/3 pay).
- When caring for a child whose school or place of care is closed due to COVID-19 (2/3 pay).
- When the employee is experiencing any other substantially similar condition (2/3 pay).
Part-time or irregularly scheduled employees are entitled to receive paid sick leave based on their average number of hours worked in the six-month period prior to taking sick leave.
Employees who have not worked at your company for six months are entitled to paid sick leave for the average number of hours they would have normally worked over a two-week period.
At the same time, employees are required to comply with your company’s normal policies and procedures outlining notice for requesting sick leave.
And note that this paid sick leave can be applied to the 10-day elimination period for emergency FMLA leave.
Rate of pay
- Sick leave must be paid at the employee’s regular rate of pay for leave used for the employee’s own illness, quarantine or care.
- Sick leave must be paid at two-thirds of the employee’s regular rate if taken to care for a family member or to care for a child whose school has closed, or if the employee’s childcare provider is unavailable due to the coronavirus.
- Pay is capped at $511/day and $5,110 total for reasons 1, 2 and 3 described above.
- Pay is capped at $200/day and $2,000 total for reasons 4, 5 and 6 described above.
Small Business Exemption
Employers with fewer than 50 employees may be eligible for an exemption from the childcare leave provisions if at least one of the three statements below are true.
- Providing leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause it to cease operating at a minimal capacity.
- The absence of the employee or employees requesting leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business or responsibilities.
- There are not sufficient workers who are able, willing and qualified, and who will be available at the time and place needed, and these labor or services are needed for the small business to operate at a minimal capacity.
Emergency expansion of the FMLA
Under normal circumstances, the Family Medical Leave Act (FMLA) of 1993 requires your company to provide employees with up to 12 weeks of job-protected, unpaid leave so that they can deal with personal health or medical issues, or take care of spouses, children or parents.
So, why is there an emergency expansion of FMLA, as well?
Simply put, it’s to provide support for employees caring for a minor child (under 18 years of age) whose school or place of care during the employee’s normal working hours has closed because of COVID-19.
If you have fewer than 500 employees – and you have employees who find themselves in that situation who have been working at your company for at least 30 days, then you now must provide them with up to 12 weeks of job-protected, paid leave.
In addition, note that:
- Emergency FMLA has a 10-day elimination period, during which you’re not required to continue paying employees. Employees can use their accrued time off, including paid sick leave, vacation or other paid time off (PTO) to cover some or all this time. Emergency paid sick leave can also be used during this time.
- Following the elimination period, you must continue paying eligible employees at two-thirds of their regular pay rate for their normally scheduled work hours.
Again, as mentioned earlier, the maximum amount of pay employees can receive is $200 per day, or $10,000 total per employee.
- You must pay part-time or irregularly scheduled employees based on the average number of hours they worked in the six-month period prior to taking emergency FMLA leave. Employees who haven’t worked at your company for six months are entitled to pay based on the number of hours they reasonably expected to work at the time they were hired.
Regarding an employees’ right to return to work after taking leave, remember:
- If you have at least 25 employees, you must comply with the same job-reinstatement requirements for employees who take emergency FMLA leave as traditional FMLA leave requires.
- Employers with fewer than 25 employees generally don’t have to comply with job-reinstatement requirements if the position that an employee held no longer exists because of the economic downturn or any other circumstance arising from COVID-19. That said, there some additional requirements in this situation, spelled out in greater detail on the U.S. Department of Labor’s FFCRA FAQ page.
- If you have fewer than 50 employees and can demonstrate that providing emergency FMLA benefits to employees will jeopardize the viability of your business, you may qualify for an exemption for this component of the Act.
Employer tax credits
Covered employers qualify for dollar-for-dollar reimbursement through tax credits 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 appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage.
For more information specific to employer tax credits, please see the Department of the Treasury’s website.
Expansion of unemployment benefits
If an employee were to lose their job due to the economic downturn, the current situation may make it harder for them to find a new position.
Consequently, the federal government will provide funding – under certain circumstances – for states’ unemployment insurance activities associated with the payment and processing of unemployment claims. At the time of this writing, however, there is some ambiguity around how this funding will roll out.
As an employer, note that you’re required to notify impacted employees of the availability of unemployment benefits. This must be done when the employee is separated from employment.
Additional employee support
Department of Labor regulations make clear that if a health care provider instructs a person in a vulnerable population to stay home, then they’re covered under the FFCRA.
When an employee is absent from work for a medical reason not covered under FFCRA, employers may opt to place those employees on leave. Then, the employee may apply for disability benefits. Employees may also be subject to traditional FMLA, or employer sponsored PTO and sick leave policies.
Employees who experience furloughs, layoffs or are unable to work because their employers are no longer able to pay them, however, may wish to file for unemployment.
Informing employees about FFCRA
As an employer, you’re required by law to alert your employees about FFCRA.
This means displaying a FFCRA poster outlining employee rights in a conspicuous location within your workplace. In this era of social distancing and remote working, you can also satisfy this requirement by emailing or mailing this information to your employees.
For more information on where, how and with whom to share FFCRA notices, please see the U.S. Department of Labor’s website.
Additional FFCRA information
As guidance for business owners and leaders is update, check the following places for more information:
Dept. of Labor’s draft instructions on how to access and administer payroll tax credits. Once final instructions are released, they will be listed here.
Summing it all up
Through emergency FMLA leave and paid sick leave, the FFCRA aims to give working Americans a little extra peace of mind. With the Act in place, the hope is that they’ll continue to cover their necessities – such as mortgages, rent, bills, medication and food – during this uncertain time.
Through expanded unemployment benefits, your employees will have assurance that – should they lose their job through no fault of their own – they can still provide for themselves and their families during what could be a prolonged job search.
Beyond the federal requirements outlined in the Act described above, employers may also want to consider:
- Whether your employees might work remotely – and what actions may be necessary to facilitate their switch to remote work, since so doing may benefit both your business and your team
- The structure and flow of your current leave request process, including whether your employees know where or how to access information on emergency paid sick leave or emergency FMLA
Remember, too, that in times like these, a trusted professional employer organization (PEO) can provide valuable HR guidance and support, helping you minimize compliance risks.
Here at Insperity, we remain dedicated to helping existing and new clients alike reduce liabilities and proactively manage employer responsibilities. Why? Because we know that as a savvy business leader, you’re as concerned about protecting your people and your business now as you will be for years to come.
For more information and updates specific to the Coronavirus pandemic, please visit our COVID-19 resources page.