On Wednesday, March 18, 2020, the president signed HR 6201, the Families First Coronavirus Response Act (FFCRA), into law. The law contains several different provisions (also called Acts) that significantly impact employer benefits and leave policies.
In short, the FFCRA: 1) Extends and expands FMLA protections in certain situations; 2) provides a new paid sick leave entitlement for work absences related to the coronavirus (COVID-19); 3) provides tax credits for employers to help address related employer costs of these benefits; and 4) requires group health plans to cover COVID-19 related tests, services and other items without cost sharing. Generally, the first three provisions apply to employers with fewer than 500 employees. They take effect April 1, 2020, and will be in effect through 2020. The fourth applies to any group health plan, takes effect immediately, and will expire when HHS determines that the public health emergency has expired. Importantly, the paid sick leave and expansions to FMLA do not apply to employers with 500 or more employees.
Since the FFCRA passed, the DOL and IRS have provided additional guidance to clarify and answer questions about the Act. Below is a discussion of the FFCRA provisions and the subsequent guidance provided by the federal government.
The Emergency Family and Medical Leave Expansion Act:
This provision modifies the FMLA by expanding the circumstances under which an employee is entitled to take leave. Specifically, employees can take FMLA-protected leave if they have a “qualifying need,” which means the employee is unable to work or telework due to a need to care for their child (under age 18) if the child’s school or daycare has closed because of a public health emergency (defined as a COVID-19 emergency declared by a federal, state or local authority).
The first 10 days of this expanded FMLA leave is unpaid, although the employee may utilize accrued vacation, PTO or sick leave during that time (in accordance with the employer’s leave policy). During the first 10 days, the employee may also qualify for paid leave under the Emergency Paid Sick Leave Act (discussed below), in certain circumstances. For each day of FMLA leave taken thereafter, employers are obligated to pay employees at the rate of two-thirds of the employee’s regular pay rate. The amount of paid leave is capped at $200 per day and $10,000 in the aggregate.
Importantly, all employers with fewer than 500 employees must comply with the expanded leave entitlements (a change to the 50-employee threshold that currently applies under FMLA). That said, the law gives the DOL authority to exempt employers with fewer than 50 employees if the paid FMLA provisions would jeopardize the viability of the business.
To help with the expanded FMLA-related tax burden, employers may claim a tax credit of 100% of qualified FMLA wages paid to employees, capped at $200 per day and $10,000 per quarter per employee.
Emergency Paid Sick Leave Act:
This provision applies to employers with fewer than 500 employees and requires employers to provide up to 80 hours of paid sick time to individuals who are:
- Diagnosed with COVID-19, self-isolating or obtaining a diagnosis/care for COVID-19 symptoms
- Under quarantine to comply with an official order or recommendation because of COVID-19 exposure or symptoms
- Providing care to a COVID-19-diagnosed individual or an individual seeking a diagnosis or care for symptoms of COVID-19
- Caring for an individual affected by a school or other care facility closing
- Experiencing similar conditions specified by HHS (in consultation with the DOL and Treasury)
This provision applies to all employees (regardless of how long they’ve been employed). Full-time employees may use up to 80 hours of sick time, while part-time employees may use proportionally less time, based on the average number of hours the employee works over a two-week period. An employee may not carry this sick time over into the next year, nor is an employee entitled to payment of unused sick time upon separation from employment. Emergency paid sick leave does not diminish the rights and benefits to which an employee is entitled under state or local law (such as a state sick leave or paid family and medical leave law), a collective bargaining agreement, or an existing employer leave policy.
During sick leave relating to an employee’s own condition, employers are obligated to pay employees the higher of their regular rate of pay or the applicable minimum wage. That amount is capped at $511 per day and $5,110 in the aggregate. For sick leave taken to care for a family member, the rate of pay is reduced to two-thirds of the employee’s regular rate of pay. That amount is capped at $200 per day and $2,000 in the aggregate.
To help employers shoulder the financial burden, employers can claim a tax credit equal to 100% of qualified sick leave wages paid to employees. These credits, however, are limited to $200 or $511 per day, depending on the qualifying leave event. Employers can claim a full credit for employees earning up to $132,860 in income and a partial credit for higher earners.
Employers must post a notice relating to the Emergency Paid Sick Leave Act in their workplace.
Mandated COVID-19 Coverage for Employer-Sponsored Group Health Plans:
Under this provision, group health plans of any size (insured and self-insured, including grandfathered plans) and health insurers in the group and individual market are required to cover COVID-19 tests and related services without cost sharing or prior authorization requirements. Excepted benefits and retiree-only plans are exempt. (Separately, most states have published guidance that requires COVID-19 coverage without cost sharing as well, which would apply to fully insured plans in each state.) Employers should work with their carriers and plan administrators to ensure COVID-19 coverage is provided.
The tests and services include in vitro diagnostic tests (cleared by the FDA) and items and services furnished during an in-office visit, urgent care visit or emergency room visit that result in an order for an in vitro diagnostic test. Thus, an individual visiting an ER who is given several lab tests, an MRI and a chest x-ray may be swept into this “no cost” requirement as there is no qualifier that the other items and services relate to the relevant evaluation.
Additional Guidance Provided by the DOL and IRS:
- On March 20, 2020, the IRS released a News Release summarizing the key takeaways of the FFCRA. This release did not provide any new information; it simply announced and described the provisions of the FFCRA.
- On March 24, 2020, the DOL published a set of Questions and Answers on the FFCRA. The document has been modified a few times since the original post, but it currently provides answers to almost 60 questions concerning the FFCRA. Some of the more clarifying answers address the following concepts:
- Question 1 confirms that the FFCRA’s paid sick leave and emergency FMLA provisions are effective on April 1, 2020, providing leave between April 1, 2020, and December 31, 2020.
- Question 2 clarifies how employers should determine whether they are under the 500-employee threshold.
- Questions 4, 58, and 59 address the small business exemption to the Act, in an effort to help employers determine if the exemption is one they can avail themselves of.
- Questions 6-8 instruct employers on how they will calculate the pay due under the FFCRA’s provisions.
- Questions 15-16 discuss the records and documents that employers and employees can use to document the need for and provision of leave.
- Questions 20-22 specify whether an employee may take expanded FML and/or paid sick leave intermittently.
- Questions 23-28 make it clear that employees that are furloughed, laid off or who don’t have work because of the business closing or shutting down are not eligible for expanded FML or paid sick leave.
- Questions 31-34 discuss how the leave provided under the FFCRA would interact with the employer’s paid leave policy.
- Questions 35-37 provide guidance on how an employer can meet their obligations under the FFCRA if they have employees that are subject to a multiemployer collective bargaining agreement.
- Question 40 clarifies that a “son or daughter” whom an employee may have to use expanded FML or paid sick leave to care for can include a biological, adopted, foster or step child; a legal ward; or a child for whom the employee is standing in loco parentis.
- Questions 44 and 45 indicate that the additional time provided through the expanded FMLA provision does not entitle the employee to more than 12 weeks of FMLA in the 12 month period chosen by their employer.
- Questions 48 and 49 define the terms “full-time” and “part-time,” making it clear that full-time employees are those who work 40 hours per week and part-time employees are those who work less than 40 hours per week.
- Questions 52-54 discuss the applicability of the law as it pertains to public sector employers and employees.
- Questions 56 and 57 define “health care provider” and “emergency responder” to make it clear who may be excluded from the expanded FMLA and/or paid sick leave.
- On March 24, 2020, the DOL Wage and Hour Division published a fact sheet, summarizing the paid sick leave and expanded FMLA provisions of the FFCRA. The fact sheet does not provide new information; it just describes the FFCRA in laymen’s terms.
- On March 24, 2020, the DOL issued Field Assistance Bulletin 2020-1, announcing a temporary non-enforcement period applicable to the FFCRA. Specifically, the DOL will not bring any enforcement actions against an employer for violating the FFCRA within 30 days of its enactment as long as the employer makes a reasonable, good faith effort to comply.
- On March 25, 2020, the DOL provided a model FFCRA notice and a set of frequently asked questions concerning the requirement to post and distribute the notice. The FAQS describe how and to whom employers should distribute the notice. The notice must be posted by April 1, 2020.
- On March 27, 2020, the IRS released Notice 2020-21. This notice indicates that the tax credits for employers that provide paid sick leave or expanded FMLA leave will only be allowed for the period beginning on April 1, 2020, and ending on December 31, 2020. It also confirms that employers that are not subject to the FFCRA (because they have 500 or more employees) will not be able to receive the credits.
As these issues are rapidly developing, NFP Benefits Compliance will continue to monitor developments on this new legislation, including any additional guidance issued by the DOL or other regulatory agency. In the meantime, please reach out to your NFP advisor with any questions.
News Release »
FFCRA Q&A »
Field Assistance Bulletin 2020-1 »
Model Notice »
Frequently asked questions »