What is FFCRA?
The Families First Coronavirus Response Act (FFCRA) was passed in response to the spread of the novel coronavirus and the disease it causes, COVID-19. The Act became effective on April 1, 2020, encompassing two other acts, the Emergency Family and Medical Leave Expansion Act (EFMLEA) and the Emergency Paid Sick Leave Act (EPSLA).
The purpose of FFCRA was to:
- expand the Family and Medical Leave Act (FMLA) until December 31, 2020, for leave and income loss for employees who must stay home to care for children due to school or childcare closures in response to COVID-19
- create two weeks of paid sick leave for childcare and other coronavirus-related leave
- provide tax credits related to paid leave mandated by the act
THE IMMEDIATE QUESTION: What Happens Now that FFCRA has Ended?
When the Act was proposed, no one anticipated that coronavirus would be part of everyone’s daily life, nor that “pandemic” would become a household word. Now that this is the case – and now that there’s a new POTUS – questions buzz about the FFCRA’s fate. While the FFCRA no longer requires employers to provide COVID-related sick pay or paid leave, employers who choose to do so will receive a tax credit for those wages through March 31, 2021.
The IRS is expected to provide further guidance soon to businesses impacted by the FFCRA. Until then, employers are on their own in terms of deciding whether to provide leave. If they do, they must carefully navigate their decision to avoid potential discrimination issues.
GENERAL INFORMATION ABOUT FFCRA
Which Employers are Responsible?
Government agencies and private businesses with fewer than 500 employees must comply with the FFCRA. Businesses with fewer than 50 employees are exempt from the FFCRA if they can show that providing benefits would put them at risk of going out of business. Businesses with fewer than 25 employees do not have to reinstate employees that return from leave. All businesses with 25 or more employees must reinstate employees after returning from leave.
Which Employees are Eligible and What do They Receive?
Full-time employees who have been employed for at least 30 days and are unable to work (i.e., via remote) and who must care for children at home due to the coronavirus health emergency are eligible.
Part-time employees are eligible for the number of hours of leave they work on average over a two-week period.
Employers first offer unpaid leave (or accrued vacation time) for ten days (80 hours). After that time, paid leave begins at two-thirds of the employee’s regular pay rate. Compensation can continue up to 10 weeks as long as daily pay does not exceed $200 and total pay (for the ten weeks) does not exceed $10,000.
For employees unable to work because they are quarantined for COVID-19 exposure, illness, or symptoms, employers must pay them at their full pay rate for ten days (80 hours). A 10-week extension exists for full-time employees at two-thirds of their regular pay rate if needed for a total of 12 weeks for these employees.
Qualifying Reasons for Leave
An employee qualifies for paid leave if they are unable to work at their place of employment OR via remote (i.e., from home) due to:
- Federal, State, or local quarantine or isolation related to COVID-19
- A health care provider’s advice to self-quarantine due to COVID-19
- Symptoms of COVID-19 while in the progress of actively seeking a medical diagnosis (i.e., testing)
- The need to care for a quarantined individual or an individual who is having symptoms of COVID-19 (i.e., a child who cannot attend school or daycare or a child whose school or daycare is closed due to COVID-19 restrictions)
What Tax Credits are Businesses Entitled to under the FFCRA?
Private companies can seek reimbursement through fully refundable tax credits each quarter for paid sick leave and paid family leave (i.e., FMLA). The tax credits are applied against an employer’s already-owed Social Security taxes. If that is not enough to offset the payouts to employees, the Treasury Department helps cover the balance.
Since Congress did not renew, the FFCRA employers are no longer required to offer paid sick time or paid leave to employees. However, employers who choose to do so voluntarily can still claim tax credits for doing so until March 31, 2021. In light of this federal ruling, employers should keep in mind that state and local laws in their areas may not be the same. Some states extended rulings that require employers to cover pay for COVID-related leave. Check with your state and local government to know the laws where you are.
And as always, your tax professional should be up-to-date on all the latest guidelines and regulations about FFCRA, so check with them first so that your business is on track moving ahead in these still-uncertain times of the pandemic.