Information on the Emergency Paid Sick Leave Act
March 20, 2020 |
On March 18, 2020, President Trump signed the Families First Coronavirus Response Act into law. This act impacts many parts of the government’s response to the coronavirus, but the biggest impact this act has on many businesses is included in the Emergency Paid Sick Leave Act. This part of the act requires employers with fewer than 500 employees to provide up to 80 hours of paid sick leave to full and part-time employees affected by the coronavirus. The employer will be compensated for this expense through a tax credit. These provisions are in effect through December 2020.
The paid sick leave is required to be paid to all employees (full and part-time) for any one of the following reasons:
- The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
- The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
- The employee is seeking a medical diagnosis where the employee is experiencing symptoms of COVID-19.
- The employee is caring for an individual for whom quarantine, or isolation is required as the result of COVID-19.
- The employee has children whose school or place of care has closed as a result of COVID-19.
Full-time employees are eligible up to 80 hours of paid sick leave and part-time employees are covered up to their average hours worked over a two-week period for the above reasons. Employees will use these new sick day provisions before utilizing other paid leave time provided by the employer.
The employer receives a refundable credit against their share of the social security tax. The credit can be claimed quarterly equal to 100% of the amount of sick leave paid. The credit is generally limited to $200 per day. However, the credit can be increased to $511 per day if the employee’s sick leave is based on the first three reasons outlined above.
Some other items to note:
- Self-employed persons – the credit is allowed against regular income taxes.
- The Labor Department is authorized to issue regulations to:
- Exclude certain healthcare providers and emergency responders from paid leave benefits
- Exempt small businesses with fewer than 50 employees from the paid leave requirements
- The effective date will be no later than April 2, which is 15 days after the enactment date.
This Law was passed very quickly in response to the COVID-19 outbreak. Therefore, we are expecting future guidance to provide details on how this Act will be implemented, documentation required, etc. so employers can make sure they are complying. Please reach out to your trusted advisor at Simon Lever to discuss how this law will impact you.