Families First Coronavirus Response Act Signed into Law by President Trump
Published on by Scott Cress, Kevin Dawson, in COVID-19, Tax Services
The federal government continues to move quickly in providing support for families and businesses impacted by COVID-19. As of Thursday, March 18th, President Trump signed into law the Families First Coronavirus Response Act (H.R. 6201), following the Senate’s passage of a revised bill originally passed on March 14th by the U.S. House of Representatives. This new bill will go into effect on April 1, 2020, just days following President Trump’s signature, and will remain in place until December 31, 2020.
Unfortunately, that does not leave a lot of time for business owners to prepare. We’ve created a summary of the information the bill contains to help you navigate the fast-moving legislation.
At the highest level, the Families First Coronavirus Response Act (H.R. 6201) will provide:
- Free coronavirus testing
- Paid emergency sick and family leave
- Tax credits for paid emergency sick and family leave
- Enhanced unemployment insurance
- Additional funding for nutritional programs
All private employers with fewer than 500 employees and more than 50 employees must comply, unless the Secretary of Labor would issue an individual regulation for good cause to exempt a business with less than 50 employees when compliance would jeopardize the viability of the business.
Covered employers required to offer the new emergency paid sick leave or Emergency Family and Medical Leave (EFMLEA) will be eligible for refundable tax credits. Gig-workers and other self-employed workers will be eligible for a tax credit to cover the benefits as well.
Eligibility for Employees
Employees are eligible for Emergency Paid Sick Leave immediately with no minimum period of employment for reasons including if the employee has been ordered by the government to quarantine or isolate, if they are displaying symptoms of COVID-19, if they are caring for someone who is quarantined or if their child’s school or child care service has closed due to a public health emergency. Full-time employees are eligible for up to 80 hours of paid-sick-leave benefits, while part-time employees are eligible for the number of hours per day they worked on average over the prior two-week period. Paid-sick-leave benefits will be capped at $511 a day ($5,110 total) for a worker’s own care, and $200 a day ($2,000 total) when the employee is caring for someone else.
Employees are eligible for EFMLEA after working for the employer for at least 30 calendar days. The EFMLEA provides an employee with job protection and relief for when employees are unable to work (or work remotely) due to their child’s childcare service, primary (K-6) or secondary (7-12) school being closed due to a public health emergency. Employees will be eligible for paid family leave benefits starting with an initial 10-day period being unpaid, followed by a 10-week period capped at $200 a day ($10,000 total) for a total of 12 weeks.
If an employee qualifies for both Emergency Paid Sick Leave and EFMLEA, the employee may use the Emergency Paid Sick Leave at the same time as the first 10 days of the EFMLEA leave which would normally be unpaid.
Employer Payroll Credit
Employers are eligible to receive a refundable tax credit equal to 100% of qualified paid sick wages or qualified family leave wages paid by the employer for each quarter.
For Emergency Paid Sick Leave, this credit may be increased by certain qualified health plan expenses allocable to the wages paid under the Emergency Paid Sick Leave Act (EPSLA). Qualified health plan expenses are amounts paid or incurred by an employer to provide and maintain a group health plan to the extent the payments are not included in the taxable income of employees under Section 106(a) of the Internal Revenue Code of 1986, as amended. That section excludes from an employee’s taxable income amounts paid by an employer for employer-provided coverage under an accident or health plan. For EFMLEA, this credit may also be increased by certain qualified health plan expenses allocable to the wages paid under the EFMLEA.
Both credits can be used to offset the employer portion of Social Security taxes (6.2%) and the employer portion of the hospital insurance portion (1.45%).
There will be just 14 days between when President Trump signed this bill, and when it becomes law. We understand that this requires a significant amount of planning, and action that may occur on the fly. Barnes Dennig is here to help make sure that your business understands the implications of this law, and how it will be applied to your business. Please contact your Barnes Dennig advisor with any questions, or call 513-241-8131.
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