How Not-for-Profits Are Impacted by the Families First Coronavirus Response Act
On March 19th 2020, President Trump signed the Families First Coronavirus Response Act (FFCRA), H.R. 6201 into law. The bill consists of a many short-term paid leave directives and employer reimbursement conditions, and also includes funding for coronavirus testing, food nutrition security, and unemployment extension.
The FFCRA creates new job protections for workers, paid leave directives on employers, and a substantial reimbursement plan for not-for-profits. The bill provides two weeks of paid sick leave, and another ten weeks of partially paid family leave for childcare, as well as refundable tax credits that will likely result in the Treasury Department providing direct financial aid to employers to cover some of the costs of the provisions.
Reimbursable Payroll Tax Credits
Employers paying for the required paid leave are eligible to claim a refundable tax credit. The tax credit is specifically permitted against the employer portion of payroll taxes, and any paid leave costs that exceed the amount of payroll taxes owed will be refundable to the employer at the end of each quarter. This means that all or a portion of the costs of these paid leave mandates will be covered the federal government. The amounts depend upon what the employee’s responsibilities are.
- Under the Paid Sick Leave (Section 7001) – Employers paying for employees who must self-isolate, obtain a diagnosis, or comply with self-isolation recommendation with respect to coronavirus may receive tax credits of up to $511 per day. Payments to employees caring for a family member or for a child whose school or childcare center is closed, qualified sick leave wages are capped at $200 per day. Both types of wages are capped at 10 days in the aggregate.
- Paid Family and Medical Leave (Section 7003) – The refundable tax credit for qualified family leave provision is capped at $200 per day and $10,000 each quarter.
Two Weeks of Emergency Paid Sick Leave
The FFCRA requires nonprofits with fewer than 500 employees to provide their employees two weeks of paid sick leave, paid at the employee’s regular rate, to quarantine, seek a diagnosis or preventive care for the coronavirus. It requires two-thirds the employee’s regular rate be paid to care for a family member for the coronavirus-related reasons above or to care for a child whose school has closed or childcare provider is unavailable due to the coronavirus. These provisions will expire at the end of 2020.
The Secretary of Labor is authorized to exclude emergency responders and health care providers from the definition of those allowed to take leave, exempt not-for-profits with fewer than 50 employees, and ensure consistency between paid family and paid sick standards and tax credits. Overall, employees are entitled to 80 hours of paid sick time and are immediately eligible for the leave under the FFCRA.
Twelve Weeks of Emergency Family and Medical Leave
The FFCRA increases the number of workers who can take up to 12 weeks of job-protected leave under the Family and Medical Leave Act (FMLA) for coronavirus-related reasons. After the two weeks of emergency paid leave, employees of organizations with fewer than 500 employees are eligible to receive at least two-thirds of the employee’s usual pay. Employees must have been employed for at least 30 days to meet a “qualifying need related to a public health emergency.” The reasons for qualifying for the emergency paid leave include caring for a child if the child’s school or childcare center is closed due to coronavirus. These provisions would also expire at the end of 2020.
Typically, employees taking Emergency FMLA have job protection, however the bill includes an exception for employers with fewer than 25 employees, provided the position no longer exists due to operational changes from the public health emergency. Emergency responders and health care providers are also excluded from the definition of employees allowed to take this leave, and the law exempts small not-for-profits with fewer than 50 employees.
Other Major Provisions
Emergency Unemployment Insurance Stabilization and Access Act
The FFCRA provides $1 billion for emergency grants to states for paying and processing unemployment insurance (UI) benefits (Section 4101). Almost 50% of the funding would be for technology, staffing, systems, and other administrative costs for eligible workers. States will require employers to give notice of potential UI eligibility to laid-off workers, ensure workers have at least two ways to apply, and notify applicants when an application is accepted and processed.
If an application cannot be processed, the state must provide information on how to ensure successful processing. The other 50% of funding is reserved for emergency grants to states with at least a 10% increase in unemployment, and these states are eligible to receive 100% federal funding for Extended Benefits under a separate provision (Section 4105), instead of the normal requirement that the state funds 50% of the benefit. Section 4103 gives states access to interest-free loans to help pay regular UI benefits through December 2020.
The FFCRA provides free testing for all Americans for COVID-19, regardless of ability to pay or insurance status. Public and private insurers (Medicaid, CHIP, Medicare and other federal health programs) must cover COVID-19 diagnostic testing, plus the cost of an urgent care center, provider and emergency room visits.