On March 18, 2020, the Families First Coronavirus Response Act (FFCRA)—a bipartisan effort to help employers and individuals alike in managing pay, benefits, and business considerations during the COVID-19 pandemic—was signed into law. The paid leave provisions of the FFCRA apply to employers with less than 500 employees and are expected to go into effect by April 2, 2020, and expire at the end of 2020 unless extended.
Mandated Free Testing
The FFCRA mandates that all testing for COVID-19 must be provided for free; this applies to all group health plans, including fully insured and self-funded plans, as well as grandfathered plans. All cost-sharing, prior authorization requirements, and other medical management, as it relates to COVID-19 testing, must be waived. This includes provider office visits, urgent care, emergency room, and other healthcare visits to evaluate or administer the necessary testing.
Emergency FMLA
The FFCRA provides for up to 12 weeks of job-protected leave under the Family and Medical Leave Act (“FMLA”) for a “qualifying need related to a public health emergency.” Generally, this applies to private-sector employers with under 500 employees and all government employers. Exceptions have been made for employers with less than 50 employees—if the required leave would jeopardize the viability of their business.
This new law expands the leave for employees who have been employed for at least 30 days. This overrides, for the purposes of the COVID-19 pandemic, the FMLA general requirement that employees must be employed for at least 12 months to be covered. The act also establishes an additional definition for a “Qualifying Need.” Under the FFCRA, a “qualifying need” exists if an employee is unable to work—or work from home—due to the need to care for a child under the age of 18, if, due to the COVID-19 public health emergency:
- the child’s school or place of care is closed;
- the child’s care provider is unavailable.
This Emergency FMLA rule also requires employers to pay employees after 10 days. Employees on leave are to be paid at two-thirds of their regular rate of pay, based on their regularly scheduled hours, up to $200 per day, and to a maximum of $10,000.
Emergency Paid Sick Leave
The FFCRA requires employers with less than 500 employees to provide paid sick leave to any employee who is unable to work—or work from home—because the employee:
- Is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- Has been advised by a health care provider to self-quarantine due to the concerns associated with COVID-19;
- Has COVID-19 symptoms and is seeking medical diagnosis;
- Is caring for an individual who is subject to a quarantine or isolation order;
- Is caring for a child if the school or daycare center has been closed, or the child care provider is unavailable, due to COVID-19 precautions;
- Is experiencing any other substantially similar condition specified by the regulatory agencies.
Overall, employees are entitled to at least 80 hours of paid sick leave—this is prorated for part-time employees—and is immediately eligible on their date-of-hire. An employer cannot require an employee who is eligible for paid sick leave to find a replacement or be involved in finding a replacement for their scheduled work shift.
For an employee’s own illness or quarantine, paid leave is limited to $511 per day ($5,110 total) paid at the employee’s regular rate of pay. For leave to care for others, paid leave is limited to $200 per day ($2,000 total) and paid at two-thirds of the employee’s regular rate of pay. Failure to pay the required sick leave is treated as a failure to pay minimum wages in violation of the Fair Labor Standards Act.
Tax Credits
FFCRA offers some relief to employers who are now required to provide paid leave. The credit is available for up to $200 per day for Emergency FMLA and up to $511 per day for Emergency Paid Sick Leave payments. The tax credit is calculated on an individual employee basis for a total of 10 days paid leave. Employers should maintain records on employees who qualify for leave, which includes the reason for taking leave, and the number of days taken to substantiate qualifications for the credit. There is also another tax credit for employers who continue to provide health coverage to employees who take Emergency FMLA or Emergency Paid Sick Leave. Employers may receive a credit for the amount paid toward maintaining the health plan, for the amounts excluded from an employee’s gross income as it related to federal income tax. This is in addition to wages paid for qualifying leave. However, the amount cannot exceed the credit available for Emergency FMLA and Emergency Paid Sick Leave. This credit is to be requested on quarterly tax returns. It will be included in an employer’s gross income.
What Employers Should Expect Next
We expect additional guidance at the state and federal levels that may impact employee benefit plans and potentially more state leave requirements. It is also essential for employers to stay up to date on their state and municipal notices, as some are providing for insurance requirements. Additionally, employers need to be aware of local and state emergency regulations that may affect how specific industries, such as food services, operate during a public health emergency.
For more information on COVID-19, see:
About the Authors. This white paper was prepared by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.
It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.
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