The Families First Coronavirus Response Act requires certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The Department of Labor’s Wage and Hour Division administers and enforces the new law’s paid leave requirements. These provisions will apply from the effective date through December 31, 2020.

Tax Credits

• Employers who pay emergency paid sick leave or emergency family and medical leave are entitled to refundable tax credits for the qualified leave wages.
• Employers can claim credits on their federal employment tax returns (e.g., Form 941, Employer’s Quarterly Federal Tax Return), but can benefit more quickly from the credits by reducing their federal employment tax deposits.
• If there are insufficient federal employment taxes to cover the amount of the credits, an Eligible Employer may request an advance payment of the credits from the IRS by submitting Form 7200.
• Self-employed persons are entitled to similar credits.
• The CARES Act provides that these credits may be advanced to the employer in accordance with forms and instructions to be provided by the Secretary pursuant to the legislation. Any penalties for failure to deposit the tax are waived if such failure is due to the anticipation of the credits.
• Claim credits for eligible leave taken between April 1 and Dec 31, 2020.
• Retain adequate records and documentation related to leave.

FAQs

1. Can employees get both unemployment insurance and paid sick leave? No, it’s one or the other.
2. If someone is only working part-time due to taking care of a child, can FMLA be paid out intermittently? Yes
3. Do you need to have a doctor’s note? No. Employer does not have permission to ask for a doctor’s note. We would suggest to only ask whether employee has called doctor; a health care provider just needs to advise employee to stay home. Send an email to employee to document discussion, the reason for leave, how leave is calculated, and generally keep track leave taken.
4. Could employees get unemployment insurance during a furlough? Yes.
5. Are paid sick leave and emergency family and medical leave retroactive? No. Both these only start on April 1, 2020. Prior to April 1, 2020, employees should use accrued PTO.
6. How does paid sick and family medical leave overlap? It can only overlap in one type of circumstance, and that is if someone stays at home to care for a child.
7. Which leave goes first? Employers can’t force employees to choose PTO. However, remember that emergency paid sick and family leave only comes into effect on April 1, 2020
8. What happens with employees’ benefits during a furlough? ‘Furlough’ is not a termination of employment, but rather a temporary, mandatory suspension of work without pay.  In general, the impact of a furlough on employees’ health, retirement, and disability benefits depends on the structure of the benefit plans. Be clear that the reason for furlough is COVID-19. This affects the employees’ ability to receive unemployment benefits. Health plans: Employers often offer health coverage to full-time employees, determined based on the number of hours worked in a prior period. Employers should firs review plan documents. If employees are required to work a minimum number of hours to stay eligible for benefits and if they will not meet those requirements during a furlough, employers could either 1) keep the employees on the plan by amending the plan; or 2) treat the furlough as a COBRA qualifying event (and consider offering COBRA coverage to the employee).
   • If employers choose to amend the plan to include employees during furlough), employers should consider the following:
     • If employees are not paid during the furlough, think about how to handle the employee portion of the premium (usually a payroll deduction under normal circumstances). Options include employer covers employee portion, or employee pay their portion by check every month, or employee pays once work is back in full swing.
     • Determination of who is eligible could cease to align with the definition of “full-time employee” under the Affordable Care Act (ACA). In terms of the ACA, coverage must be made available to 95% of the full-time employees, and if this is not met, employers may face penalties.
     • Depending on the duration of the furlough, consider how a furlough in 2020 may affect the determination of full-time employee status for health coverage in the 2021 plan year.
     • Coordinate any expansion with plan’s insurer, third-party administrator, or stop loss carrier.
   • If employers choose to treat the furlough as a COBRA qualifying event, employers should consider the following:
     • The employer must issue COBRA notices to employees in order for them to allow them to receive COBRA coverage.
     • Although many employers subsidize COBRA, this is not required. An employer can require an electing employee to pay up to 102% of the cost of the medical coverage in order to continue coverage under COBRA. The 102% represents the total premium (employee’s share plus the employer’s share) plus a 2% administrative fee.
     • The CARES Act is not providing subsidies for COBRA.
     • Note that an increase in the employee’s share of the group health plan premium due to unpaid leave or a reduction in hours is also considered to be a COBRA qualifying event.

     For employees: Affordable Care Act enrollment has reopened in many states. Also, consider state health insurance exchange, Medicaid, or CHIP.

     Employees can get unemployment benefits during a fulough.