As states loosen COVID-19 restrictions and businesses reopen, workers across the country are struggling to get back to work. Without child care or paid family leave, many families are forced to turn down work and remain home as schools, child care centers, adult day care, and summer camps remain shut.
This breakdown in caregiving is also hurting the ability of businesses—particularly small businesses owners reeling from the rapid decline in revenue—to restart operations. Even before the pandemic, U.S. states and firms were losing billions in economic or business activity due to breakdowns in child care.
In March, Congress tried addressing this gap with the passage of the Families First Coronavirus Response Act (FFCRA). The bill provides two benefits: paid sick and paid family leave. Workers can have access to 10 weeks of emergency paid family leave and 10 days (80 hours) of emergency paid sick leave. In turn, it reimburses small and midsize companies with dollar-for-dollar tax credits for the cost of providing leave wages to their employees. Both workers and employers have access to these emergency provisions from April 1, 2020 through December 31, 2020.
Workers should be able to navigate the difficulties of sickness or family caregiving without fearing the risk of losing their job or livelihood. Employers should understand that at no point are they expected to provide an additional cash outlay for employee’s leave wages—payment for wages will come directly out of the employer’s payroll tax liability.
In instances when the cost of leave payments do exceed the total corporate payroll expense, the IRS is committed to a two-week refund. Though implementing these benefits will undoubtedly create an administrative burden, employers should find that the structure of the tax law puts minimal financial stress on business operations.
And while the FFCRA law does not apply to everyone, workers and employers who qualify for emergency leave benefits should understand what it means for them. To help you get up to speed, here’s what you need to know.
What paid leave benefits do I have access to?
- COVID-19 Family Leave: You can take 12 weeks (2 weeks unpaid, 10 weeks paid) of family leave to care for your child under 18 years of age if your child’s school or child care provider is closed or unavailable due to COVID-19 related reasons from April 1, 2020 to December 31, 2020. You must be employed for at least 30 days to take leave and the weeks of paid leave will be paid at two-thirds the regular rate of pay, but payments may not exceed $200 per day and $10,000 in the aggregate.
- COVID-19 Sick Leave: You can take two weeks (80 hours) of paid sick leave to recover from or care for a family member due to COVID-19 related reasons from April 1, 2020 to December 31, 2020. The weeks of paid leave will be paid at your regular rate of pay (full wages) if taking leave to self-quarantine or recover from COVID-19, but payments may not exceed $511 per day and $5,110 in the aggregate. If using paid sick leave to care for an individual due to COVID-19 related reasons, leave will be paid at two-thirds the regular rate of pay, but may not exceed $200 per day and $2,000 in the aggregate. Part-time workers can take leave based on the average number of hours they work over a two-week period. The pay for part-time workers will be calculated based on their average schedule over a 6-month period.
- Leave can be taken intermittently if employer agrees to the arrangement.
- Must notify and provide documentation to employer about taking leave.
- Any time taken time off under the Family and Medical Leave Act (FMLA) in the current 12-month year, will be reduced from the 12 weeks of leave under FFCRA.
- Employees may elect to use their accrued personal leave or paid vacation to supplement their emergency paid sick or family leave. Employees may also elect to use the emergency paid sick leave during the first two weeks of unpaid emergency family leave. However, an employer cannot require employees to use other paid leave before using their FFCRA paid leave.
How do I know if I qualify?
- You must have worked for your employer for 30 days to qualify for family leave for child care. There is no tenure requirement for sick leave.
- You must be working for an employer with fewer than 500 workers (part-time and full-time employees count towards this number but independent contractors do not).
- If you work for an employer that has fewer than 50 workers, you may be ineligible. The law allows for smaller businesses to opt out if providing benefits jeopardizes the viability of their business.
- Generally, all industries are covered except:
- Private and public-sector health care providers and emergency responders who may be excluded by their employer from being able to take paid sick leave.
- U.S. Government Executive Branch employees who may be excluded from taking paid sick leave or family leave. If you are a Federal employee, you should seek guidance from your respective employers as to your eligibility.
- Generally, all industries are covered except:
- You must be working for an operating business. In other words, you can only take leave if caring for your child takes you away from completing your work. If your employer shut down operations, or if you are furloughed, you cannot take family leave. Instead, you can be eligible for unemployment.
What do I need to know about the FFCRA laws?
- Applies to businesses with fewer than 500 employees.
- You will receive a dollar-for-dollar tax credit to cover the cost of providing paid sick and family leave wages to employees under the FFCRA from April 1, 2020 through December 31, 2020.
- You can retain an amount of payroll taxes to pay qualifying sick or child care leave will be able, rather than deposit them with the IRS. For example, if an employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit to cover leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
- You can file an accelerated payment request from the IRS, if payroll taxes are not sufficient to cover the cost of qualified paid family and sick leave wages. For example, if an employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to cover leave payments and file a request for an accelerated credit for the remaining $2,000. The IRS expects these requests to be processed in two weeks or less
- You must reinstate an employee to their position after they return from leave must. Small businesses with fewer than 25 employees are not required to.
- If you are a small business with fewer than 50 employees, you may be eligible for an exemption if providing emergency paid family or sick leave would jeopardize the viability of your business. Exemptions are based on guidelines from the U.S. Department of Labor.
- If you are small business with fewer than 50 employees, you are exempt from civil actions brought by employees for violations regarding emergency paid FMLA.
- Healthcare and emergency response organizations may exclude employees from paid FMLA expansion due to the coronavirus crisis.
- You may elect to supplement your employee’s emergency paid sick or family leave with existing employer-provided paid leave policies. However, you will not receive a tax credit for any paid sick or family leave that is not required—or exceeds the limits under—the FFCRA.
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