Economic stimulus packages, such as the Payroll Protection Loans, have been the buzz over the last month or so and are continuing to be a hot topic — especially in Michigan as businesses struggle with stay-at-home orders. But as the buzz of the PPP loans dies down, employers and employees will continue to evaluate other benefits that are available to them through the end of the year.
In response to COVID-19’s impact on employers and employees, the federal government enacted the Families First Coronavirus Response Act (the Act or FFCRA). The Act, which took effect April 1 and runs through Dec. 31, requires small employers — those with fewer than 500 employees — to provide limited paid-leave benefits to employees who are affected by the coronavirus emergency.
The law is designed to be generous to employees and employers. Benefits paid by employers are 100% recoverable through refundable payroll tax credits. Credits are claimed via federal employment tax reporting or can be claimed by filing Form 7200 – Advance Payment of Employer Credits. Both full time (40 hours a week) and part time (anything less than 40 hours a week) are eligible for FFCRA benefits.
The FFCRA includes two key provisions: emergency paid sick leave and emergency family and medical leave expansion (emergency FMLA). While the FFCRA went into effect April 1, some employers and employees may still be struggling to understand the benefits.
Emergency paid sick leave provides up to 80 hours of paid leave for an employee, regardless of the length of employment. Employees can receive their full pay (up to $511 per day) if they are in isolation, quarantine or are showing COVID-19 symptoms and seeking diagnosis.
The affected employee must provide a doctor’s note or a note from a governmental authority stating they are mandated to isolate or self-quarantine. Employees can receive two-thirds of their pay (up to $200 a day) if they are caring for an individual who has COVID-19 or the employee’s child’s school or child care is closed or otherwise unavailable. Employers cannot first require an employee to use vacation time or other sick leave benefits before utilizing emergency paid sick leave.
Emergency FMLA expansion can be utilized by an individual — employed at least 30 days — who is unable to work or telework due to caring for a son or daughter under age 18 (or over 18 with a disability that limits self-care) due to school or child care closures. Emergency FMLA expansion provides an employee two-thirds pay (maximum of $200 a day) for up to 12 weeks of benefits with the first 10 days unpaid. An employee can stack benefits and utilize vacation time or other sick leave benefits during those 10 days.
Can an employer pay more than the caps? Yes, this is known as “topping off.” Refund claims, however, are based on the formula caps provided in the Act.
Self-employed individuals and independent contractors also can take advantage of the FFCRA benefits. Benefits are provided via a credit to self-employment taxes due at the end of the year with a filed individual tax return.
School terms are wrapping up in the next couple of weeks. Many summer camps and child care centers are closed. Families in Michigan will be continuing to balance work-at-home life with kids-at-home life for quite a while. The FFCRA allows employers to grant part-day or hourly use of either benefit with a specific caveat: Hourly or part-day use is allowed (with employer approval) only for employees who must be on-site and who are affected due to child care or school closures. Use of FFCRA leave for any other reason must be taken in full work-day increments.
Very small employers are allowed some leeway from FFCRA compliance. Employers with less than 50 employees can seek exemption from the Act — under very specific circumstances — through the Secretary of Labor. An officer of the employer must certify that compliance could jeopardize the viability of the business, the employee requesting leave has specialized skills that are vital to the financial stability of the business or there are no other workers who are available to take on the role of the requesting employee.
Job restoration typically is required of an employer for an employee after leave ends — this act, however, includes a provision whereby employers with fewer than 25 employees may not be required to restore an employee if the position no longer exists due to economic downturn.
It is important to note neither the emergency FMLA nor the emergency paid sick leave apply to employees who simply fear going to work. It also does not apply to those who are unable to work due to state shutdown orders.
The Department of Labor concluded that Michigan’s stay-at-home order does not rise to the level of “isolation” or “quarantine.” The FFCRA was specifically designed to cover employees who are unable to work because they are at home with a child who cannot go to school or child care or if they have been affected by a COVID-19 exposure.
Employer obligations for notification and implementation of FFCRA are provided through the Department of Labor. Employers are required to post a notice, either prepared or approved by the Secretary of Labor, informing employees of the benefits. A posting can be accomplished through email, print letters or text. Employers should also be mindful of employees who do not speak English as a first language and seek translation services to mitigate barriers to access.
Employees requesting leave also have documentation requirements. Employees should provide and employers retain where applicable: Name, date of request, statement of reason for leave, statement detailing why the employee is not able to telework, name of health care professional recommending quarantine or name of governmental agency mandating quarantine, name and age of children needing care, name of care provider or school that is closed, reason why a child over age 14 needs care.
As with any legislation, there may be obstacles. Employees might not understand the limitations applied under these benefits. The benefits are not all-encompassing — it is the employer’s responsibility to educate employees on what rights they do have.
If the COVID-19 pandemic has demonstrated one thing it is the need to establish a professional support services bench. Solid relationships that include banks, insurance companies, CPAs and attorneys can direct employers, regardless of size, to qualified human resource professionals for support during these times.
The FFCRA was designed with a focus on supporting employees amid COVID-19 while avoiding an undue burden on employers. Awareness and message dissemination likely will prove to be the most important steps in ensuring compliance, and employers should be prepared to communicate consistently and comprehensively on the benefits offered.
Rehmann’s COVID-19 Knowledge Center provides practical guidance and insights to help empower organizations and individuals as they navigate through the uncertainty and complexity of the pandemic.