Essentials of the Families First Coronavirus Response Act

Updated: March 27, 2020

As previously reported, the Families First Coronavirus Response Act (FFCRA) passed Congress on March 18, 2020, and was signed into law by President Trump that same evening, to take effect “not later than 15 days after the date of enactment.” Among other things, FFCRA requires each private employer with fewer than 500 employees to provide special paid emergency family and medical leave and paid sick leave in certain COVID-19-related circumstances, to be offset by refundable payroll tax credits. The following is a summary of the essential elements of the act.

Emergency Paid Family and Medical Leave

Employer coverage: Every private employer with fewer than 500 employees, and all governmental employers regardless of size.

Although the final regulations may provide otherwise, whether separate entities will be deemed a single employer to determine employer coverage likely will be determined by the “joint employer” or “integrated employer” tests described in the Family and Medical Leave Act (FMLA) and/or Fair Labor Standards Act (FLSA).

Employer coverage exception: Per FFCRA, the Secretary of Labor has authority to issue regulations that exclude small businesses with fewer than 50 employees each if the act’s requirements would jeopardize the viability of the business as a going concern.
Employee coverage: Full-time and part-time employees who have been employed with a covered employer for 30 calendar days or more. This is unlike the regular FMLA, which requires a minimum of 12 months of prior employment, 1,250 hours of work in the prior 12-month period, and working in a location where there are 50 or more employee within a 75-mile radius.
This is unlike the regular FMLA, which requires a minimum of 12 months of prior employment, 1,250 hours of work in the prior 12-month period, and working in a location where there are 50 or more employee within a 75-mile radius.
Employee coverage exception: Per FFCRA, the Secretary of Labor has authority to issue regulations that exclude certain healthcare providers and emergency responders from the definition of an eligible employee. Further, employers of healthcare providers and emergency responders may elect to exclude such employees from coverage.
Leave use: When an “employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable,” because of COVID-19. Note: “Child care provider” is defined as a provider who receives compensation for providing child care services on a regular basis.
When an “employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable,” because of COVID-19.
Note: “Child care provider” is defined as a provider who receives compensation for providing child care services on a regular basis.
Leave allowance: Employers are required to provide up to 12 weeks of job-protected paid FMLA leave for COVID-19 (albeit the first 10 days may be unpaid).
Pay rate: The first 10 days can be unpaid. (See below for an explanation of optional use of paid leave during the first 10 days.) The remaining time must be paid at not less than two-thirds of the employee’s regular rate of pay (as defined by the FLSA) for the number of hours the employee would otherwise be normally scheduled to work. There are special rules for calculating the hours for those employees that have variable weekly schedules.
Pay amount/cap: Up to $200 per day and $10,000 in the aggregate (per employee).
Optional use of other paid leave during the first 10 days: During the first 10 unpaid days of FMLA leave for COVID-19, employees may use accrued personal, vacation or medical or sick leave. However, employees may not be required to do so.
Paid leave after the first 10 days: After the first 10 days, employers must compensate employees in an amount that is not less than two-thirds of the employee’s regular rate of pay for the remainder of the 12-week period.
Tax Credit: There is a tax credit for employers for amounts required to be paid as family and medical leave under FFCRA. The amount of the credit is equal to 100 percent of the “qualified family leave wages” that the employer is required to pay for the applicable quarter. The dollar-for-dollar credit results in $200 per employee for any day (or portion thereof) for which the employer pays the employee qualified family leave wages, up to a maximum aggregate amount for all calendar quarters of $10,000 per employee. The credit is taken on the employer’s quarterly Social Security tax remittance and is refundable where the credit exceeds employment taxes owed.
Job restoration: Protection similar to regular FMLA leave (i.e., employees generally must be returned to the same or an equivalent position upon return to work).
Job restoration exception: For employers of fewer than 25 employees, in the event the position has been eliminated due to the pandemic and the employer (1) makes “reasonable efforts” to restore the employee to an equivalent position with equivalent pay, benefits, etc.; and (2) if such efforts fail, notifies the affected employee if an equivalent position later becomes available during the defined “contact period.” The “contact period” is defined as “the 1-year period beginning on the earlier of (A) the date on which the qualifying need related to a public health emergency concludes; or (B) the date that is 12 weeks after the date on which the employee’s leave … commences.’’
Effective date: Will become effective on April 1, 2020 and expire in December 31, 2020.

Emergency Paid Sick Leave

Employer coverage: Every private employer with fewer than 500 employees, and all governmental employers regardless of size.
Employer coverage exception: Per FFCRA, the Secretary of Labor has authority to issue regulations that exclude small businesses with fewer than 50 employees each if the act’s requirements would jeopardize the viability of the business as a going concern.
Employee coverage: All current part-time and full-time employees of a covered employer (i.e., no matter how long employed).
Employee coverage exception: Employers of healthcare providers and emergency responders may elect to exclude such employees from coverage.
Leave use:

Quarantine – to comply with a federal, state or local quarantine or isolation order related to COVID-19.
Self-Quarantine – to self-quarantine, if the employee has been advised to do so by a local healthcare provider.
Diagnosis – to obtain a medical diagnosis if the employee is experiencing symptoms of COVID-19.
Care for a Quarantined Individual – to care for an individual required to be quarantined or advised to be quarantined.
Child Care – to care for an employee’s son or daughter if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable,” because of COVID-19 precautions.

Note: “Child care provider” is not defined in the act.
Substantially Similar Care – to care for an employee’s substantially similar condition, as specified by the Secretary of Health and Human Services.

Full-time employee leave allowance: Employers are required to provide 80 hours of paid sick leave for full-time employees.
Part-time employee leave allowance: Employers are required to provide a total number of hours of paid sick time equal to the number of hours the part-time employee works, on average, over a two-week period. Or, put another way, the equivalent of two weeks of hours for part-time employees.

Carryover: Not allowed from year to year.
Unused Leave Cash-out: Not required upon separation.

Leave sequencing: Employees may use the paid FFCRA sick leave first, before the use of other available leave. Also, an employer cannot require an employee to use other accrued, unused paid leave before the use of FFCRA paid sick leave.
Pay rate: Paid at the employee’s regular rate of pay (as defined by the FLSA) or the applicable federal FLSA minimum wage or state or local minimum wage, whichever is greater.
Pay amount/cap:

For Items 1, 2 and 3 above – full pay at the rate described above, up to $511 per day and $5,110 in the aggregate (per employee).
For Items 4, 5 and 6 above – two-thirds pay at the rate described above, up to $200 per day and $2,000 in the aggregate (per employee).

Tax Credit: There is a tax credit for employers for “qualified sick leave wages” that the employer is required to pay for a given quarter. This amount, in turn, varies depending upon the reason for the leave and is consistent with the amounts listed in the bullet above.

For Items 1, 2 and 3 – the amount of qualified sick leave wages taken into account for the tax credit is capped at $511 per employee per day, $5,110 (10 days) in the aggregate.
For Items 4, 5 and 6 – the amount of qualified sick leave wages taken into account for the tax credit is capped at $200 per employee per day, $2,000 (10 days) in the aggregate.

The credit is taken on the employer’s quarterly Social Security tax remittance and is refundable where the credit exceeds employment taxes owed.

Notice: Employers will be required to post a notice informing employees of their right to leave. A model notice will be provided by the Department of Labor.
State law: Does not pre-empt existing state or local paid sick leave entitlements.
Effective date: “Not later than 15 days after the date of enactment” (i.e., effective beginning April 2, 2020), expiring Dec. 31, 2020.

An important point for employers is that paid leave as outlined above is not available if employees are unable to work solely due to business decisions and/or operational closures. Rather, employees are eligible for paid leave only if they meet the specific criteria outlined above. This, however, is likely to be a heavily litigated issue, depending on the particular factual circumstances at issue.

For answers to questions or additional guidance on how this new legislation may impact your business, employers can contact the authors, any of the McGuireWoods COVID-19 Response Team members or your McGuireWoods labor and employment contact.