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COVID-19, Tax & Assurance Guidance

Coronavirus: Families First Response Act

Posted on March 18, 2020 by

Sarah Russell

Sarah Russell

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The President signed into law on March 18 the Families First Coronavirus Response Act, which expands Medicaid and unemployment benefits, provides free Coronavirus testing and mandates paid sick leave and childcare leave – but only for certain employees.

What should business owners know about the bill?

  • The bill requires employers to provide two weeks of paid sick leave to employees who are unable to work (or telework) due to a COVID-19 event if:
    • The employee is subject to a Federal, State or local quarantine or isolation related to COVID-19
    • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
    • The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis
    • The employee is caring for an individual who is subject to an order described above
    • The employee is caring for a son or daughter if their school or daycare has been closed due to COVID-19 precautions

Paid sick time is calculated based on the employee’s compensation or the number of hours that would normally be worked; not to exceed $511 per day and $5,110 in the aggregate for each employee.  Specific calculations are provided for employees who work variable hours from week to week.

Companies with more than 500 employees are exempt, and businesses with less than 50 employees may apply for a hardship waiver.

  • The Family and Medical Leave Act has been expanded with respect to COVID-19 events and requires employers to pay 2/3 of wages, up to $200 per day and capped at $10,000 in the aggregate for a qualifying COVID-19 event for eligible employees.
    • The Act expands the definition of eligible employees to include those who have been employed at least 30 days (only for a COVID-19 event)
    • The paid leave covers employees who are unable to work due to the need to care for a minor child due to the closure of schools or daycare
    • The expansion applies to business with over 50 employees but under 500 employees
  • To help offset the cost of emergency paid sick leave, a payroll tax credit is available to employers equal to 100% of qualified emergency paid sick and paid family leave wages paid. The credit cannot exceed, with respect to any employee, $511 per day for paid sick leave and $200 per day for paid family and medical leave.  Excess credits may be refundable, however certain limitations apply.

Other provisions of the bill, which may benefit your workforce, include:

    • Enhanced unemployment insurance for employees who lose their jobs or are laid off due to the Coronavirus outbreak
    • Requires private health plans to provide coverage for Coronavirus diagnostic testing at no cost to the consumer and increases funding for Medicaid programs
    • Funding and waivers to allow schools to continue to provide meals to students while schools are closed due to the outbreak. In addition, there have been enhancements to SNAP and support for food banks.

This law is known as Phase 2.  The House and Senate are expected to start negotiations on a much broader stimulus package, which will be Phase 3. Clayton & McKervey will keep you up to date as legislation is passed.

The above represents our best understanding and interpretation of the material covered as of the date of this post. Things are moving at a rapid pace, and as such, information is subject to change. This information is provided for informational purposes only and is not intended to be a substitute for obtaining accounting, tax, or financial advice from an accountant.

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Sarah Russell

Shareholder, Tax

As the leader of the firm's tax group, Sarah supports growth-driven domestic and international businesses with tax planning, consulting and compliance.

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