As we discussed in a recent post, the Families First Coronavirus Response Act (“FFCRA”) requires small businesses to paid employees for time away from work for various reasons related to the coronavirus epidemic.
The FFRCA provides two types of benefits.
- Employers must pay an employee at his or her regular rate of pay if the employee is unable to work or telework because of a federal, state, or local order related to COVID-19, or because the employee has been advised by a health care provider to self-quarantine because of COVID-19 concerns, or because the employee has symptoms of a coronavirus infection and is seeking a diagnosis.
- Employers must also pay an employee at two-thirds of his or her regular rate of pay if the employee is unable to work or telework because he or she is caring for an individual who is subject to a coronavirus order or has been advised by a health care professional to self-quarantine or because the employee is caring for a son or daughter whose school or place of care has been closed due to COVID-19 or whose child caregiver is unavailable because of COVID-19.
On March 20, the Department of Labor released guidance providing answers to certain questions and describing future anticipated regulatory actions with respect to certain provisions of the FFRA.
Thirty-Day Grace Period—Sort of
The FFRCA requires businesses to begin paying benefits under the FFCRA on April 2, 2020. The Department of Labor’s intends to implement a thirty-day non-enforcement policy (presumably beginning on April 2, which means the policy would expire May 2, 2020) under which it will not take enforcement action against employers who have acted reasonably and are exercising good-faith efforts to comply.
That does not mean, however, that employers need not comply until May 2. Even though the Department of Labor will not enforce the FFRCA before then, employees have a private cause of action to enforce their rights to receive most of the benefits afforded by the FFCRA. Although the Department may exercise its prosecutorial discretion not to take enforcement action on its own, it has no apparent authority to deprive employees of their enforcement rights.
Possible Exemptions for Businesses with Fewer than 50 Employees
The FFCRA permits the Department of Labor to establish by regulation exemptions for businesses with fewer than 50 employees if compliance with the FFCRA would jeopardize the business as a viable ongoing enterprise. The Department announced that it intends to do so with simple and clear criteria to determine which businesses are eligible. The Department did not explain whether the exemptions will be self-implementing or if businesses will need to apply.
Immediate Tax Credits
The FFCRA gives employers a dollar-for-dollar tax credit for amounts paid to employees for time off. Additional guidance will be released that employers may receive that tax credit immediately by retaining the amounts paid to employees from the payroll taxes that the employer would ordinarily forward to the U.S. Treasury. If the payroll taxes are insufficient to cover the amount of paid leave, the employer may apply for an accelerated payment from the Internal Revenue Service. The IRS expects to process those requests within two weeks.
Tax Credits for Self-Employed Individuals
Self-employed individuals (including independent contractors and others) who are unable to work for any of the reasons for which employees are entitled to paid time off will receive equivalent tax credits that will be applied toward taxes owed on the individual’s next income tax return. The taxpayer may also reduce quarterly estimated tax payments to reflect those credits.
The FFCRA requires employers to post a notice to employees explaining the availability of paid time off. Employers must use the workplace poster prescribed by the Department of Labor. The version of the poster for private employers and a list of frequently asked questions are available on the Department’s website.