H.R. 6201: Families First Coronavirus Response Act
This legislation has now passed both the House and the Senate and has been enacted into law by the President. The effective date is 15 days after enactment: April 2, 2020.
- This legislation applies only to employers who employ less than 500 employees.
- This legislation is not retroactive; its provisions will apply beginning 15 days after enactment. The legislation is limited to just this coronavirus pandemic; its provisions expire on December 31, 2020.
- This legislation mandates that covered employers provide paid leave for employees affected by the coronavirus if those employees are unable to work or telework. This is being done in two components:
- Two weeks (80 hours) of paid sick time at the employee’s full regular rate of pay, subject to dollar caps; this is reduced to two-thirds pay if the leave is due to caring for others (e., a sick or quarantined family member or a child whose school is closed or whose childcare provider is unavailable due to the coronavirus).
- Ten additional weeks of FMLA leave but only for those who must stay at home to care for a child whose school is closed; these 10 weeks will be paid at two-thirds the employee’s regular rate of pay, again subject to dollar caps.
- This legislation provides payroll tax credits to offset all costs of providing these paid leaves.
- Other proposals concerning cash payments to every American; tax relief; and other stimulus provisions for the economy are still under consideration in Congress.
For employers who employ less than 500 employees, this law can impose monetary burdens. Because the credit is only realized when the payroll tax is paid, there may be cash flow concerns for certain employers. Additionally, because the initial two workweeks of emergency paid sick leave covers not only employees who have COVID-19 or are suspected to have COVID-19 but also employees subject to a quarantine or isolation order, this benefit could possibly be used by a broad swath of employees as more states and cities consider such isolation orders. Regardless of financial impact, there is also an administrative burden: covered employers must adjust their policies to comply, including communicating the specifics of the new policies to your employees.
For employers who employ more than 500 employees, this legislation just does not apply.
For more details, please visit https://abipcpa.com/federal-aid-package-helps-individuals-affected-by-covid-19/