In an effort to help our country endure the economic uncertainties of the COVID-19 Pandemic, Congress has passed the Family First Coronavirus Response Act (FFCRA) on March 18, 2020.

This requires employers to provide financial support to employees impacted by COVID-19. These mandates apply only to employers with fewer than 500 employees. This act comes with two provisions: Paid Sick Leave and Paid Family Leave.

Paid Sick Leave: Under the FFCRA, employees who can’t work due to:

• Quarantine or an isolation order in relation to COVID-19
• Advisement by a healthcare provider to self-quarantine in relation to COVID-19
• Experiencing symptoms of COVID-19

They will receive two weeks (80 hours) of Paid Sick Leave at their regular rate of hours, capped at $511/day with $5110 in aggregate. Employees may be full-time or part-time.

If the employee is absent from work due to:

• Caring for an individual who is subject to quarantine (not limited to family members)
• Caring for a child whose school or daycare provider is closed due to COVID-19
• Experiencing any other substantially similar conditions

They will receive two weeks (80 hours) of Paid Sick Leave at 2/3 of the employee’s regular rate, capped at $200/day with $2000 in aggregate. This benefit is available between April 1, 2020 and December 31, 2020. These benefits are available to any employee regardless of their length of employment.

Paid Family Leave: The FCCRA created benefits for employees who can’t work due to caring for a child under the age of 18 due to school closures. Employees will receive at least 2/3 of their regular compensation for 12 weeks, with a two-week waiting period, capped at $200/day with $10K in aggregate – the employee may use Paid Sick Leave for this two-week waiting period. The Paid Family Leave provision is only available for employees with a minimum of 30 days of employment.

In order to compensate the employer for those additional mandated costs, the FCCRA has created a dollar-for-dollar credit against the employer payroll tax when they file their QTR payroll report. The DOL has granted 30 days for businesses to comply with no enforcement action. In addition, employers can retain their portion of FICA and federal income tax to offset these benefits. If the benefits paid by the employer exceed the QTR payroll taxes, the business will receive a refund check.

It is worth mentioning that the Employer Credit is available for those who are self-employed, with a $200 / $511 daily cap (based on the cause). Self-employed individuals who are impacted, may reduce their estimated tax payment in 2020, and should receive this credit when filing their 2020 income tax returns.  For more information visit our accounting consultant.