Synergy — March 21, 2020 The government response to the spreading coronavirus has evolved rapidly, culminating in the passing of the Families First Coronavirus Response Act. Given that the language of the law measures nearly 20,000 words, it can be difficult to digest on your own.
As your HR partner, its our job to be on top of this development. To make things easier for you, we’ve summarized four key parts of this act that affect your business the most.
Short-Term Expansion of the Family and Medical Leave Act (FMLA)
The most significant aspect of this law takes effect April 2nd through December 31st and entails creating a new FMLA leave entitlement that alters the definition of which employers the law affects. Whereas FMLA previously applied to businesses of more than 50 employees, the new law applies to all businesses with less than 500 employees. Employers with fewer than 50 workers can apply for an exemption from providing paid leave if they can prove it “would jeopardize the viability of the business.” The definition of a covered employee is also expanded to include anyone who has worked for the employer for at least 30 days.
Qualifying employees may now take up 12 weeks of FMLA job-protected leave if they are unable to work because they themselves have COVID-19, are caring for their child who is under 18 and whose school or place of care has closed, or are caring for another individual with COVID-19. This is a significant provision considering how many schools have closed across America. Employers with at least 25 employees must reinstate employees who take expanded FMLA leave to the same or equivalent position. Those with fewer than 25 employees must still make an effort to reinstate the employee, but they do have added flexibility.
Emergency Paid Sick and Family Leave
Under FMLA, the first two weeks of leave are unpaid. However, the emergency paid sick leave program covers the first 80 hours of a full-time employee’s absence as sick pay at the full regular rate up to a maximum entitlement of $ 511 per day and $ 5,110 total. After the 80-hour period, employees are covered under FMLA and can receive two-thirds of their regular rate of pay with a maximum of $ 200 per day or $ 10,000 total for the remaining 10 weeks of leave.
Part-time employees are eligible for some emergency paid sick leave as well during the first two weeks of FMLA leave, and the amount they’re eligible for is equal to “the number of hours that such employee works, on average, over a 2-week period.” The emergency paid sick and family leave part of the act also goes into effect on April 2nd.
Virus Testing Implications for Health Plans
Section 101 of the act requires health plans to provide coverage for COVID-19 diagnostic testing, including the cost of a provider, urgent care center, and emergency room visits in order to receive testing. Coverage must be provided at no cost to the consumer. Health insurance providers are not allowed to impose any cost sharing such as deductibles, copayments, or coinsurance related to testing. This testing provision takes effect immediately.
Refundable Tax Credits
While seeing all these dollar signs can be concerning for employers, the good news is the new act includes a significant tax credit. Employers will be provided a tax credit against their employer portion of Social Security taxes for 100% of the qualified sick and family leave wages paid out in accordance with this act. Synergy will provide further details on how this will work once we receive further guidance from the IRS.
If you’d like to read further about the law, you can find the full text of the act at this link or another summary of the act here.
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