Families First Coronavirus Response Act – Frequently Asked Questions

The Families First Coronavirus Response Act (FFCRA), signed into law on March 18, provides certain emergency paid sick leave and emergency family leave pay provisions for employees unable to work due to specific COVID-19 related absences. The law also provides payroll tax credits for employers to offset the wages paid under these provisions. For a full overview of the FFCRA provisions, see DHG’s related Tax Alert and a recording of our webinar on the topic.

In the days following the passage of this law, the Department of Labor (DOL), the Internal Revenue Service (IRS) and the Department of Treasury (the Treasury) have issued releases summarizing or clarifying certain provisions. Notable updates from these agencies are as follows: 

  • The DOL is expected to issue regulations related to the FFCRA sometime in April.
  • The DOL has released an FAQ site.
  • The DOL has granted employers a 30-day window to come into compliance with the law. Employers making “good faith” compliance efforts will not be subject to penalties during this window.
  • The IRS is expected to issue a form for employers to expedite the receipt of wage credit refunds. This form is expected to be released before the end of March.

In addition, DHG has compiled a list of Frequently Asked Questions below. These responses are based on guidance released as of March 26, but this list will be updated as additional guidance is released. 

General – Emergency Pay Provisions

Emergency Paid Sick Leave

FMLA

Additional Resources

DHG is committed to serving you and your business as you navigate this evolving process. With respect to the FFCRA emergency pay and corresponding tax credits, we are prepared to assist you with services including, but not limited to: 

  • Identification of eligible employees, eligible employers and qualifying leave
  • Calculation of the required amount of emergency leave wages required to be paid to employees
  • Calculation of the corresponding tax credits
  • Assistance with various filings, such as quarterly Form 941 reporting, applications for expedited credit refunds and other required reporting 

For more information about the services DHG can provide, please contact Nathan Clark (nathan.clark@dhg.com) or Troy Taylor (troy.taylor@dhg.com).

General – Emergency Pay Provisions
Q: When are these provisions effective?

A: The provisions are effective April 1, 2020, and apply to leave taken between April 1, 2020, and Dec. 31, 2020. Wages paid for leave taken prior to April 1 will not be eligible for the payroll tax credits.

Q: How is the number of employees determined? Is the 500-employee limitation determined by location or by the sum of all locations? Do entities under common control need to be aggregated? Do foreign subsidiaries/ operations need to be considered in the 500-employee limit?

A: The number of employees is based on a headcount of full-time and part-time employees at the time an employee’s leave is taken. Determination of the number of employees depends on several factors. In general, the statute takes a “by organization” approach, meaning all locations under one organization would be considered a single employer for purposes of determining the number of employees. 

With respect to aggregating multiple organizations, the answer depends on several factors. Family Medical Leave Act (FMLA) regulations provide guidance on the definition of an “integrated employer.” Integrated employers aggregate all employees across integrated entities for purposes of determining the total number of employees. The main factors for determining whether a group of organizations is considered an integrated employer are as follows:

  1. Common management
  2. Interrelation between operations
  3. Centralized control of labor relations
  4. Degree of common ownership/financial control

There are other implications that come with being defined as an integrated employer beyond the scope of the emergency pay provisions. It is possible that many businesses, whether knowingly or not, have taken a position that they are integrated or not for FMLA purposes prior to deciding for this purpose. For assistance with this matter, please consult with your human resources department or with a labor attorney.

Q: Are companies with fewer than 50 employees required to participate in these programs?

A: Companies with fewer than 50 employees may elect out of participating in these programs if participation creates a growing concern issue. The intent of this exemption is to relieve smaller companies of the potentially undue cash flow burden of these provisions.

Q: What is the definition of “employee”? If we have employees from a staffing agency that are effectively working for us full-time, what is our obligation for those people?

A: The law as written does not provide guidance with respect to who is considered an employee. The law references existing employment law standards and modifies FMLA for the provision of emergency family leave. 

The Fair Labor Standards Act (FLSA), used by the FMLA and other labor standards, defines an “employee” as any individual employed by an employer, meaning he/she is permitted to work. 

The FLSA defines an employer as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” Employers utilizing employees from a staffing agency may need to include those employees in their headcount for purposes of determining the total number of employees. For assistance with this matter, please consult with your human resources department or with a labor attorney.

Q: If an employee’s normal wages exceed the caps for either emergency paid sick leave or FMLA emergency pay, am I required to pay the employee at their normal rate for eligible leave pay?

A. No. There are caps on the amount of pay that is required to be paid under each provision. For the paid sick leave, there are two pay caps that are determined by the reason for the leave. Generally, if the sick leave is because the employee meets one of the sick leave criteria, the pay cap is $511 per day and $5,110 in aggregate, per employee. If the sick leave is to care for another person, such as a child, the sick pay cap is $200 per day and $2,000 in aggregate. The pay cap for the FMLA leave is $200 per day and $2,000 in aggregate per employee.

Q: What is the rate of pay required to be paid under the emergency paid sick leave or emergency FMLA leave?

A: If the sick leave is because the employee meets one of the sick leave criteria, the rate of pay is 100 percent of the employee’s normal rate of pay. If the sick pay is to care for another person, such as a child, the rate of pay is two-third the normal rate of pay. The rate of pay for the FMLA leave is two-thirds the normal rate of pay. The rate of pay is not required to exceed the caps discussed in the prior question.

If an employee is paid commissions, tips or piece rates, these wages will be incorporated into their rate. 

The wage amount for each employee can also be computed by adding all compensation that is part of the regular rate over the period and divide that sum by all hours actually worked in the same period.

Q: What is the best way to calculate the daily pay rate for commissioned employees?

A: The regular rate of pay used to calculate the paid leave is the average regular rate over a period of up to six months prior to the date on which leave is taken. If the commissioned employee has not worked for his/her current employer for six months, the regular rate used to calculate the paid leave is the average of the regular rate of pay over the weeks worked for the current employer.

Q: Can an employee qualify for emergency leave pay if their job location is closed due to state mandated closings or other reasons, including a city or county wide shelter in place order?

A: To qualify for emergency paid sick leave or emergency FMLA leave, employees must be unable to work for one of the six reasons specified in the law (see six conditions of receipt in the Tax Alert) or a child’s school is closed, childcare must be unavailable and the employee is unable to work or telework. Closure of a business is not one of the specified reasons for leave pay. If an employer closes a work site due to a lack of business or a government directive, employees are not entitled to receive pay under the FFCRA emergency pay provisions.

Q: For the FMLA credit, the amount of the credit is increased for proportionate healthcare costs. Does the amount include both the employer and employee portion of costs or only amounts paid by the employer?

A: The credit is increased for an allocation of healthcare expenses paid by the employer, but only to the extent the expenses are excluded from gross income of the employee.

Q: What is the proper ordering of applying these leave provisions? For example, if a person uses FMLA emergency pay provisions to care for a qualifying child for one week, then that person gets sick, will they be eligible for emergency paid sick leave?

A: An employee may be eligible for both types of leave, but only for a total of twelve weeks of paid leave. He/she may take both paid sick leave and expanded family and medical leave to care for their child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons. The Emergency Paid Sick Leave Act provides for an initial two weeks of paid leave. This period may cover the first ten workdays of expanded family and medical leave, which are otherwise unpaid under the Emergency and Family Medical Leave Expansion Act.

Please note that you can only receive the additional ten weeks of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act for leave to care for your child whose school or place of care is closed or child care provider is unavailable due to COVID-19 related reasons.

Q: If an employee decides to self-quarantine, are they covered by the emergency paid sick leave provisions?

A: Self-quarantining alone is not enough to qualify the employee for paid sick leave. However, if the employee is, for example, advised by health care provider to self-quarantine or experiencing symptoms and seeking a medical diagnosis, then the employee would be eligible for the paid sick leave.

Q: I am self-employed. Am I eligible for the emergency pay tax credits?

A: The act provides for an equivalent tax credit for self-employed individuals. These credits will be available to claim on a self-employed individual’s federal income tax return. Self-employed individuals may also reduce quarterly federal income tax estimated payments by the amount of the credits.

Q: What documentation is required to prove employee qualifications under the emergency pay provisions?

A: Employees are required to provide their employers with documentation including the qualifying reason for requesting leave, statement that the employee is unable to work or telework for that reason and the dates for which leave is requested. Additional documentation may be required depending on the qualifying reason of absence. Please reference the DOL FAQ site for an in-depth description of required documentation.

Q: How should the emergency pay provisions be accounted for in the ledger and/or payroll system?
Should the FMLA and the emergency sick leave pay be accounted for separately?

A: Employers who do payroll in house will need to set up a separate pay type in their payroll system for these payments (possibly more than one depending on how their payroll system works).

Q: What is the definition of an exempt healthcare worker?

For example, would an employee at an assisted living facility or a dentist office be considered exempt from these provisions?

A: The law does not provide specific guidance on this topic. We are awaiting additional guidance from the Secretary of Labor and Secretary of Treasury.

Q: Are employers required to notify employees of the provisions of this act?

A: Employers are required to post notice in their places of employment regarding the emergency sick pay. The DOL has provided posters for such use.

Q: Are the tax credits limited to a total amount of government funding?

A: The law does not have a limitation on the amount of credits the government will honor.

Q: Will the tax credits run out?

A: As stated previously, there is not a limit on the amount of credits. They will not run out. However, the credits are only effective through Dec, 31, 2020, at which point the credits will expire.

Q: What type of payroll taxes can be offset by the emergency pay tax credits?

A: The tax credits for both types of leave pay are claimed against the employer’s portion of its social security tax liability. Any excess of the credit above the employer’s social security tax liability may be used to satisfy other types of payroll tax liability (i.e., Form 941 liability).

Emergency Paid Sick Leave
Q: Does an employee have to exhaust their existing PTO/ sick leave before qualifying for emergency paid sick leave?

A: If an employee meets the requirements to receive emergency paid sick leave, that employee does not have to exhaust existing PTO/sick leave before qualifying for emergency paid sick leave. If an employee uses existing PTO/sick leave during their absence, the employer may claim a credit for wages paid pursuant to these plans up to the applicable cap amount.

Q: If an employee has the ability to telework and meets one or more of the five criteria for emergency paid sick leave, are they eligible to receive this pay? 

A: Emergency paid sick leave is only available to employees who are unable to work or telework due to one of the qualifying reasons for absence.

FMLA
Q: Do any restrictions exist for the number of people per household that qualify for FMLA emergency pay? Can two parents collect pay for caring for the same child?

A: This is not specifically addressed in existing guidance.
However, it appears both employees in a household would be eligible for the pay if they must remain home to care for a child because their school or child care is unavailable due to a COVID-19 related order and they are unable to work or telework. 

Q: Are employees receiving benefits under the emergency FMLA leave offered the same job protection as offered by regular FMLA?

A: The job protections under FMLA continue to apply to an employee taking emergency leave. However, exceptions to the job protection requirements are provided for employers with fewer than 25 employees, if certain conditions are met.

Q: If an employee only takes emergency FMLA leave – and not paid sick leave – when is the employer required to begin paying the employee?

A: An employee is only eligible for emergency FMLA pay after 10 days of absence due to caring for a qualifying child. For the first 10 days, an employee may use other leave pay, such as accrued vacation or sick time. However, an employee unable to work due to caring for a qualifying child may be eligible for emergency paid sick leave for their first 10 days of absence, provided the employee has not already used this paid leave for another qualifying reason.

Additional Resources

Below is a list of existing resources available related to the evolving COVID-19 legislation and application of the Families First Coronavirus Response Act.

DHG’s COVID-19 Response Page

Department of Labor FFCRA FAQ Page

IRS FFCRA Press Release Page