Paid Leave Mandated for First Time Nationally Under Coronavirus Emergency Law
Author: David B. Weisenfeld, XpertHR Legal Editor
March 19, 2020
Millions of US workers will be entitled to paid leave for the first time under the coronavirus emergency law signed last night by President Trump. The Families First Coronavirus Response Act provides for federally mandated paid leave, including for some gig economy and part-time workers. However, it excludes employers with 500 or more employees.
In addition to temporarily expanding paid sick and Family and Medical Leave Act (FMLA) protections, the new law will provide for free testing for the coronavirus (COVID-19). It also includes payroll tax credit provisions to help employers.
Emergency Paid Leave
Under the Act, private employers with fewer than 500 employees must provide two weeks of paid sick leave at 100% of an individual's salary, up to $511 per day. In addition, they must provide up to 12 weeks of paid leave for employees who are unable to work or telework if the employees are:
- Quarantined (or advised to self-quarantine);
- Helping care for a family member with COVID-19; or
- Affected by school or child care closings.
Paid family leave is capped at $200 per day, $10,000 total. As long as employees have been working for a covered employer for at least 30 days, they will be covered by the emergency relief law.
However, the Department of Labor could exempt small employers with fewer than 50 employees if providing paid leave would jeopardize their business. Employers also may decline to provide leave for health care providers and emergency responders.
The paid leave provisions were the most contentious part of the new law, and the provisions make clear they will expire effective December 31, 2020.
Employer Tax Credit for Paying Covered Wages
An employer is allowed a 100% credit against the Social Security and Medicare taxes that are attributable to any wages paid under the Act. The credit is increased by the amount of qualified group-health benefits that are allocable to those wages. Excess credits will be refunded to the employer. Any credit taken increases the employer's gross income for the year. The amounts paid to employees vary, depending on the leave they are taking, but the credit is 100% regardless of the leave taken.
For wages paid under the expanded family and medical leave provisions, the credit equals $200 for any day an employee is paid qualified family leave wages. The aggregate credit is $10,000 for all calendar quarters. The credit is not allowed if employers provide unpaid leave.
For wages paid under the emergency paid sick leave provisions, the credit equals $511 for any day employees are on paid leave to care for themselves or $200 for any day employees are caring for others. The total number of days taken into account for a calendar quarter may not exceed the excess of 10 over the total number of days into account for all preceding calendar quarters.
Gig workers and self-employed individuals who work for another employer (such as Uber, Lyft or others) are eligible for a tax credit of up to two weeks of sick pay and 12 weeks of family leave pay at two-thirds their normal rate.