President Trump Signs Families First Coronavirus Response Act Into Law

/ Freidel & Associates, LLC/

Earlier today, President Donald John Trump signed the “Families First Coronavirus Response Act” into law. This bill, H.R. 6201, is colloquially known as “Phase 2” of the coronavirus legislation—following the phase 1 supplemental appropriations legislation that was enacted on March 6. Congress and the White House are already well under way on negotiating for Phase 3 of coronavirus legislation—aimed at economic stimulus.

The Families First Coronavirus Response Act is focused primarily on ensuring access to leave for those affected by the COVID-19 pandemic. Specifically, the Families First Coronavirus Response Act includes the Emergency Family and Medical Leave Expansion Act, which expands upon the Family and Medical Leave Act of 1993 specifically with respect to small employers. Remember that FMLA in general applies only to employers with 50 or more employees—whereas the Emergency Family and Medical Leave Expansion Act specifically applies to employers with fewer than 500 employees.

Under the Emergency Family and Medical Leave Expansion Act:

  • Employees are entitled to an initial unpaid leave of 10 days, during which the employee can use accrued vacation leave, personal leave, or medical and sick leave.

  • After the initial unpaid leave period, employers are required to offer paid leave for those affected by the COVID-19 pandemic

    • The paid leave may be no less than 2/3 of the employee’s normal salary, though the paid leave is not required to exceed $200 per day or $10,000 in the aggregate.

In addition, the Families First Coronavirus Response Act includes the Emergency Paid Sick Leave Act, which requires employers to provide:

  • Up to 80 hours of paid sick leave for employees subject to:

    • A quarantine or isolation order;

    • Medical guidance to self-quarantine; or

    • Caring for an individual or child subject to self-quarantine guidance; or

    • Caring for a child if the child’s school or place of care has been closed.

The Secretary of Labor and the Secretary of the Treasury are required to issue appropriate guidance to ensure enforcement the Emergency Family and Medical Leave Expansion Act as well as the Emergency Paid Sick Leave Act, including that the Secretary of Labor will be issuing model notices to post for all employees in the coming days.

The Families First Coronavirus Response Act also includes tax credits for businesses that comply with the Emergency Family and Medical Expansion Leave Act as well as the Emergency Paid Sick Leave Act, specifically against federal payroll taxes. For businesses where the credit exceeds the liability, there will be a refundable credit to be paid by the U.S. Treasury to the business.

While there are still some pieces that may be clarified by the Secretary of Labor and the Secretary of the Treasury, the Families First Coronavirus Response Act will go into effect rather quickly—in not less than 15 days. The Families First Coronavirus Response Act provides harsh penalties for employers that fail to comply with the terms of the Act, including the penalties of the Fair Labor Standards Act of 1938 for those that fail to provide the unpaid sick leave under the Emergency Family and Medical Leave Expansion Act. Importantly, the Families First Coronavirus Response Act also provides that the Secretary of Labor may exempt small business from certain requirements of the Act if enforcement “would jeopardize the viability of the business as a going concern.”

The Families First Coronavirus Response Act is hot off of the government presses, and there may be some uncertainty comes with it. If you are unsure how the Act affects your business, we strongly advise you to consult your legal and accounting professionals.

Freidel & Associates, LLC provides this post for informational purposes only and this post does not constitute tax advice rendered by Freidel & Associates, LLC to the reader. All tax advice is personal to each client and simply viewing this post does not form an accountant-client relationship between you and Freidel & Associates, LLC. For all current clients of Freidel & Associates, LLC, if you are not sure how this new legislation affects you, please contact Paul or a member of the team for further information.