The new Families First Coronavirus Response Act (FFCR Act) took effect April 1, 2020 and contains important requirements for businesses that employ less than 500 people. This act is a crucial cornerstone for ensuring that employees receive paid leave for certain virus-related illnesses or caregiving needs. It also provides employers with cash flow solutions and tax credit reimbursement to cover those wages required under the act.
Note: Components of this act are evolving as government agencies work to issue guidance required by the act.
Here are some takeaways of the act to get small business employers started:
1) The Treasury Department recently confirmed that leave paid under the FFCR Act will be eligible for tax credit reimbursement for the pay periods encompassing April 1, 2020 through December 31, 2020.
2) For the benefit of employees, each employer is required to post a notice of the requirements described in the FFCR Act. It is recommended that employers email it to all employees in addition to posting it at the work site. The Secretary of Labor has provided a model workplace poster.
3) There are two leave components under the FFCR Act:
- The Emergency Paid Sick Leave Act: This governs the first 10 days of leave needed for virus related illness or caregiving needs. There is no minimum employment longevity rule.
- The Emergency Family Medical Leave Act: This provides up to an additional 10 weeks of paid leave for employees who have been employed at least 30 days prior to leave request.
4) Benefits are available for full- and part-time employees. The act provides guidelines for calculating the required leave wages to pay to employees depending on whether the employee is full- or part-time as well as the reason for leave. The total tax credit offset has a cap per day and per period depending on which category the leave is taken under.
5) Leave benefits paid under this act are in addition to any leave/paid time off benefits an employer already provides. For example, employers cannot force an employee to exhaust their normal paid sick leave before providing paid leave required under this act.
6) There are exceptions for employers with fewer than 50 employees with respect to the requirement to provide paid leave due to school closings and childcare needs. This exception will be allowed based on the viability that paying these leave wages will create a going concern issue for that business.
7) The IRS will provide relief in the form of tax credits on quarterly payroll tax remissions as well as provide a mechanism for qualified businesses to request quick turnaround funds. Tax credits will include certain qualified health plan expenses paid for the employee. We will follow up with more guidance as the IRS provides it.
- Joint Committee on Taxation Technical Explanation “Bluebook”
- Department of Labor Guidance Issued April 1, 2020
Do you have questions about how your small business should navigate the FFCR Act? Reach out so we can provide you with additional, specific guidance.