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April 27, 2020

Everything U.S. Businesses Need To Comply With And Pay For COVID-19 Paid Leave Protections

As a reminder, the Families First Coronavirus Response Act, the second stimulus bill designed to address the COVID-19 pandemic, established paid leave policies for some employees impacted by COVID-19. Under the legislation, the following employees are eligible for leave:

  • Employees at companies with fewer than 500 employee;
  • Employees who work under a multiemployer collective agreement and whose employers pay into a multiemployer plan; and
  • Local, state, and federal government employees.

They are eligible for:

  • Eligible full-time employees are entitled to two weeks (80 hours) of fully paid time off (up to $511 per day) to self-quarantine, seek a diagnosis or preventive care, or receive treatment for COVID-19.
  • Eligible part-time employees are entitled to fully paid time off (up to $511 per day) for the typical number of hours that they work in a typical two-week period to self-quarantine to seek a diagnosis or preventive care, or receive treatment for COVID-19.
  • Eligible full-time employees are entitled to two weeks (80 hours) paid time off at two-thirds of their regular pay (up to $200 per day) to care for a family member or to care for a child whose school has closed, or if their child care provider is unavailable due to COVID-19.
  • Eligible part-time employees are also entitled to the typical number of hours that they work in a typical two-week period at two-thirds of their typical pay (up to $200 per day) to care for a child whose school has closed, or if their child care provider is unavailable, due to COVID- 19.

The U.S. House of Representatives has provided a detailed summary of these provisions. This summary also includes an FAQ that MSCI encourages all members to review. It is available at this link.

On Monday, April 20, the U.S. Department of Labor announced the end of its temporary period of non-enforcement of these provisions. The non-enforcement period allowed the department’s Wage and Hour Division (WHD) to offer extensive guidance and education about the requirements, which aided American workers and enabled employers to come into compliance as the nation continues to battle the COVID-10 pandemic. The WHD offers extensive plain-language guidance on the requirements of the law, including Questions and Answers,  a Fact Sheet for Employees and a Fact Sheet for Employers, and an in-depth webinar.

The department also has provided information on common issues employers and employees face when responding to the coronavirus, and its effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act at this website.

As a reminder, employers will have to post notice of these changes in a similar manner to other poster requirements.

Under the bill passed by Congress, employers initially front the cost of emergency paid sick leave but will be fully reimbursed by the federal government within three months. The reimbursement will cover both the wages paid and the employer’s contribution to employee health insurance premiums during the period of leave. Employers will be reimbursed through a refundable tax credit that counts against employers’ payroll tax, which all employers pay regardless of non-profit/for-profit status. Employers will submit emergency paid sick leave expenses as part of their estimated quarterly tax payments. If employer’s costs more than offset their tax liability, they will get a refund from the IRS.

Click here for more information about how these provisions will work. Click here for a helpful fact sheet from Bloomberg that explains how the tax credits will work. For an overview of the tax credits for businesses that provide paid leave, see this IRS announcement.