As of March 26, 2020
1) What is the effective date of the Act?
- The effective date of the Act is April 1, 2020, and runs through December 31, 2020.
2) It states the law takes effect April 1 – is that the payroll date or the 1st day they miss work and are therefore eligible?
- April 1 corresponds to the first day of leave.
3) What counts toward my employee count to determine if I meet the mandated employee threshold number (500 employees or less)?
- At the time of the employees’ leave, employee count includes Full -Time and Part- Time employees within the US, including those on leave, and temporary employees.
4) If I employ fewer than 50 employees, how do I elect the small business exemption if providing child-care related paid sick leave and expanded family and medical leave would jeopardize my business?
- You need to document why you feel your business meets the criteria set forth by the Department; NOTE: final regulations and guidance have yet to be published.
5) Which piece of the Act can an employer opt out of?
- See #4 above.
6) What are the requirements for eligibility for the expanded family and medical leave?
- An employee must be employed for 30 calendar days prior to the employee’s leave. For example, if leave was to start on 4/1/2020, the employee needs to be on payroll as of March 2, 2020.
7) My company is exempt from the current FMLA due to having less than 50 employees. Are we exempt from the emergency FMLA leave as well?
- No. The emergency FMLA has different qualifying factors than the current FMLA does.
8) How much do employers pay eligible employees for sick leave or expanded family medical leave under the new Act?
It depends on the employee’s normal schedule as well as why they are taking leave, but in general:
- If any employee is sick with COVID-19, then they are entitled to the Emergency Paid Sick Leave for the first 10 days (2 weeks) and then they are covered under the regular FMLA for the remaining time. They would need to use their accrued/available sick/vacation/PTO/EIB for the remaining time they are away from work.
- Note that the Expanded Family Medical Leave Act is only for parents taking care of children for daycare/school closures. For eligible employees, the first 10 days are unpaid. However, the emergency paid sick leave act (see bullet point above) provides eligible employees with 10 days of paid leave to cover the unpaid days, but would only receive compensation at 2/3 of their regular pay rate. The employee may use any accrued leave for the first 10 days if they wish, but the employer cannot require it. After the first 10 days (2 weeks), they are then entitled to the Expanded Family Medical Leave Act for the remaining 10 weeks at 2/3 their normal rate of pay. Both acts combined cannot go over the 12-week FMLA stipulation. Pay cannot exceed $200 per day, and $10,000 in total. Any unused portion of this pay will not carry over to the next year.
Below are the current regulations on 100% pay and 2/3 pay:
- If an employee is taking leave because they are unable to work or telework due to quarantine or being sick with COVID-19, they would receive 100% of their normal work hours in emergency paid sick leave (based on normal hours worked). In this circumstance, they would be entitled to a maximum of $511 per day or $5,110 total over the entire paid sick leave period.
- If an employee is taking leave because they are caring for an individual who is subject to quarantine or who has been advised by health care provider to self-quarantine related to COVID-19; closed schools/child care or experiencing any other substantially similar condition that might arise, they would receive compensation at 2/3. Under these circumstances, they would be entitled to a maximum of $200 per day, or $2,000 over the entire two-week period.
- Also, for employees receiving these payments their normal payroll deductions for insurance, etc. are still withheld. If they cannot cover them with their payroll then they will need to reimburse their employer for any premiums paid on their behalf.
9) How do I incorporate the new pay items into my payroll software?
- Consider setting up 3 new payroll categories to capture the special pay items. For example:
COVID-19 Self-Care –this would be set up to calculate the full pay rate for employees for up to 80 hours. This applies to employees who are unable to work because they are ill or quarantined due to COVID-19.
COVID-19 Other Care – this would be set up to calculate 2/3 of the employee’s pay rate for up to 80 hours. This applies to employees who are unable to work because they are caring for another person (adult or child) with COVID-19.
COVID-19 Expanded Child Care – this would be set up to calculate 2/3 of the employee’s pay rate for up to 400 hours. This applies to employees who are unable to work because of lack of childcare during the COVID-19 crisis.
10) How do I claim the credits for the sick and expanded family and medical leave amounts that I pay to my employees?
- Final guidance has yet to be published, but the IRS has indicated that businesses can retain funds they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of the paid leave, you would be able to seek an expedited advance from the IRS (claim form yet to be published). The payroll taxes available for retention include withheld federal income taxes, employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.
11) If I pay employees for emergency sick leave or expanded family medical leave, how do I report that on my quarterly payroll 941 return?
- The IRS has not yet released information on how to reconcile the sick leave and family medical leave credit on the quarterly form 941 return. This will apply starting with the second quarter 941 report, since the effective date of the law is April 1, 2020.
12) What if I am self- employed? Do I still get the credits?
- According to the IRS, equivalent credits are available to self-employed individuals based on similar circumstances. See below for general guidance:
Comparable tax credits for self-employed individuals
- If you are a self-employed individual who is affected by the coronavirus emergency, the Act allows you to claim a refundable credit against your federal income-tax bill, including the self-employment tax hit. If the credit exceeds your bill, the government will issue you a payment for the excess.
- The credit equals: 1) 100% of your self-employed sick-leave equivalent amount plus 2) 67% of the sick-leave equivalent amount for taking care of a sick family member or taking care of your child following the closing of the child’s school.
- The sick-leave equivalent amount equals the lesser of: 1) your average daily self-employment (SE) income or 2) $511 per day for up to 10 days (up to $5,110 in total) to care for yourself due to the coronavirus or $200 per day for up to 10 days (up to $2,000 in total) to care for a sick family member or your child following the closing of the child’s school due to the coronavirus.
- In addition, you could claim a coronavirus emergency family-leave credit for up to 50 days. The credit amount would equal the number of qualified family-leave days multiplied by the lesser of 1) $200 or 2) your average daily SE income. The maximum total family-leave credit would be $10,000 (50 days times $200 per day).
NOTE: These credits for self-employed individuals are only allowed for days during the period beginning on April 1, 2020 and ending on Dec. 31, 2020.
Warning: To properly claim the credits, self-employed individuals must maintain whatever documentation the IRS requires in future guidance.
13) Does the credit apply to state payroll liabilities as well?
- We have received no guidance from the state for this issue. At this time, we are assuming that the credit does not apply at the state level.
14) If my business experiences a furlough or a reduction in hours, should I continue to pay benefits for my employees?
- This will ultimately be a decision you will need to make based on your current situation. If you do decide to continue paying for benefits, make sure to review your plan documents regarding employee eligibility and benefits continuation during unpaid/unprotected leaves of absence. It may be best to check with your benefit provider to see if they are relaxing any of their requirements; some carriers are allowing benefits continuation for employees/workers who are laid off or furloughed as long as monthly premiums are received. If you need to be reimbursed for the employees’ share of healthcare premiums, there are options you can choose from that needs to be applied to all employees (pre-payment, pay as you go, or payment upon return).
15) If I continue to pay healthcare premiums for covered employees, do the amounts paid qualify for a credit?
- According to the IRS, eligible employers are entitled to an additional tax credit related to healthcare premiums paid. We don’t currently have details on the process for claiming these credits.
16) If I have to lay off workers or reduce hours, are my employees eligible for unemployment benefits?
- If an employee is working less than their customary hours, they may be eligible for benefits. Encourage them to apply for unemployment at MontanaWorks.gov. That is where they can file a claim and use a benefits calculator to determine an estimated amount of benefits they may receive. This applies whether an employee is salaried or hourly.
17) As an owner of my business, am I eligible for unemployment?
- If your business is a corporation or an LLC filing as a corporation, and you receive wages as a corporate officer, you may be eligible for unemployment. If you are a sole-proprietor, partner or LLC member and file the business as a partnership, you would not be eligible for unemployment.
18) If I am self-employed, and have experienced a downturn in business due to COVID- 19, am I eligible for benefits?
- It depends. You would need to check with the Montana Department of Labor, especially if you have been solely self-employed for the last year or more. See also 17) above.
19) One of my employees experiencing symptoms called our provider hotline and was directed to stay home and self-isolate for 14 days, but did not get tested and did not go to the doctor. This employee has some hours built up of accrued leave. How do I, as the employer, comply with the Act?
- The Emergency Sick Leave under the Act must be utilized before requiring employees to use their own accrued leave. The emergency leave goes into effect April 1, so any accrued leave may be used until April 1.
- Any credits allowed will only be applicable to leave paid under the Act on or after April 1 through December 31.
- Obtain documentation of the order to stay home. If a doctor’s order is not available, obtain an alternative form of documentation from the employee (there is no clear guidance on what this documentation needs to be). Usually medical providers will provide employee with a note.
- If an employee is exposed or infected with COVID-19, you should inform coworkers who shared the same physical space of the situation, but remember that under the ADA/ HIPAA regulations, employees are guaranteed the privacy of medical information. You should never reveal private medical information to others.
- According to the MT Department of Labor, unemployment benefits may be available for eligible individuals who are requested by a medical professional, local health authority, or employer to be isolated or quarantined due to COVID-19, even if they are not actually diagnosed with COVID-19, so the employee can be encouraged to contact the Unemployment office.
20) If my business closes temporarily, do I have to pay out an employee’s vacation before they can claim unemployment?
- If the layoff is a termination, you have to pay out accumulated vacation, as it always has a cash value. It is a job-attached furlough; you may have the option to not pay out vacation.
21) Are there any sample policies or flyers that would assist me in explaining these benefits to my employees?
- Federal Posters and FAQ sheets can be downloaded from: https://www.dol.gov/agencies/whd/pandemic
- Montana Unemployment Resources can be accessed at: http://uid.dli.mt.gov/claimants
If you have additional questions on the Families First Coronavirus Response Act, please contact us!