Employer Responsibilities Under FFCRA

March 31, 2020

Reorganization of Practice operations During the COVID-19 Emergency

The COVID-19 virus has disrupted practices nation-wide. As reductions in patient volumes and revenues occur practices must determine workforce strategies for staffing and Medical Management Associates, Inc. (MMA) is researching options and working with practices to offer solutions to minimize workforce reductions and determine sources of revenue to offset losses.

The needs of each practice vary greatly based on size, specialty, workforce, and contractual obligations with partners, associates and other elements. We encourage our clients to obtain the assistance of seasoned advisors during this process. The consulting staff at MMA has many years of experience in this area, and we are available to partner with you in this effort.

Please Note: MMA is not a legal or an accounting firm. The information provided is based upon the analysis of respected employment law experts, the Society of Human Resources Management (SHRM) and bulletins from appropriate departments of the U.S government. Our intent is to provide our clients with our best summary of the pertinent aspects of the new laws and regulations addressing the COVID-19 emergency. Until the final official guidance is available many questions remain as to application and enforcement. Our MMA advisors are available to work with you to provide guidance. In considering your specific circumstances you may need to contact an employment attorney or accountant. The following information is available as of March 31, 2020.

Families First Coronavirus Response Act (FFCRA)

H.R. 6201/Public Law 116 & 127

Any strategy selected must also take into consideration rapidly developing legislation such as the Families First Coronavirus Response Act ("FFCRA"). FFCRA was passed by the U.S. Congress and signed by the President on March 18, 2020. The FFCRA directly impacts all employers by expanding the scope of the Family Medical Leave Act and requiring sick leave pay for COVID-19 related illnesses as further described in the information below. The effective date will be April 1, 2020.

Effective date: April 1, 2020 - Sunsets Dec. 31, 2020

Who is affected? All private entities and individuals that employ fewer than 500 employees are affected.

Intent of the Act: To coordinate the efforts of the U.S. Treasury, IRS and Department of Labor to allow small and midsize employers take advantage of two new refundable payroll tax credits. The credits are designed to reimburse these employers, dollar-for-dollar, for the cost of providing COVID -19-related leave to their employees.

Background: The act provides paid sick leave and expanded family and medical leave for COVID-19 related reasons and created the refundable paid sick leave credit and the paid child-care leave credit for eligible employers. Eligible employers will be able to claim these credits based on qualifying leave they provide between the effective date and Dec. 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances.

Types of Leave

Emergency Family Medical Leave Expansion Act (EFMLA)
Emergency Paid Sick Leave Act
Child Care Leave Credit for Employees

Emergency Family Medical Leave Expansion Act (EFMLA)

What employers must provide: Up to 12 weeks of job-protected leave and pay for an employee employed 30 days or longer if one of the following reasons for leave applies:

The employee is unable to work or telework due to a need to care for a child under 18 years of age because that child's school or place of care has closed.
- Pay for First 2 Weeks (10 Days): Unpaid (unless using PTO or vacation)
- Pay for Weeks 3-12: 2/3 of normal salary
- Maximum Payment: $200/day, $10,000 in aggregate
The child's childcare provider is unavailable due to a public health emergency with respect to COVID-19.
- Pay for First 2 Weeks (10 Days): Unpaid (unless using PTO or vacation)
- Pay for Weeks 3-12: 2/3 of normal salary
- Maximum Payment: $200/day, $10,000 in aggregate

Emergency Paid Sick Leave Act

What employers must provide: Up to two weeks (80 hours) of paid sick leave for all employees who are unable to work by telehealth if one of the following reasons for sick leave apply:

Employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
- Pay: Regular rate of pay.
- Maximum Payment: $511/day, $5,110 agg.
Employee is sick with or has been quarantined due to COVID-19 .
- Pay: Regular rate of pay.
- Maximum Payment: $511/day, $5,110 agg.
Employee is sick with or has been quarantined due to COVID-19.
- Pay: Regular rate of pay.
- Maximum Payment: $511/day, $5,110 agg.
Employee is caring for an individual who is subject to an order to quarantine or self-isolate or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
- Pay: Greater of: (1) 2/3 of regular rate of pay OR (2) Minimum wage.
- Maximum Payment: $200/day, $2,000 agg
Employee is caring for their child if the school or place of care of their child has been closed, or the childcare provider is unavailable due to COVID-19 precautions.
- Pay: Greater of: (1) 2/3 of regular rate of pay OR (2) Minimum wage.
- Maximum Payment: $200/day, $2,000 agg
Employee is experiencing any other substantially similar condition specified by the Secretary of HHS.
- Pay: Greater of: (1) 2/3 of regular rate of pay OR (2) Minimum wage.
- Maximum Payment: $200/day, $2,000 agg

Child Care Leave Credit for Employees Employed for at least 30 Days

In addition to the Emergency Paid Sick Leave credit, for an employee who is unable to work because of a need to care for a child whose school or child-care facility is closed or whose child care provider is unavailable due to the Coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee's regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child-care leave credit. The maximum if combined with Emergency Paid Sick will be no more than $12,000. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

Which Employers Are Exempt?

Who's Exempt? https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

The Secretary of Labor has the authority to exclude/exempt:

(A) Certain health care providers and emergency responders. A health care provider is anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity.

(B) Small businesses with fewer than 50 employees when the imposition of such requirements would jeopardize the viability of the business as a going concern.

Additional Requirements

US Treasury, IRS and Department of Labor Bulletin on Receiving Reimbursement (From Bulletin - March 20, 2020)

Employee Notice - Practices must post a notice in the practice about the rights of employees. The Department of Labor published model notices for employers and employees on March 25, 2020. These can be found at Fact Sheet for Employees, a Fact Sheet for Employers and Questions and Answers.

The Families First Coronavirus Response Act Posters to be Placed in Worksites

Employee Rights: Paid Sick Leave and Expanded Family and Medical Leave under The Families First Coronavirus Response Act (FFCRA)

Complete Coverage

Employers receive 100% reimbursement for paid leave pursuant to the Act.

Health insurance costs are also included in the credit.
Employers face no payroll tax liability.
Self-employed individuals receive an equivalent credit.

Fast Funds

Reimbursement will be quick and easy to obtain.

An immediate dollar-for-dollar tax offset against payroll taxes will be provided.
Where a refund is owed, the IRS will send the refund as quickly as possible.

Small Business Protection

Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or childcare is unavailable in cases where the viability of the business is threatened.

Easing Compliance

These requirements are subject to 30-day non-enforcement period for good faith compliance efforts. To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined.

Prompt Payment for the Cost of Providing Leave

When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees' share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS.

Eligible employers who pay qualifying sick or child-care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child-care leave that they paid, rather than deposit them with the IRS.

The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes and the employer share of Social Security and Medicare taxes with respect to all employees.

If there are not enough payroll taxes to cover the cost of qualified sick and childcare leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less.

Examples from the IRS

"If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date."

"If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments, and file a request for an accelerated credit for the remaining $2,000."

"Equivalent child-care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments."

Prohibitions

Employers may not discharge, discipline, or otherwise discriminate against any employee who takes paid sick leave under the FFCRA and files a complaint or institutes a proceeding under or related to the FFCRA.

Penalties and Enforcement

Employers in violation of the first two week's paid sick time or unlawful termination provisions of the FFCRA will be subject to the penalties and enforcement described in Sections 16 and 17 of the Fair Labor Standards Act. 29 U.S.C. 216; 217. Employers in violation of the provisions providing for up to an additional 10 weeks of paid leave to care for a child whose school or place of care is closed (or child care provider is unavailable) are subject to the enforcement provisions of the Family and Medical Leave Act. The Department will observe a temporary period of non-enforcement for the first 30 days after the Act takes effect, so long as the employer has acted reasonably and in good faith to comply with the Act. For purposes of this non-enforcement position, "good faith" exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department receives a written commitment from the employer to comply with the Act in the future.

Source: US Dept of Labor document -https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave

For More Information

For more information about these credits and other relief, visit Coronavirus Tax Relief on IRS.gov. Information regarding the process to receive an advance payment of the credit will be posted next week.