April 1 - CARES Act employee retention credit, FFCRA paid leave and various employee scenarios
Updated: Apr 3, 2020
Okay everyone, I have a few items we are going to do a deep dive on. We will start with a provision of the CARES act we haven’t covered yet.
CARES Act Employee Retention Credit
The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 crisis. This credit is available for wages paid after March 12, 2020 and before January 1, 2021, but it is not available to employers receiving Small Business Interruption loans.
The credit is available to employers, including nonprofits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel, or group meetings. The credit is also provided to employers who have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis. Eligible Employees For employers who had an average number of full-time employees of 100 or fewer in 2019, all employees’ wages are eligible, regardless of whether the employees are furloughed. For employers who had a larger average number of full-time employees in 2019 - only the wages of employees who are furloughed or face reduced hours as a result of their employers' closure or they had reduced gross receipts, are eligible for this credit. Eligible Wages The term "wages" includes health benefits and is capped at the first $10,000 in wages paid by the employer to an eligible employee. Wages do not include amounts taken into account for purposes of the payroll credits, for required paid sick leave or required paid family leave in the Families First Coronavirus Response Act, nor for wages taken into account for employer credit for paid family and medical leave. The CARES Act and the Families First Coronavirus Response Act provide eligible employers, who pay qualified sick and family leave wages or qualified wages eligible for the employee retention credit, should retain an amount of the employment taxes equal to the amount of qualified sick and family leave wages (plus certain related health plan expenses and the employer’s share of the Medicare taxes on the qualified leave wages) and their employee retention credit, rather than depositing these amounts with the IRS. Under these Acts, employers can obtain an advance payment of the credits if there are insufficient employment taxes to cover the cost of qualified sick and family leave wages (plus the qualified health expenses and the employer share of Medicare tax on the qualified leave wages) and the employee retention credit. Interpreting these Acts can be confusing. For questions or further clarification, contact your CPA or banker.
Let me reiterate that last point. Please contact your CPA or Banker!
We anticipate that the Paycheck Protection Program (PPP) Loans will go active by the end of the week and they will likely be first-come, first-serve. Please contact a competent accountant or banker to help facilitate your application and decide which of the many programs currently available are best for you.
Okay… next. We’ve had a lot of questions today on the FFCRA and we have new guidance from NECA on it as well. In a reversal of information provided yesterday in the Webinar, they have responded that only health and welfare contributions and payment of wages are required by the law. They did say that if our contracts had specific provisions saying we needed to pay benefits on the FFCRA, then we would have to. Near as I can see, none of our agreements contain such a provision. So that’s a positive. Here’s a link to the updated Q&A.
Additionally, we are sometimes getting calls from folks who are just overwhelmed and wondering where they should start, what they should be doing. First, and this sounds hokey, but just keep trying your best and taking things one step at a time. It’s all so overwhelming but you guys are amazing. So many of you have been calling me worried about how you can take care of your people even before you’ve been asking about how to take care of yourselves. And while I’m on the subject, you need to be doing that too. Take the time to stay healthy. Get sleep. Follow the guidelines. Just take a few moments each day just for yourselves. You might not think you have time, but if you don’t, you won’t have anything else either. You got this.
Read the blog. We’ve covered a lot of subjects and we will continue to keep it updated as often as we can with things you need.
For right now though, many of our questions are about how to handle contact all the employment scenarios and how to stay safe and compliant.
I’ve already covered separation from employment, but let’s look at some of the others you’re asking about:
As soon as possible, all employers should:
· Post the new Families First Coronavirus Response Act (FFCRA) poster.
· If your company does not yet have an infectious exposure control plan (ECP), now is a good time to make one. You may use this sample plan from NECA.
· Employers should also complete this COVID-19 risk assessment for all projects that may have been impacted by COVID-19.
Please see the additional notes and important questions (with answers) about the FFCRA after the employee scenarios. For any employee requesting FFCRA paid leave, it’s a good idea to document their request using a form such as this one, created by Huston Electric, or something similar.
In each of the following scenarios, when an employee is seeking emergency paid sick leave or expanded emergency family/medical leave under the FFCRA, an employer may allow the employee to use any company-accrued sick leave or PTO if the employee so chooses. If they have none, or the employee chooses not to use their company PTO at this time, they are not required to use it.
Employees wishing to use FFCRA paid leave due to COVID-19:
1. An employee has exhibited symptoms of COVID-19 and is seeking a medical diagnosis, tested positive for COVID-19, or has called in sick due to suspected COVID-19 symptoms:
a. Health & Safety Concerns/Employer Rights:
During a pandemic, ADA-covered employers may ask such employees if they are experiencing symptoms of the pandemic virus. For COVID-19, these include symptoms such as fever, chills, cough, shortness of breath, or sore throat.
The CDC states that employees who become ill with symptoms of COVID-19 should leave (or not show up to) the workplace. The ADA does not interfere with employers following this advice. Employers must maintain all information about employee illness as a confidential medical record in compliance with the ADA. (U.S. EEOC bulletin 3/19/2020)
If an employee exhibits or describes COVID-19 symptoms, the employee must remain at home until he or she is symptom free for 72 hours (3 full days) without the use of fever-reducing or other symptom-altering medicines (e.g., cough suppressants). To the extent practical, employees are required to obtain a doctor’s note clearing them to return to work.
If an employee is confirmed to have a COVID-19 infection, employers should ask the employee to identify all individuals who have worked in close proximity with them during the previous 14 days, and inform fellow employees of their possible exposure to COVID-19 in the workplace but maintain confidentiality by not naming the employee who tested positive. The fellow employees should then self-monitor for symptoms (i.e., fever, cough, or shortness of breath). Employers should also document all steps taken to investigate potential exposures (via a form such as
If you have not already, educate all employees on how to prevent the spread of the virus. If a sick employee is suspected or confirmed to have COVID-19, follow the CDC cleaning and disinfection recommendations.
b. Paid Leave requirements:
A full-time employee who is experiencing symptoms of COVID-19 and seeking a medical diagnosis, or is subject to a government quarantine or has been told by a health
care provider that he/she should self-quarantine due to COVID-19 would be eligible for up to 80 hours (pro-rated average number of hours for part-time employees) of Emergency Paid Sick Leave under the FFCRA, at 100% their normal rate of pay, capped at $511 per day or $5,110 in the aggregate.
If, rather, it is determined that an employee is not suffering from COVID-19, but is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, the employee must be paid emergency sick leave, at 2/3 the
employee’s rate, and capped at $200 per day/ $2,000 in the aggregate.
If the employee requires more time off due to their illness, they may use any company accrued PTO, or they may use the standard 12 weeks of unpaid leave, which is allowed under the FMLA. Emergency paid sick leave under the FFCRA is separate from the traditional FMLA unpaid leave, and does not reduce the 12 weeks of FMLA leave that employees are eligible for in any 12-month period.
2. An employee is unable to work because a family member has tested positive or is seeking treatment for COVID-19:
a. Health & Safety Concerns/Employer Rights:
Employees that have come into close contact with a confirmed-positive COVID-19 individual (co-worker, family member, or otherwise), should be directed to self-quarantine for 14 days from the last date of close contact with the carrier. Close contact is defined as six (6) feet for a prolonged period of time. (recommendations from Construction Industry Safety Coalition (CISC) See source information at end of document).
b. Paid leave requirements:
The employee is eligible for emergency paid sick leave, paid at 2/3 the employee’s rate, capped at $200 per day/$2,000 in the aggregate for up to 80 hours, or they may substitute any accrued vacation leave, personal leave, or medical or sick leave that they have accrued under your company’s policy.
If the employee requires more time off, they may use any company accrued PTO, or they may use the standard 12 weeks of unpaid leave, which is allowed under the FMLA. Emergency paid sick leave under the FFCRA is separate from the traditional FMLA unpaid leave.
3. An employee is unable to work due to their child’s school or childcare provider being unavailable due to COVID-19.
a. Health & Safety Concerns: None.
b. Paid leave requirements:
Regardless of the length of an employee’s employment with your company, they are eligible for emergency paid sick leave (paid at 2/3 the employee’s rate, capped at $200 per day/$2,000 in the aggregate) for the first ten days of that leave period (80 hours for full-time employees, or the average work hours for part-time employees), or they may substitute any accrued vacation leave, personal leave, or medical or sick leave that they have accrued under your company’s policy.
Following the first ten days of paid sick leave, if the employee has been employed by your company for at least 30 days prior to the start of their leave period, the employee is eligible for an additional ten weeks of expanded family medical leave. During these ten weeks, the employee must be paid at least 2/3 the employee’s rate, capped at $200 per day/$2,000 in the aggregate, for the hours they would be normally scheduled to work.
Important notes and questions (with answers!)
Note: According to DOL guidance issued 3/28/20, the only exemptions for paid sick or expanded family medical leave under the FFCRA for small businesses (fewer than 50 employees) are for leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons. Read more on the exemption under scenario 3, above.
Note: Eligible employees who take leave under the Emergency FMLA Expansion Act are entitled to be restored to the position they held when the leave commenced, or to an equivalent position, subject to certain exceptions outlined in the FMLA.
However, employers with fewer than 25 employees may not need to return employees to their same or similar positions if (1) the position does not exist due to changes in the employer’s economic or operating conditions caused by the COVID-19 emergency; (2) the employer makes reasonable efforts to restore the employee to an equivalent position; and (3) if those efforts fail, the employer makes a reasonable effort to contact the employee if an equivalent position becomes available within a one-year period after the employee’s leave ends.
When does the small business exemption apply to exclude a small business from the provisions of the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act?
An employer with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern.
A small business may claim this exemption if an authorized officer of the business has determined that:
1. The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
2. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
3. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.4
As of April 1, 2020, the DOL’s guidance states: “You should not send any materials to the Department of Labor when seeking a small business exemption for paid sick leave and expanded family and medical leave.”
How do emergency paid sick leave and expanded family medical leave under the FFCRA interact with traditional FMLA leave?
Employees may take a total of 12 workweeks of leave during a 12-month period under the FMLA, including the Emergency Family and Medical Leave Expansion Act. If you take some, but not all 12, workweeks of your expanded family and medical leave by December 31, 2020, you may take the remaining portion of FMLA leave for a serious medical condition, as long as the total time taken does not exceed 12 workweeks in the 12-month period. Please note that expanded family and medical leave is available only until December 31, 2020; after that, you may only take FMLA leave.
For example, assume you take four weeks of Expanded Family and Medical Leave in April 2020 to care for your child whose school is closed due to a COVID-19 related reason. These four weeks count against your entitlement to 12 weeks of FMLA leave in a 12-month period. If you are eligible for preexisting FMLA leave and need to take such leave in August 2020 because you need surgery, you would be entitled to take up to eight weeks of FMLA leave.
However, you are entitled to paid sick leave under the Emergency Paid Sick Leave Act regardless of how much leave you have taken under the FMLA. Paid sick leave is not a form of FMLA leave and therefore does not count toward the 12 workweeks in the 12-month period cap. But please note that if you take paid sick leave concurrently with the first two weeks of expanded family and medical leave, which may otherwise be unpaid, then those two weeks do count towards the 12 workweeks in the 12-month period. (Source: DOL FFCRA Q & A, question #45).
That’s it for tonight everyone. Like I said. It's overwhelming, but like anything else, you just take it one step at a time. You really can do this.
As always, stay safe and give me a call if you have any questions.