Understanding Families First Act - COVID-19 Alert Update


The Families First Coronavirus Response Act (“Families First Act”), is the first federal emergency relief bill that addresses the ongoing COVID-19 pandemic. The Act creates two new temporary laws – the Emergency Family and Medical Leave Expansion Act (“EFMLA”) and the Emergency Paid Sick Leave Act (“EPSLA”) – that seek to compensate employees of medium and small employers who require time off to care for themselves or others due to the COVID-19 pandemic. The Families First Act’s paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020.

Generally, the Act provides that all private employers with fewer than 500 employees must provide to all employees (no matter the length of employment):

Two weeks (up to 80 hours) of paid sick time, at the employee’s regular rate of pay (capped at $511 per day) to an employee is unable to work or telework due to a quarantine or isolation order, advice by a health care provider to self-quarantine, or due to experiencing symptoms of COVID-19 and seeking a medical diagnosis; or

Two weeks (up to 80 hours) of paid sick time, at two-thirds the employee’s regular rate of pay (capped at $200 per day) to an employee unable to work or telework because s/he is caring for someone subject to quarantine, caring for their child whose school or child care provider is closed or unavailable due to COVID–19 precautions, or experiencing a “substantially similar condition”.

Additionally, covered employers must provide employees who have been employed for at least 30 calendar days:

Up to an additional 10 weeks of paid family leave, at two-thirds the employee’s regular rate of pay (capped at $200 per day) to an employee unable to work or telework because s/he must care for a minor child whose school or childcare provider is closed or unavailable due to a declared COVID-19 public health emergency.

Job-Protected Childcare Disruption Leave: EFMLA requires that employees taking leave to care for a child whose school or childcare provider is closed or unavailable due to COVID-19 reasons are entitled to 12 weeks of job protected leave. Meaning, the employee is entitled to reinstatement to the same position s/he held when the leave began or to an equivalent position with equivalent benefits and pay. However, if certain requirements are met, employers with fewer than 25 employees may deny job restoration due to economic conditions or other changes in the employer’s operating conditions caused by the COVID-19 pandemic.

The first 10 days of this leave can be unpaid, but the employee may elect to substitute other accrued vacation leave, personal leave, or medical or sick leave (including EPSLA’s above paid sick time) during this time. The 10-week remainder of the leave is paid at the two-thirds pay rate described above.

Exceptions: Employers who employ health care providers and emergency responders may elect to exclude those employees from the above paid leave requirements. The Department of Labor also has the authority to issue (but has not yet issued) regulations exempting small businesses with fewer than 50 employees if the required paid leave would jeopardize the viability of their business.

Notice: The Department of Labor will soon publish posters describing EFMLA and EPSLA’s requirements, which employers must post and keep posted in the workplace. Because the COVID-19 pandemic may prevent management and employees for entering the premises, we recommend employers also distribute notice of the new law to their employees electronically.

Payroll Tax Credits: Employers are to be reimbursed dollar-for-dollar for the costs of providing the paid leave required under the Families First Act in the form of a payroll tax credit. Employers can receive a tax credit equal to 100% of the wages paid by the employer under the Act for each quarter. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage.

Additionally the IRS has promised that reimbursement “will be quick and easy to obtain.” Under guidance set to be released this week, eligible employers who pay qualifying sick time or family leave will be able to retain an amount of their payroll taxes equal to the amount of qualifying wages leave that they paid, rather than deposit them with the IRS. In addition to this immediate dollar-for-dollar tax offset, the IRS has also promised that where a refund is owed, it will send the refund “as quickly as possible.”

Remote Form I-9 Verification: The Department of Homeland Security (“DHS”) has also announced temporary flexibility for Employment Eligibility Verification (Form I-9) requirements. Currently, DHS requires employers to review a new hire’s identity and employment authorization documents in the employee’s physical presence. However, aligning with “social distancing” guidelines, DHS will temporarily permit employers and workplaces that are operating remotely to review a new hire’s identity and employment authorization documents remotely (e.g., over video link, fax or email, etc.) and obtain, inspect, and retain copies of the documents, within three (3) business days of date of hire. Once normal operations resume, these remote on-boarded employees must report in-person verification of these documents within three (3) business days.

Chicago Small Business Resiliency Fund: Mayor Lori E. Lightfoot recently announced that the City of Chicago will establish a $100 million Chicago Small Business Resiliency Fund to help provide small businesses with emergency cash flow during this immediate health crisis. Funds will provide low-interest loans to eligible severely impacted small businesses and will include extended due dates for business-related tax payments until April 30, 2020. Formal applications for the Chicago Small Business Resiliency Fund will begin to be accepted on March 31, 2020, but employers can complete an interest form here.

The federal, state, and local government’s response to the COVID-19 pandemic is complex and ongoing. This is uncharted territory, but we are here to help and together we will help you find a path to success during this difficult time. If you have any questions about the Families First Coronavirus Response Act or need strategic advice on how to manage your workforce during this trying time, Golan Christie Taglia’s Employment Law, Employee Benefits and ERISA, and Taxation teams are available 24/7 to assist. To discuss your specific employment questions, feel free to contact Laura Balson (312-696-1351) or Ashley Orler (312-696-2032).