What is the Emergency Paid Leave Act?

The Emergency Paid Sick Leave Act (“Act”) was passed on March 18, 2020. The Act takes effects no later than April 2, 2020. The Act is part of the Families First Coronavirus Response Act. A copy of the full text and history of the Act can be found online at Families First Coronavirus Response Act.

How is it implemented?

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 claim form that will be released next week. The Department of Labor is expected to publish implementing regulations in the following weeks. RTS will continue to monitor the guidance and bring you the most up to date information.

How this impacts your day to day operation and your business:

1. Who is covered under this Act?

An employer shall provide to each employee employed by the employer paid sick time to the extent that the employee is unable to work (or telework) due to a need for leave because:
(1) The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19; (2) The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19; (3) The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis; (4) The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2); (5) The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID–19 precautions; or (6) The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

2. How much paid sick leave is available? And when?

Full time employees are eligible to receive 80 hours of paid sick leave. Part time employees receive the number of hours equal to the hours the work on average over a two-week period. Paid leave under the Act is available immediately and applies regardless of how long an employee has been working for the employer.

3. Does the Act affect my business?

Small businesses with fewer than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would jeopardize the ability of the business to continue. The exemption will be available on the basis of simple and clear criteria that make it available in circumstances involving jeopardy to the viability of an employer’s business as a going concern. Labor will provide emergency guidance and rulemaking to clearly articulate this standard. RTS will send out information when these procedures are released.

4. How do I pay for this if my business is slowing down?

a. Under guidance that will be released next week, 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.

b. 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.

c. If there are not sufficient payroll taxes to cover the cost of qualified sick and child care 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. The details of this new, expedited procedure will be announced next week.

5. Is there a limit on the amount I am reimbursed under the Act?

For an employee who is unable to work because of COVID–19 quarantine or self-quarantine or has COVID–19 symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay, up to $511 per day not to exceed $5,110 total, for a total of 10 days.

For an employee who is caring for someone with COVID–19, or is caring for a child because the child’s school or child care facility is closed, or the child care provider is unavailable due to the COVID–19, eligible employers may claim a credit for two-thirds of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. 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.

Examples 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.

6. Are there any other requirements for my business?

Employers are required to post a notice of the availability of this Paid Sick Leave in their workplace. The Department of Labor will make a model notice available within the week.

The above information does not take the place of legal advice. Please contact the attorneys at Reiling Teder and Schrier if you have questions about a particular situation.