Federal Response to COVID-19 Part 1

The information below is a summary of the first legislation passed, which we received from Paychex.  It is a summary of relevant information so far.  This is not reflective of the second bill passed early this morning.

In general, the Families First Coronavirus Response Act dedicates tens of billions of dollars for paid sick and family leave, unemployment insurance, free COVID-19 testing, and other measures to help Americans impacted by the crisis. The final bill, which takes effect for most covered employers no later than 15 days after enactment and sunsets on December 31, 2020, contains numerous provisions affecting businesses and individuals.

Here is an overview of the key elements, which generally apply to private employers with fewer than 500 employees:

Emergency Family Medical Leave (FML) Expansion Act: Temporarily expands the provisions under the Federal Family and Medical Leave Act specifically to address COVID-19-related absences.

  • Eligible employees, who have worked for their employer for 30 days, who qualify for leave under the expanded reasons for leave, would be paid by their employer after the first 10 days of leave at a rate of no less than two-thirds of their current rate of pay.
    There is cap of $200 per day, up to a maximum $10,000, for up to 12 weeks in the benefit year.
  • Employees are permitted to take but employers cannot require the use of any other paid time off during their leave.
  • Employees covered under a multi-employer bargaining agreement are addressed separately in the legislation.

Some exemptions apply for employers of health care workers.

Payroll Credit for Required Paid Family Leave: This refundable tax credit is designed to reimburse 100 percent of wages paid by the employer under the new Emergency FML expansion for each calendar quarter.

  • The tax credit is allowed against the employer portion of the tax-imposed Social Security rate of 6.2 percent and the Medicare rate of 1.45 percent.
  • The amount is capped for each employee at $200 per day and $10,000 for all calendar quarters.
  • If the credit exceeds the employer’s total liability of the employer portion of Social Security and Medicare in any calendar quarter, the excess credit is refundable to the employer.

Specific rules apply that prevent a double tax benefit.

Emergency Paid Sick Leave (PSL) Act: Employers are required to provide paid sick time, available for immediate use, to each employee requiring such time for specific reasons associated with the COVID-19 pandemic, including quarantines, currently seeking a diagnosis due to symptoms, or caring for an individual who is under quarantine or for a child whose school/care is closed due to COVID-19.

  • Provide up to 80 hours of paid sick leave (PSL) to eligible full-time employees and pro-rate part-time employee paid sick time based on the average number of hours regularly scheduled in a two-week period.
  • The calculation and caps for compensation vary dependent on the reason for leave with a maximum of $511 per day if the employee is the individual directly impacted and up to $200 per day if it is for care of someone else. Aggregate caps exist as well.
  • Employees may not be required to use other available paid time off before using paid sick time under this Act.
  • Employees covered under a multi-employer bargaining agreement are addressed separately in the legislation.
  • Some exemptions apply for employers of health care workers.
  • Employers will be required to post a notice of employee rights; the U.S. Secretary of Labor will provide a model notice within seven days of enactment.
  • Paid sick time provided under this Act is not preempted by other federal, state, or local law.

Payroll Credit for Required Paid Sick Leave (PSL): This refundable tax credit is designed to reimburse 100 percent of wages paid by the employer under the new Emergency PSL for each calendar quarter.

  • The tax credit is allowed against the employer portion of the tax imposed Social Security rate of 6.2 percent and the Medicare rate of 1.45 percent.
  • The amount is capped at the maximums of $511 or $200 per day, depending on the reason.
  • If the credit exceeds the employer’s total liability of the employer portion of Social Security and Medicare in any calendar quarter, the excess credit is refundable to the employer.
  • Specific rules apply that prevent a double tax benefit.
    Other General Provisions:

Emergency Unemployment Insurance Stabilization and Access Act of 2020: The bill provides $1 billion in emergency grants to states for activities related to facilitating unemployment insurance benefits, under certain conditions.

  • $500 million will be used to provide immediate additional funding to all states for staffing, technology, systems, and other administrative costs, provided certain requirements are met.
  • The remaining $500 million would be set aside in reserve for emergency grants to states which experienced at least a 10 percent increase in unemployment. Those states would be eligible to receive an additional grant, if certain conditions are met.
  • The U.S. Secretary of Labor will also work with states that want to implement work-sharing programs.
  • Coverage of Testing for COVID-19: Diagnostic testing and provider visits related to COVID-19 testing, including office visits, urgent care visits, and emergency room visits, must be provided without any co-pays, coinsurance, or deductibles.
    Additionally, no prior authorizations may be required for testing.
  • These provisions would apply to any health insurance plans, including individual and group health plans, Medicare, and Medicaid.
    Additionally, federal funding will be provided for uninsured individuals to receive reimbursement for COVID-19 testing and related services.
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