Special Tax Alert

What the “Families First Coronavirus Response Act” Means for Employers

Allison Hoeinghaus, Managing Director

ahoeinghaus@alvarezandmarsal.com

Ryan Wells, Director

March 20, 2020 / North America

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act into law (the “Act”). The Act covers a range of emergency relief items ranging from coverage of COVID-19 testing to paid sick leave to budgetary effects. The purpose of this Special Tax Alert is to summarize the employer-related impacts of the Act and provide readers with A&M’s additional insight.

Emergency Family and Medical Leave Expansion
The Act provides 12 weeks of leave for an employee that is unable to work (or telework) due to a need to care for employee’s son or daughter under the age of 18 if the school or place of care has been closed, or the child care provider of such child is unavailable, due to a public health emergency (with respect to COVID-19).

  • This provision applies to employees that have been employed for at least 30 calendar days and to employers who have fewer than 500 employees.
  • The Secretary of Labor is authorized to issue regulations that exclude employers who have fewer than 50 employees when the imposition of the paid leave would jeopardize the business as a going concern.
  • The first 10 days of such leave are unpaid, however the remaining leave is paid by the employer. This section of the Act provides a formula to calculate the amount that needs to be paid to the employee, but generally provides that it is at least 2/3 of the employee’s regular pay with a cap of $200 per day and $10,000 in the aggregate.
  • An employee may elect to substitute the first 10 days of unpaid leave with accrued vacation, personal leave, or medical or sick leave.
  • The employee is generally entitled to return to his or her job, unless the employer has fewer than 25 employees and meets other requirements.
  • For the benefit of employees, each employer is required to post a notice of the requirements described in this section of the Act. The Secretary of Labor is required to provide a model notice no later than 7 days after enactment (i.e., March 25, 2020).

Emergency Paid Sick Leave
Furthermore, the Act provides up to 80 hours of paid sick leave to employees that are unable to work (or telework) due to a need for leave because of the following:

  • The amount of paid sick time is 80 hours for full-time employees and a number of hours equal to the number of hours that such employee works on average over a 2-week period for part-time employees. This section of the Act provides a formula to calculate the amount that needs to be paid to the employee subject to the applicable caps listed above by category.
  • This paid sick time does not carryover to another year and an employer cannot require an employee to use other sick time prior to using this sick time (i.e., this requirement is on top of other sick leave that is granted).
  • Employers cannot require employees as a condition of taking such leave to find replacement employees for their hours and discrimination of employees who utilize leave is prohibited (subject to penalties under the Fair Labor Standards Act).
  • There are specific rules regarding who is an “employee” and “employer,” but generally this provision is applicable for private employers of fewer than 500 employees and public agencies (i.e., government employers).
  • For the benefit of employees, each employer is required to post a notice of the requirements described in this section of the Act. The Secretary of Labor is required to provide a model notice no later than 7 days after enactment (i.e., March 25, 2020)…

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North America



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