President Trump signed the “Families First Coronavirus Response Act,” a strong, bipartisan response to COVID-19 (coronavirus) on March 19. This bill will provide immediate relief to American workers and families during this unprecedented time.
While the Michigan Chamber is still analyzing the bill and the impact it would have on Michigan employers and employees alike, we are sharing a US Chamber analysis of the bill. Key provisions include:
- Unemployment Insurance (UI) – The bill bolsters the UI safety net for workers who have been laid off due to COVID-19. The bill gives state governments flexibility with respect to waiting periods and in interpreting the “able, available and actively looking” test for UI eligibility.
- Paid Sick Leave – The bill expands paid sick leave by requiring private sector employers with fewer than 500 employees and government employers to provide employees with two-weeks of paid sick leave (80 hours for full-time employees and typical number of hours over two-weeks for part-time employees). Employees are compensated at the higher of their regular rate, the federal minimum wage, or the local minimum wage, but not to exceed $511 per day and $5,110 in the aggregate. However, if the employee is absent to care for a sick family member, a child unable to attend school, or because they meet the criteria for similar conditions they are compensated at 2/3 of the rate they would otherwise receive, but not to exceed $200 per day and $2,000 in the aggregate. It is important to note that the Secretary of Labor is authorized to issue regulations to exempt health care providers and emergency responders from the definition of employer. In addition, the Secretary may exempt small businesses with fewer than 50 employees from the requirement to offer leave to care for a child when a school is closed when the imposition of paid sick leave would jeopardize the viability of the business as an ongoing concern.
- Eligibility: The paid sick leave is available to any employee without regard to duration of employment if they are unable to work or telework because they are:
- Subject to a government quarantine or isolation order related to COVID-19,
- Have been advised by health provider to self-quarantine due to COVID-19,
- Experiencing symptoms of COVID-19 and seeking medical diagnosis,
- Caring for an individual subject to quarantine order or self-quarantine,
- Caring for children if schools are closed or their caregiver is unavailable because of a public health emergency, or
- Experiencing substantially similar conditions as specified by the Secretary of Health and Human Services
- Employers of employees who are healthcare providers or emergency responders may elect to exclude such employees from the paid sick leave.
- Funding of Paid Sick Leave - Each quarter, private sector employers subject to the requirement are entitled to a fully refundable tax credit equal to 100% of the qualified sick leave wages paid by the employer. Qualified sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member) and 10 days. The tax credit is applied against employer Social Security taxes, but employers arereimbursed if their costs for qualified sick leave exceed the taxes they would owe. The Treasury Secretary is provided with regulatory authority intended to help with cash flow issues, for example by waiving penalties on failing to deposit payroll taxes in anticipation of the credit.
- Additional Credit for Health Plan Expenses: The amount of the tax credit is further increased by the amount of the expenses of the employer’s health care plan allocable to the qualified sick leave. This allows the employer to seek reimbursement for the cost of continuing to provide health insurance while the employee is on sick leave.
- Tax on Employers: Paid sick leave is not considered wages for Social Security tax purposes and for half of the Hospital Insurance Tax, for the other half of the Hospital Insurance Tax, the applicable tax credit is increased to cover the cost of the payroll tax. Self-Employed: There is a similar tax credit against self-employment taxes for individuals who are self employed but would otherwise qualify for paid sick leave if they were an employee of an employer.
- Paid Family Medical Leave (FMLA) – With certain possible exceptions, the bill requires private sector employers with fewer than 500 employees and government employers to provide employees with up to 12 weeks of paid family and medical leave (FMLA). The paid family and medical leave is available to any employee who has been employed for at least 30 days if they are out in order to care for children if schools are closed or their daycare is unavailable because of a public health emergency and they are unable to work or telework. After 10 days, during which time the employee can take unpaid or paid leave (if available), employees are compensated at 2/3 of their regular rate. Paid leave under this requirement shall not exceed $200 per day and $10,000 in the aggregate. (This conforms to the amount of the tax credit.) As with the paid sick leave provisions, there is a funding mechanism in the bill (see the US Chamber analysis linked above).
- Adds provisions for diagnostic testing – The bill requires private health plans to provide coverage for diagnostic testing at no cost to the consumer.
- Other - There are also provisions in the bill related to health services, school nutrition programs, WIC, SNAP, senior food programs and medical device liability.
We understand that most businesses are concerned with the revenue fall-out related to COVID-19 and that this bill does little to address that problem. We continue to urge state and federal policymakers to double down on meaningful financial assistance to businesses. That is the Michigan Chamber and the US Chamber’s top priority.
Please know that we are working hard on all things COVID-19. We will continue to push out valuable resources and to tackle the problems you are facing. Please be on the look-out for a full analysis of the “Families First” bill in the coming days. In the meantime, please contact Wendy Block with any questions at email@example.com.