Legislation Updates - Emergency Paid Leave

Mar 20th, 2020
Topics: News

Emergency Paid Leave Act of 2020 - New Legislation Update

By Frank Sommerville

The new law requires employers with more than one employee and less than 500 employees to provide qualifying paid sick leave.

The paid sick leave must arise from:

1. The employee has COVID-19;

2. The employee must quarantine (including self-quarantine) at the instruction of a public health office;

3. The employee cares for an individual with COVID-19 or under quarantine at the direction of a public health official; or

4. The employee must care for a child because the school or childcare closed due to the COVID-19, and the child cannot care for themselves.

Every employee (full-time or part-time) with thirty days or more of tenure is entitled to fourteen days of paid sick leave at their regular rate if they are infected or quarantined. If the employee is caring for someone else or caring for children because the school or daycare is closed due to COVID-19, the sick pay is two-thirds of their regular compensation. The qualifying sick pay is not subject to the employee portion of the FICA taxes.

The Family Medical Leave Act will now include Public Health Emergency Leave. This paid leave must arise from the same reasons as the paid sick leave. This leave is different from traditional FMLA and applies even if the employer is exempt from the traditional FMLA. This new portion of FMLA applies to employers with more than one employee (instead of the 50 or more employees). After the two weeks paid sick leave above or two weeks paid leave under an employer's existing policies, the employee may take up to twelve weeks of paid family medical leave at two-thirds of their compensation. The mandated pay is capped at $200 per day, per employee, with an overall cap of $10,000 per employee.

Employers may recover some or all of the paid sick leave (the 14 days or the paid FMLA) through a credit against the employer portion of the FICA taxes.   The employer may take a credit against their federal payroll tax deposit for 100% of the qualifying paid sick leave, subject to certain limits. The payroll tax credit is limited to qualifying sick leave pay up to $511 per day, per employee if the employee is infected or required to quarantine, or up to $200 per day to care for a family member sick with COVID-19 or required to quarantine, with a maximum of ten days per calendar quarter per employee, and $10,000 total credit in the aggregate per calendar year per employee. The credit is refundable if it exceeds the employer's FICA tax obligation.

For example, John must stay home to care for his children because their school closed due to COVID-19 concerns. John typically makes $1500 per week or $300 per day. The employer must pay John $200 per day ($300*.66667) for up to 14 days. Assuming John used ten days, the employer must pay him $2,000 in qualifying sick pay. The employer will not withhold the employee portion of the FICA taxes from the $2,000 payment. The employer will then reduce its next federal payroll tax deposit by $2,000.

Effective date selected by Secretary of the Treasury but no more than 15 days after enactment and expires December 31, 2020.  For more details, follow this link:   https://www.congress.gov/bill/116th-congress/house-bill/6201

Cory Halliburton and Mark Levine are contributors to this legislative update article.

For more employment related concerns, contact Frank Sommerville, Cory Halliburton or Mark Levine.


CORY HALLIBURTON
Shareholder
3030 Matlock Rd., Suite 201
(817) 795-5046
E-Mail: Cory Halliburton

MARK J. LEVINE
Shareholder
11 Greenway Plaza, Suite 1400
Houston, Texas  77046
(713) 961-9045
E-Mail: Mark J. Levine