COVID-19 Laws in Plain English
Realizing that the state of the law is very fluid and rapidly evolving creature, here is a quick look at the federal legislation that is either already in place, or about to be enacted to address the novel coronavirus outbreak in the United States. The President and Congress have put forth several legislative packages attempting to ease the impact of COVID-19 on the health care system and the broader economy.
- Phase 1, called H.R.6074 - Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, is an $8.3 billion dollar statute targeting coronavirus vaccine research and development. Find it here: https://www.congress.gov/bill/116th-congress/house-bill/6074/text
- Phase 2, called H.R. 6201 – Families First Coronavirus Response Act targets relief for individuals, providing (1) paid family leave and paid sick leave for certain employees affected by the novel coronavirus; (2) refundable tax credits (capped) for covered employees; and (3) easier access to unemployment insurance for employees affected by the pandemic. Find it here: https://www.congress.gov/bill/116th-congress/house-bill/6201/text
- Phase 3 (not yet passed) is a broader economic stimulus potentially totaling $850 billion designed to deliver financial relief to help weather the downturn. The focus is threefold: (1) liquidity; (2) financial assistance for individuals; and, (3) assistance for distressed industries (initial focus is airlines).
For our purposes today, the Phase 2 Bill, originally proposed requiring employers with less than 500 employees (incorporating most of us) with 14 days of paid sick leave under the Family Medical Leave Act (FMLA), has been revised to narrow eligibility before passing on March 18, 2020. The revised bill, effective on April 2, 2020 and continuing until December 31, 2020, significantly narrowed the qualifications mandating 10 days, instead of 14 and creating an exception for employers with fewer than 50 employees if compliance would jeopardize the viability of the business.
Paid Sick Leave
Employers subject to the Act (500 or fewer employees) are required to provide the following benefits:
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 the symptoms of coronavirus and needs to obtain a medical diagnosis or care;
4. the employee is caring for or assisting an individual who is subject to an order describe in (1) above or has been advised to self-quarantine, as described in (2) above;
5. the employee is caring for a son or daughter (as defined under the FMLA) because such son or daughter’s school or place of care has been closed, or such son or daughter’s care provider is unavailable due to coronavirus; 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.
Employees staying home for reasons 1, 2, and 3 shall receive paid leave at 100% of their regular rate of pay. However, employees staying home for reasons 4, 5, or 6 may only receive 2/3 of their regular rate of pay.
The good news for employers is that the revised Bill creates expanded tax credits for employers specifically to offset the expense of the paid sick leave program.
Payroll Credits. The paid sick time payroll tax credit can be claimed on a quarterly basis, equal to 100 percent of the amount of sick leave wages paid. The credit is limited to $511 per day ($5,110 total) if an employee is taking time off to care for themselves or $200 per day ($2,000 total) if the sick leave is to care for an individual who’s quarantined or showing symptoms of COVID-19 or a minor child whose school is closed. The credit is refundable if it exceeds the amount the employer owes in payroll tax.
Employers must increase their gross income for the taxable year by the amount of payroll credit received. Also, any wages considered in determining the payroll credit can’t be used in determining the amount of credit under Internal Revenue Code Section 45S related to paid family and medical leave.
Credits for Sick and Family Leave for Self Employed. Self employed, including independent contractor can also claim a credit against their regular income taxes related to sick or family leave. The credit covers 100 percent of self-employed individuals’ daily self-employment income or 67 percent if an individual is taking care of a child whose school is closed. The per-day amount is limited to the lesser of an individual’s average daily self-employment income, or $511 per day if caring for themselves or $200 if caring for a minor child. The number of eligible days is limited to 10 if related to sick leave and 50 if related to family leave. The Act directs Treasury to provide guidance on what documentation self-employed individuals must submit to claim the credit.
Emergency Transfers for Unemployment Compensation
The legislation boosts unemployment benefits, with nearly $1 billion in state grants to cover processing and paying unemployment insurance. It also raises the amount of assistance to states with high unemployment for those who have exhausted benefits already.
What This All Means For You
Employers with less than 500 employees must comply to the leave requirements, unless you are a small business with under 50 employees and you apply for the exemption from the Department of Labor citing compliance would, “jeopardize the viability” of your business.
Employers may not discharge, discipline, or discriminate against employees who elect to take paid sick leave due to COVID-19 related illness.
We will be watching to see what Michigan may do to implement these federal laws within our state. Stay tuned.