Senate Passes Updated Version of House Coronavirus Bill

On March 16, 2020, the House passed, by unanimous consent, an updated version of the coronavirus (COVID-19) relief bill that it originally passed on March 14. The original bill, H.R. 6201, the Families First Coronavirus Response Act (the Act), provides: a) paid leave benefits to employees; b) tax credits for employers and self-employed taxpayers; and c) FICA tax relief for employers. See House Passes Coronavirus Relief Bill Including Paid Leave, Unemployment, and Tax Credits, 3/17/20 regarding H.R. 6201.

On March 18, 2020, the Senate passed the updated House bill (90-8) with no amendments.

A summary is available of paid leave provisions outside the Appropriations Committee’s jurisdiction incorporating changes made in the updated version.

The changes in the updated version include:

Emergency Paid Sick Leave. 

The Emergency Paid Sick Leave Act under H.R. 6201 requires certain employers to provide paid sick leave to employees who are unable to work or telework under certain circumstances. Paid sick leave is available when an employee:

1. is subject to a federal, state, or local quarantine or isolation;
2. is advised by a health care provider to self-quarantine;
3. is experiencing symptoms of COVID-19 and is seeking a medical diagnosis, preventive care, or treatment;
4. is caring for a family member under quarantine or isolation;
5. is caring for a child due to a school or childcare provider closing; or
6. is experiencing a 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.

Eligible employees are: (1) employees of employers with 500 or fewer workers; (2) local, state, and government employees; and (3) employees who work under multiemployer collective agreement and whose employers pay into a multiemployer plan.

Eligible full-time employees may receive up to 80 hours (two weeks) of paid emergency sick leave (up to $511 per day) when the employee is subject to a quarantine or isolation, is experiencing symptoms of COVID-19 or is seeking a diagnosis and/or treatment. Part-time employees are entitled to paid sick leave for the typical number of hours worked in a two-week period (up to $511 per day).

For employees who are caring for a family member or a child during a school or childcare provider closing or experiencing a substantially similar condition, eligible full-time employees may receive up to 80 hours (two weeks) of paid time off (up to $200 per day). Eligible part-time employees are entitled to paid leave for the typical number of hours worked in a two-week period (up to $200 per day).

Payroll tax credits for paid sick leave (Sec. 7001).

Employers may take a payroll tax credit against FICA (Social Security (6.2%) and Medicare (1.45%)) and Railroad Retirement Tax Act (RRTA) taxes for paid sick leave of up to $511 per day or $200 per day, whichever is applicable as described in the above circumstances for a total of 10 days per individual per calendar quarter. The aggregate number of days taken into account for the calendar quarter with respect to an individual may not exceed the excess 10 total days for all preceding calendar quarters. The original bill provided a payroll tax credit only for the employer share of Social Security tax (6.2%).

An employer may not claim a credit under Code Sec. 45S (Employer credit for paid family and medical leave, see Payroll Guide ¶20,260) for qualified sick leave wages paid but may claim the Code Sec. 45S credit for any additional wages paid as long as Code Sec. 45S requirements are met.

• Self-employed individuals (Sec. 7002).
• Eligible self-employed individuals are allowed an income tax credit for any taxable year for a qualified sick leave equivalent amount. The qualified sick leave equivalent amount is
  1. $511 per day when the self-employed individual is subject to a quarantine or isolation, is experiencing symptoms of COVID-19 or is seeking a diagnosis and/or treatment or 100% of the average daily self-employment income;
  2. $200 per day when caring for a family member or a child during a school or childcare provider closing or experiencing a substantially similar condition or 67% of the average daily self-employment income.

For self-employed individuals, the average daily self-employment income under the provision is an amount equal to the net earnings from self-employment for the taxable year divided by 260.

• Certain limitations apply for self-employed individuals who receive sick leave pay for work performed by a covered employer.

Emergency Paid Family Leave.

The updated bill requires certain employers to provide paid family leave to employees who are unable to work or telework under certain circumstances. Paid family leave is available for eligible employees to take care of a child in the event of a school closure or if a childcare provider is unavailable due to COVID-19. The previous Act permitted eligible employees to use paid leave when the employee is under quarantine or experiencing symptoms and also permitted paid leave for an employee to care for a family member under quarantine or experiencing symptoms of COVID-19.

Eligible employees are: (1) employees of employers with 500 or fewer workers; (2) local, state, and government employees; and (3) employees who work under multiemployer collective agreement and whose employers pay into a multiemployer plan.

Eligible employees may take up to 12 weeks of job-protected leave. The first two weeks of leave is unpaid and is followed by 10 weeks of paid leave. Employees may use other available paid leave during the two weeks of unpaid leave under the bill. Employees will receive no less than 2/3 of the employee’s usual pay. Paid family leave may not exceed $200 per day and $10,000 in total.

Payroll tax credits for paid family leave (Sec. 7003).

Employers may take a payroll tax credit against FICA (Social Security (6.2%) and Medicare (1.45%)) and RRTA taxes for paid family leave of up to 100% of qualified family leave wages paid per quarter. The original bill provided a payroll tax credit only for the employer share of Social Security tax (6.2%). The maximum amount of the credit is $200 per day up to $10,000 in total.

An employer may not claim a credit under Code Sec. 45S (Employer credit for paid family and medical leave, see Payroll Guide ¶20,260) for paid family leave wages paid but may claim the Code Sec. 45S credit for any additional wages paid as long as Code Sec. 45S requirements are met.

• Self-employed individuals (Sec. 7004).
• Eligible self-employed individuals are allowed an income tax credit for a qualified family leave equivalent amount. The qualified family leave equivalent amount is up to 50 days during the taxable year the self-employed individual cannot perform services due to taking care of a child in the event of a school closure or if a childcare provider is unavailable due to COVID-19. The credit is up to: (1) 67% of the average daily self-employment income or (2) $200 per day. The individual’s average daily self-employment income under the provision is an amount equal to the individual’s net earnings from self-employment for the year divided by 260. The available credit is up to $10,000.

Provisions applicable to both Paid Sick Leave and Paid Family Leave.

• Special rule related to tax on employers (Sec. 7005).
• Paid sick leave and paid family leave will not be considered wages for the employer or the employee for the purposes of FICA (Social Security and Medicare) or RRTA tax.
• Qualified Health Plan Expenses and Quarterly Reporting.
• While employers will front the cost of paid sick leave and paid family leave, the federal government will fully reimburse the employer within three months. The reimbursement will cover wages and the employer’s contribution to the employee’s health insurance premiums (“qualified health plan expenses”) during the period of leave to the extent that such amounts are excluded from the gross income of employees under Code Sec. 106(a). The reimbursement will be through a refundable tax credit against the employers’ payroll tax. Paid sick and paid family leave expenses will be submitted as part of the estimated quarterly tax payments. A refund will be made if the costs are greater than the employer’s tax liability.

Emergency Unemployment Insurance Stabilization and Access Act of 2020.

No changes were proposed to this portion of H.R. 6501. See House Passes Coronavirus Relief Bill Including Paid Leave, Unemployment, and Tax Credits, 3/17/20 for further details.

Next steps.

Senate Majority Leader, Mitch McConnell (R-KY) stated on the Senate floor that while he supports the House bill to provide “some emergency relief for some American workers,” the Senate will work towards a package to provide “significant relief for small businesses.” McConnell stated that the Senate will remain in session until an economic relief package is passed for America’s small business owners.

Certain Unemployment Benefit Requirements Have Been Waived

Governor Greg Abbott instructed the Texas Workforce Commission (TWC) to waive the one week waiting period for unemployment benefits. The waiting week is the first payable week of an individual’s claim for unemployment benefits. Under normal circumstances, TWC doesn’t pay for the first week of a claim until an individual receives twice their weekly benefit amount and returns to full-time work or has exhausted their benefits. Generally, applicants are required to register for work search on WorkinTexas.com and meet a minimum number of work search activities per week. In addition to waiving the waiting week, TWC is exercising its authority under the Governor’s Declaration of a Statewide Disaster to waive the unemployment work search requirements effective immediately.

DOL Releases FLSA and FMLA Guidance for COVID-19 Related Issues

The U.S. Department of Labor’s Wage and Hour Division (WHD) has updated both the Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA) with Questions and Answers (Q&As) for employer issues related to COVID-19 (coronavirus) and other public health emergencies.

FLSA Q&As. The Q&As address issues regarding business closures, the use of volunteers during a worker shortage, teleworking, and temporary workers [COVID-19 or Other Public Health Emergencies and the Fair Labor Standards Act Questions and Answers].

• Question: An employer’s business closes mid-week. How many hours must a non-exempt employee be paid if they usually work 40 hours per week?
  • Answer: Non-exempt workers need only be paid for hours worked and therefore there is no mandatory number of hours to be paid in a partial workweek.

Question: An employer instructs an employee to take vacation or leave without pay due to an office closure from a public health emergency, is the employee’s exempt status impacted?

• • Answer: Salaried employees must receive their full salary for any week work is performed. Vacation time is not required under the FLSA so an employer may require an exempt worker to take accrued leave on a specific day(s). The worker’s exempt status will not be affected if the employee receives payment equal to the employee’s guaranteed salary. However, an employee would lose their exempt status if any deductions are made to the worker’s salary for absence in a week that work was performed.

Question: Do employers have any obligations to employees under a government-imposed quarantine?

• • Answer: While there are no obligations under the FLSA, the WHD is encouraging employers to be flexible and offer teleworking or additional paid time off.

Question: Do volunteers need to be paid if they perform services to a public agency or private non-profit organization?

• • Answer: Volunteers to a public agency such as state or city government or private non-profit organization in an emergency capacity are generally not employees who are due wages under the FLSA if: (1) the services are performed for civic, charitable or humanitarian reasons and there is no promise or expectation of compensation; (2) the services are offered freely without coercion; and (3) the volunteer is not employed by the same public agency to perform the same services they are usually paid for. The WHD cautions for profit employers that FLSA covered non-exempt workers cannot volunteer their services and must be paid at least the minimum wage.

Question: Does an employer have to pay an employee the same hourly rate or salary when they telework (work from home)?

• • Answer: Yes, if the remote work is provided as a reasonable accommodation to a qualified individual with a disability or required under a union or employment contract. Otherwise, the FLSA provisions apply for non-exempt and exempt workers. Non-exempt workers must be paid for actual hours worked including overtime pay and exempt workers must receive their full salary under most cases.

Question: Is an employer responsible for FLSA violations when employing a temporary worker provided by a staffing agency?

• • Answer: An employee can be employed by more than one entity. If one or more employers are deemed joint employers, both employers may be jointly and severally liable for any FLSA violations

FMLA Q&As. The WHD notes while an employee may take FMLA leave for a serious health condition that may include a pandemic illness to care for themselves or a family member, an absence because the employee is trying to avoid exposure is not FMLA-protected leave. Employers are not legally required to permit parents or caregivers time off to tend to children who have been dismissed from school, but the WHD encourages employers to be flexible in such scenarios. Employers are permitted to request an employee provide a doctor’s note, submit to a medical exam, or remain symptom-free a certain number of days prior to returning to work, however, during a pandemic, health practitioners may be overwhelmed. For additional information regarding the FMLA, see Payroll Guide ¶ 20,260 et seq. Employers who must temporarily shutdown operations may be subject to Worker Adjustment and Retraining Notification (WARN) Act requirements (see Payroll Guide ¶ 20,315) [DOL, COVID-19 or Other Public Health Emergencies and the Family and Medical Leave Act Questions and Answers].

Note: Recently passed legislation requires emergency paid family leave to be provided to workers who cannot work due to a school closure or unavailability of a child care provider. See Senate Passes Updated Version of House Coronavirus Bill, 3/19/2020.

Employers may call the WHD at (866) 4USWAGE for further information and assistance.