The Senate voted and approved the Families First Coronavirus Response Act to provide taxpayers with a range of benefits, including (i) employer tax credits, (ii) paid sick and family leave for employees, (iii) expanded food and nutrition services, (iv) emergency state unemployment insurance grants, and (v) increased Medicaid funding to states, among other things. The House approved the bill on March 17, and President Trump signed it on March 18.
1. Employer tax credits for paid sick and family and medical leave.
Employers would receive a 100% refundable payroll tax credit to reimburse them, dollar for dollar, for paid sick leave and family and medical leave wages paid to employees affected by the coronavirus. Any additional wages paid under the sick leave requirement would not be subject to the employer portion of the payroll tax.
2. Paid sick leave.
The bill would apply to private employers with less than 500 workers and to all public-sector employers. They would have to provide two weeks of paid sick leave for full-time employees, and a calculated amount over a two-week period for part-time employees if certain conditions are met. The conditions would be met if the leave is due to an isolation or quarantine order or advisory; the leave is due to the person experiencing symptoms; or the leave is due to caring for a family member or child whose school or day-care facility is closed due to a public emergency. The sick leave would be limited to $511 per day and $5,110 in the aggregate for those on leave because of their own health issue, and to $200 per day and $2,000 in the aggregate for those caring for a family member. The Department of Labor has authority to issue regulations exempting businesses with less than 50 employees.
3. Emergency family and medical leave.
The bill would apply to the private employers listed above and to government entities. They would have to provide up to 12 weeks of job-protected leave to employees caring for a child whose school or place of care is closed. The first 10 days would be unpaid, although employees could use other accrued leave. Employers would be required to pay employees two-thirds of their wages up to $200 per day and $10,000 in total. The Department of Labor has authority to issue regulations exempting certain health care providers and businesses with less than 50 employees.
4. Unemployment insurance.
The bill would provide up to $1 billion of funding to states for unemployment benefits. The bill would provide affected individuals with 13 additional weeks of unemployment benefits, and an additional 7 weeks in some states.
5. Increase in Medicaid funding.
The bill would provide states with a 6.2% increase in Medicaid funding for all medical services for the duration of the national emergency.
In addition to the above, the bill would provide other assistance to affected individuals, such as food and nutrition assistance and free coronavirus testing. This act will sunset on 12/31/2020.
The House Ways and Means Committee has set up a list of FAQs on its website, which includes a helpful chart of the employer-paid leave requirements and tax credit provisions. The Joint Committee on Taxation also has prepared a technical explanation of the bill.
contact a member of Withum’s Tax Services Group.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.