COVID-19 Resource Center

March 31, 2020

How The Families First Response Act Affects You

On March 18th, the government signed the Families First Coronavirus Response Act into law, and the l$100 billion act goes into effect April 1st 2020 until December 31, 2020.

The law covers companies with up to 500 employees, and unlike the typical Family Medical Leave Act there is no 50-person minimum. Self-employed people can also see benefits.

Who qualifies?

There are six qualifying reasons for coverage under this bill. The National Law Review Describes them as follows:

  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 symptoms of Covid-19 and seeking medical diagnosis;
  4. the employee is caring for an individual who is subject to a federal, state, or local quarantine order, or the individual has been advised to self-quarantine due to concerns related to Covid-19;
  5. the employee is caring for the employee’s son or daughter, if the child’s school or child care facility has been closed or the child’s care provider is unavailable due to Covid-19 precautions; or
  6. the employee is experiencing any other substantially similar condition specified by Health and Human Services in consultation with the Department of the Treasury and the Department of Labor.

Benefits for Employees

  1. Normal FMLA is unpaid, but under the FFCRA, employees who are on sick leave because they are sick can receive their full pay, up to $511 per day, or $5,110 total.
  2. Leave taken to care for children whose schools or day care facilities have closed is paid at two-thirds the employee’s regular rate of pay, with a maximum of $200 per day or $10,000 total.
  3. Employers cannot force you to use up your vacation or other sick time before receiving this benefit. 
  4. There is a 10-day waiting period before this benefit applies. Employees can use existing sick or vacation time to cover these days.

Benefits for Employers

  1. Employers receive tax credits for 100 percent of what they pay out to employees, with the above-noted limits. 
  2. For employers with 50 or fewer employees, the Secretary of Labor can exempt the business from these requirements.
  3. Employers with fewer than 25 employees do not have to restore employees to their previous positions.

Comparable tax credits for self-employed individuals

If you are a self-employed individual who is affected by the coronavirus emergency, the Act allows you to claim a refundable credit against your federal income-tax bill, including the self-employment tax hit. If the credit exceeds your bill, the government will issue you a payment for the excess.

The credit equals: 1) 100% of the self-employed person’s sick-leave equivalent amount plus 2) 67% of the sick-leave equivalent amount for taking care of a sick family member or taking care of your child following the closing of the child’s school.

The sick-leave equivalent amount equals the lesser of: 1) your average daily self-employment (SE) income or 2) $511 per day for up to 10 days (up to $5,110 in total) to care for yourself due to the coronavirus or $200 per day for up to 10 days (up to $2,000 in total) to care for a sick family member or your child following the closing of the child’s school due to the coronavirus.

In addition, you could claim a coronavirus emergency family-leave credit for up to 50 days. The credit amount would equal the number of qualified family-leave days multiplied by the lesser of 1) $200 or 2) your average daily SE income. The maximum total family-leave credit would be $10,000 (50 days times $200 per day).

These credits for self-employed individuals are only allowed for days during the period beginning on a date specified by the Secretary of the Treasury and ending on Dec. 31, 2020. The beginning date will be within 15 days of the March 18 date the Act became law.

Warning: To properly claim the credits, self-employed individuals must maintain whatever documentation the IRS requires in future guidance. Your tax professional can help with that.

You can read the bill in its entirety with key summaries here:

If you have any questions or need assistance with requirements outlined in the bill, please contact Darren Wendroff at darren@wendroffcpa.com.

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