On March 18, 2020, President Donald Trump signed the Families First Coronavirus Response Act (the “Act”). The Act will take effect on April 2, 2020 and will sunset on December 31, 2020. Click here for a detailed summary of the Act’s emergency Family Medical Leave Act (“FMLA”) and paid sick leave provisions. The Department of Labor (“DOL”) and the Department of Treasury (“DOT”) are expected to issue regulations and guidance further clarifying the Act in April 2020. In the meanwhile, both Departments have provided additional guidance for employers, which is outlined below.
Department of Treasury Guidance
The DOT has issued the following guidance:
Pursuant to the Act, employers will receive 100% reimbursement for payments of paid leave to their employees. In addition, the federal government will reimburse all covered employers’ health insurance costs, via a tax credit.
Employers can also begin to immediately withhold payroll taxes due to the federal government. Under DOT guidance, expected to be issued next week, eligible employers who are required to provide qualifying sick or Emergency FMLA paid leave to their employees will be able to retain an amount of payroll taxes equal to the amount of qualifying sick or Emergency FMLA paid leave, rather than deposit them with the Internal Revenue Service (“IRS”). The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees. If there are not sufficient payroll taxes to cover the cost of qualified sick and Emergency FMLA paid leave, employers will be able file a request for an accelerated payment from the IRS. It is expected that the IRS will process these requests in two weeks or less.
Department of Labor Guidance
The DOL has issued a “model notice” poster, which all employers subject to the Act are required to display at their work place and/or otherwise communicate to their employees.
In addition, the DOL has issued additional guidance regarding the enforcement of and penalties associated with any violations of the Act. All covered employers who fail to pay eligible employees the paid sick leave required under the Act or who unlawfully terminate such employees’ employment are subject to the penalties and enforcement described in Sections 16 and 17 of the Fair Labor Standards Act (“FLSA”) (29 U.S.C. 216; 217). In addition, all covered employers who fail to comply with the Emergency FMLA’s expanded leave provisions are subject to the enforcement provisions of the FMLA.
The DOL will observe a temporary period of non-enforcement for the first 30 days after the Act’s effective date, April 2, 2020, but only so long as the employer has acted reasonably and in good faith to comply with the Act. According to the DOL, “good faith exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department receives a written commitment from the employer to comply with the Act in the future.”