“An ounce of prevention is worth a pound of cure.” ― Benjamin Franklin 

On March 18th, 2020 President Donald Trump signed H.R.6201 or the Families First Coronavirus Response Act (FFCRA) after the Senate voted 90 – 8 in the affirmative. The legislation has a few updated provisions since the House voted on it on March 14th. This new law is a response to the growing coronavirus threat and attempts to alleviate some of the financial stress of employees whose lives have been or will be affected by the virus. Abrahams Wolf-Rodda has already written a blog on the proposed Bill which was posted on Wednesday March 18th; you can visit that blog here: https://www.awrcounsel.com/blog/2020/3/18/has-the-coronavirus-broken-the-deadlock-over-sick-and-family-leave-benefit-expansion.

The FFCRA changes the Family Medical Leave Act (“FMLA”) to include paid medical or family leave for the victims and their families of coronavirus. The Act mandates leave for employees who are dealing with the virus themselves or taking care of family members. The first two weeks of leave are unpaid, and the following 10 weeks are paid. The main difference between the Bill that the House passed, and the Bill the Senate voted on are clarifications providing the upper limits for the paid leave. For the FMLA, an employee’s paid leave will not exceed more than $200 a day and $10,000 in aggregate over the course of the 12 weeks. The federal government is guaranteeing a full tax credit for this amount of money which means that the employers will not have to foot the bill for the paid leave.

In addition to the Family Medical Leave Act, the new law creates the Emergency Paid Sick Leave Act which requires employers to provide emergency paid sick leave to their employees. As stated in our previous blog, the sick leave must be provided to employees who are subject to a federal or state quarantine order, have contracted the virus, or have been instructed by a health care professional to self-isolate. For these instances, the Act requires employees to be paid at their full regular rate for a period of 80 work hours for full-time employees. Part-time employees must receive paid leave hours equal to the number of hours that they would normally work over a two-week period. The Senate added a compensation upper limit of $510 per day and $5,110 in aggregate. The Act also provides sick leave for employees in different circumstances. These circumstances include the employee taking care of an individual who has been told to self-quarantine by a health professional, has been diagnosed with coronavirus or is seeking a medical diagnosis. They also include employees who are caring for a son or daughter whose school, place of care, or care provider is canceled or unavailable. For these circumstances the employee must receive 2/3 their regular rate with an upper limit of $200 per day and $2,000 in aggregate.

Both of the changes instituted by the Senate related to the upper limits of compensation provided to the employees. They are meant to address objections that legislation is an unfunded budget buster. In previous versions of the Bill, the House limited the tax credit that the employers could take for the family medical leave or the paid sick leave. However, the Senate added a provision which subjects employees to compensation limits. In the original bill, the House limited the tax credit for the employer. But they didn’t limit the amount that the employee could receive. Accordingly, if the worker’s compensation was higher than the maximum reimbursable rate, then the employer would be left to pay the difference without a corresponding tax credit. In the final Act, there is no tax credit limit for the employer. Instead the Senate limited the compensation the employee could receive by imposing a per day compensation limit and covering the entire compensation limit with a corresponding tax credit.

However, whatever the compensation cap, many employers do not have that amount of cash saved to pay out the leave. Lawmakers have suggested an ability to request loans through the Small Business Association (SBA) as well as future laws providing more funds to the Small Business Association to give loans to a larger amount of small businesses. Here is a link for small businesses to request loans of the SBA: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. Only some states have been designated as currently eligible to apply for loans and already Massachusetts and possibly other states have stopped accepting applications on account of the sheer volume submitted.

Additional legislation is being negotiated as we speak to fund small business grants and loans to keep the businesses afloat. Congress is working on a bill to increase the funds available to the SBA to help the employers. One is expected as soon as the two parties decide on the more controversial terms. Some of the controversial items relate to slush funds to aid larger businesses, use of the monies to buy back stock, and general opposition to government bail-outs. President Trump has suggested that the larger organizations that have used their reserves for stock buyouts or dividend payment can expect disparate treatment compared to those who are in economic trouble because they have not had the opportunity to save. These larger businesses might be subject to the Federal Government receiving equity similar to the TARP bailouts in the Emergency Economic Stabilization Act of 2008,including demands for public equity interests in return for bail-outs. The TARP bailout was largely a successful action which supposedly saw a $121 billion profit on the $633 billion dollar bailout as a result of interest, dividends, fees and stock repurchase agreements. 

For more information on the FFCRA please view the signed bill here: https://www.congress.gov/116/bills/hr6201/BILLS-116hr6201enr.pdf.