Members, the following report originally appeared in the NEFI NEON weekly report.
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Report By Jim Collura, NEFI Vice President & Director of Government Affairs (jim.collura@nefi.com)
Important: Below is a brief summary of pending legislation. It is not intended as tax guidance or legal advice. We recommend that you consult with a qualified tax or legal professional regarding how this legislation might impact your business and employees.
Just after midnight on Friday, the U.S. House of Representatives approved emergency legislation that would, among other things, guarantee sick and family leave for certain workers directly affected by the coronavirus. The bill was negotiated by Treasury Secretary Steven Mnuchin and top House Democrats. President Trump expressed support over the weekend. The Families First Coronavirus Response Act (H.R.6201) passed the House overwhelmingly by a vote of 363-40. This legislation is pending in the Senate and is not yet final.
The bill currently requires businesses with fewer than 500 employees to provide two weeks (80 hours) of paid sick leave to employees that have been on the job for at least 30 days. Leave would be prorated for part-time workers. This leave must be coronavirus-related such as symptomatic isolation or time-off for medical evaluations. It may also be taken at two-thirds an employee’s pay to care for a sick family member or a child whose school has closed, or when a childcare provider is unavailable, due to the coronavirus. The Family Medical Leave Act (FMLA) is expanded to provide a total of three months (12 weeks) of job-protected family medical leave related to the coronavirus. The first two weeks (14 days) may be unpaid, or employees may use other available leave to cover it. The remaining leave is provided at two-thirds of an employee’s pay.
Businesses with 500 or more employees are exempt from the sick and family medical leave requirements. Very small businesses with 50 or fewer employees may seek a hardship waiver from the federal government. To help soften the impact, the bill would allow affected businesses to take a quarterly tax credit against payroll taxes up to an amount that does not exceed the business’s total tax liability for that quarter. The bill has received some criticism for exempting large businesses and for the financial burden it places on smaller ones.
These requirements would go into effect 15 days after enactment and expire on December 31, 2020. There are still many questions yet to be answered, and many details may be deferred to implementation. Note that the bill also includes other provisions related to unemployment insurance, free coronavirus testing, and other matters. NEFI is monitoring this legislation and the overall response from Congress and federal agencies to the coronavirus situation. We endeavor to keep our members as updated as possible.
Click here for bill text.
Click here for the official legislative summary.