Please Note: The information contained on this website is not legal or tax advice and should not be relied upon or construed as legal or tax advice. This post is for general informational purposes only and does not purport to be complete or cover every situation. Please consult your own legal and tax advisors to determine how these laws affect you.
About the Act
Last weekend, the U.S. House of Representatives passed the Families First Coronavirus
Response Act (the “Act”), which allows free COVID-19 testing, establishes paid and unpaid
leave programs, provides grants to states to process and pay unemployment insurance benefits,
expands food service initiatives, and increases federal Medicaid funding. After some negotiation
and changes to the legislation, the Senate passed a revised version of the Act on March 18, 2020.
President Trump signed the Act into law the same day.
The leave provisions of the Act, which apply to employers with fewer than 500 employees,
require covered employers to provide job-protected paid leave to employees for up to 12 weeks
for a COVID-19-related absence. The Act does so by expanding the FMLA and adding a new
paid sick leave program. Compared to the original version of the bill, the Act expanded the
qualifying events for sick leave, narrowed the FMLA qualifying events, and capped the benefit
payments to employees. These new leave laws become effective 15 days after enactment, which
falls on April 2, 2020.
What Does This Mean
The leave and tax credit provisions of the Act apply to all employers with fewer than 500
employees. To the extent you and your workforce are subject to the Act, here are some options
that we suggest you consider as best practices:
- Expand PTO/Sick Leave and FMLA programs to allow up to 12 weeks of COVID-19-
related time off following the requirements of the Act.
- During any COVID-19-related absence, if the intent is to continue payment to employees
for the duration of the absence, employers should continue paying employees through
their payroll and consider updating benefit calculations to be consistent with the Act.
This would create a seamless benefit experience for employees and limit payroll
- Continue monitoring federal, state, and local legislation for additional changes that could
impact your obligations as an employer to provide leave and benefits to your employees.
MetLife is monitoring federal and state legislation as well and will provide you with
updates after they become available.
- Consult with your legal counsel to help create a legally compliant plan that works best for
you and your employees.
New Sick Leave Requirements
Initially, the Act requires employers with fewer than 500 employees to offer sick leave to their
employees who are unable to work or telework for the following COVID-19-related absences:
- An employee is subject to a federal, state, or local quarantine or isolation order regarding
- An employee has been advised by a health care provider to self-quarantine due to
concerns related to COVID-19;
- An employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
An employee is caring for an individual subject to the first two qualifying events listed
- An employee is caring for a minor child if the child’s school or place of care has closed
or if the childcare provider is unavailable due to COVID-19 precautions; or
- An employee is experiencing any other substantially similar condition specified by the
Secretary of Health and Human Services (“HHS”).
Full-time employees can use up to 80 hours of sick time, while part-time employees can use
proportionally less time, based on the average number of hours the employee works over a two-week period.
During sick leave taken for the employee’s own condition, employers must pay
employees their regular rate of pay or the applicable minimum wage, whichever is higher.
However, if the sick leave is taken to care for a family member or because the employee is
experiencing a condition specified by HHS, the rate of pay is reduced to two-thirds of the
employee’s regular rate of pay. Leave benefits are limited to $511 per day and $5,110 in total
per employee for the first three qualifying events listed above. As for the last three qualifying
events, leave benefits are limited to $200 per day and $2,000 in total per employee.
An employee cannot carry over sick time into the next year, nor is an employee entitled to
payment of unused sick time upon separation from employment. Employees will be able to use
this sick leave beginning on April 2, 2020, regardless of their length of service with the
Employer. Healthcare or emergency responder employers may elect to exclude healthcare
workers from the Act. By March 25, 2020, the Department of Labor will publish a model notice
that employers must conspicuously post in their workplaces. Similar to the FMLA amendments,
the new sick leave law will become effective 15 days after the enactment of the Act – or April 2,
2020 – and will sunset on December 31, 2020.
To help employers shoulder the financial burden of paying for these additional benefits, the Act
allows employers with fewer than 500 employees to claim a tax credit equal to 100% of qualified
sick leave wages paid to employees. These credits, however, are limited to $200 to $511 per
day, depending on the qualifying leave event, subject to other conditions and limitations. The
aggregate number of days taken into account per employee may not exceed the excess of 10 over
the aggregate number of days taken into account for all preceding calendar quarters. The tax
credit also includes an allowance for certain health plan expenses allocated to wages paid
pursuant to the Act. These credits will effectively help employers recover up to 10 days of
wages paid to employees earning up to $132,860 in income.
For employees earning above $132,860, and who are absent for more than 10 days, the Act will help employers recover some
of these wages.
The Act also expands the FMLA to allow employees to use FMLA in situations where an
employee is unable to work or telework to care for a minor child if the child’s school or place of
care has closed or if the childcare provider is unavailable due to a public health emergency
regarding COVID-19. The prior version of the Act included several more FMLA qualifying
events, which Congress has since scaled back.
Although the first 10 days of COVID-19-related FMLA leave is unpaid, employers must pay
employees up to approximately 10 additional weeks of leave at the rate of two-thirds of the
employee’s regular pay rate, capped at $200 per day and $10,000 in total per employee.
The 50-employee minimum applicable to current FMLA leave reasons does not apply to COVID-19-
related leaves, although the Act gives the Department of Labor authority to limit the applicability
of the Act to employers with fewer than 50 employees. Absent any regulations from the DOL,
all employers with fewer than 500 employees must offer COVID-19-related FMLA leave to their
The job protection requirements of the FMLA also apply to COVID-19-related
leaves, but only to employers with 25 to 499 employees, if certain conditions are met. Any
employee who has been employed for at least 30 calendar days will be eligible for this new type
of FMLA leave. These amendments will be effective 15 days after enactment, which falls on
April 2, 2020, and will sunset on December 31, 2020.
Similar to the sick leave requirement, the Act allows employers with fewer than 500 employees
to claim a tax credit of 100% of qualified FMLA wages paid to employees, which is capped at
$200 per day and $10,000 per quarter per employee. The FMLA tax credit is designed to help
employers recover up to $10,000 in wages for employees earning up to $52,000 per year. For
employees earning above $52,000 per year, the tax credit will help employers recover a smaller
portion of wages.