The Families First Coronavirus Response Act (FFCRA) requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The paid sick leave and expanded family and medical leave provisions of the FFCRA apply to certain public employers and private employers with fewer than 500 employees. However, small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or childcare unavailability if the leave requirements would jeopardize the viability of the business as a going concern.

Under the FFCRA, an employee qualifies for paid sick time if the employee is unable to work (or unable to work remotely) due to a need for leave because the employee:

a.) Is subject to a federal, state or local quarantine or isolation order related to COVID-19,

b.) Has been advised by a health care provider to self-quarantine related to COVID-19,

c.) Is experiencing COVID-19 symptoms and is seeking a medical diagnosis,

d.) Is caring for an individual subject to an order described in (a) or self-quarantine as described in (b),

e.) Is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19, or

f.) Is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.


Duration of Leave

For reasons (a) through (d) and (f), the FFCRA provides a full-time employee 80 hours of leave. A part-time employee is eligible for the number of hours of leave that the employee works on average during a two-week period.

For reason (e), a full-time employee is eligible for up to 12 weeks of leave at 40 hours a week. A part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work during that period.


Calculation of Pay

For reasons (a) through (c), employees taking leave are entitled to pay at either their regular rate or the applicable minimum wage (whichever is higher) up to $511 per day and $5,110 in the aggregate (during a 2-week period).

For reasons (d) and (f), employees taking leave are entitled to pay at two-thirds their regular rate or two-thirds the applicable minimum wage (whichever is higher) up to $200 per day and $2,000 in the aggregate (during a 2-week period).

For reason (e), employees taking leave are entitled to pay at two-thirds their regular rate or two-thirds the applicable minimum wage (whichever is higher) up to $200 per day and $12,000 in the aggregate (during a 12-week period).


FFCRA Pay and Retirement Plans

Can employees make salary reduction contributions from the amounts paid as qualified leave wages for their employer sponsored health plan, a 401(k) or other retirement plan, or any other benefits?

The FFCRA does not distinguish qualified leave wages from other wages an employee may receive from the employee’s standpoint as a taxpayer; thus, the same rules that generally apply to an employee’s regular wages or compensation would apply. To the extent that an employee has a salary reduction agreement in place with an eligible employer, the FFCRA does not include any provisions that explicitly prohibit taking salary reduction contributions for any plan from qualified sick leave wages or qualified family leave wages.

Should eligible employers withhold federal employment taxes on qualified leave wage paid to employees?

Yes. Qualified leave wages are wages subject to withholding of federal income tax and the employee’s share of Social Security and Medicare taxes. Qualified leave wages are also considered wages for purposes of other benefits that the eligible employer provides, such as contributions to 401(k) plans.

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Charlie Wendlandt
I joined Hawkins Ash CPAs in 2011. As a manager, my main responsibilities include planning, test of transactions and preparation of financial statements for ERISA audits during outside of tax season. During tax season, I work with compilation and reviews and the preparation of corporate tax returns.

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