Proposed Bill Follow-Up: Who is Going to Pay for All This Coronavirus Leave?

Miller & Martin PLLC Alerts | March 17, 2020

As the “fight on the Hill” over the Families First Coronavirus Response Act (the "Act") continues with an amended version now passed by the House, many questions are emerging related to the many measures proposed in this multi-faceted bill.

Of key interest to employers, we want to offer a response to the question “Who Is Going to Pay for All This Coronavirus Leave?”  The answer is the tax credits that offset the costs of the paid leave benefits outlined in our previous alert (The Families First Coronavirus Response Act Passes the House).

In short, the Act provides employer tax credits to cover the wages paid to employees while they are taking time off under the Act's sick and family leave provisions. Each sick leave credit would equal each employee’s wages, subject to certain limits. While the law is neither final nor finalized, the current proposed limits for these credits are as follows:

  • $511 per day while the employee is receiving paid sick leave to care for themselves, limited to a total of 10 days per employee.
  • $200 per day if the sick leave is to care for a family member or child whose school or paid childcare provider is closed. The family leave credit for each employee is limited to $2,000.

The credits are taken against the employer’s payroll tax and are refundable to the extent they exceed the payroll tax. Employers will not receive the credit if they are also receiving a credit for paid family and medical leave under Internal Revenue Code section 45S.

For self-employed individuals (such as your friendly neighborhood Uber driver), the Act also provides for refundable credits against the self-employment tax. Those credits cover 100% of a self-employed individual's sick-leave equivalent amount, or 67% of the individual's sick-leave equivalent amount if they are taking care of a family member or child following the child's school or paid childcare provider closing. The sick-leave equivalent amount is the lesser of (1) the individual’s average daily self-employment income, or (2) $511 per day to care for the self-employed individual or $200 per day to care for a sick family member or child following a school or paid childcare provider closing. Like the above employer credits, these self-employment credits are subject to limits.

Leave paid under the Act will not be considered wages for purposes of the old age, survivors, and disability insurance portion of FICA.

These rules apply only with respect to the period beginning on a date selected by the Secretary of the Treasury and ending on December 31, 2020. December 31, 2020 is also the current ending date of the paid sick and family leave provisions of the proposed Act.

We hope this additional information about the Act will ease some employer concerns regarding who has to pay for the new leave benefits. It will be interesting to see what actually ends up “making it off the Hill” and onto the President’s desk with respect to this highly politicized topic.

As always, if Miller & Martin can be of assistance to you as we all navigate through these unique times as employers, please feel free to contact a member of our Labor & Employment Law Practice Group.

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