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Paid Leave Act passed March 18, 2020

Emergency Family and Medical Leave Act:

Employers with fewer than 500 employees must provide up to 12 weeks of job-protected FMLA leave for a qualifying need related to a public health emergency to employees who have been on payroll for 30 days.  This is when the employee is unable to work due to sick minor child, no childcare or school or unavailable to public health emergency.  The 1st 10 days may be unpaid, but the employee can opt to substitute other paid leave.  The remaining 10 weeks of FMLA leave is required to be paid, generally at 2/3 of the employee’s regular rate and for the number of hours the employee would otherwise be scheduled to work.  The bill limits the amount of regular pay to $200/day and $10,000 total.  The bill provides job protection to employees, but has an exception for employers with less than 25 employees if an employee’s position is eliminated following leave due to operational changes caused by a public health emergency. 

Emergency Sick Leave:

The new law requires employers with fewer than 500 employees to provide paid sick leave to employees who are forced to stay home due to quarantining or to care for a family member (“qualified paid sick leave”).  

  1. is subject to a federal, state or local quarantine or isolation order related to COVID-19;
  2. has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  3. is experiencing symptoms of COVID-19 and seeking a medical diagnosis
  4. is caring for an individual subject or advised to quarantine or self-isolate;
  5. is caring for a son or daughter whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 precautions; or
  6. is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury. 

For items 1-3, the required pay is limited to $511/day with a maximum payout of $5,110 (10 days).  For 4-6, the required pay is $200/day with a maximum pay out of $2,000.  For part-time employees, the employer is required to pay the typical number of hours the employee is normally scheduled to work.  Unlike the emergency FMLA requirements, an employee is immediately eligible for this leave (there is no 30-day-on-payroll requirement).

For both of programs, the employer receives a refundable credit against its share of the Social Security portion of the payroll tax. The credit can be claimed on a quarterly basis, equal to 100 percent of the amount of sick leave wages paid under the new law.  The credits are only available to employers required to offer these benefits under the new law.

Note:  An employer may exclude employees who are health care providers or emergency responders.  Secretary of Labor has authority to provide exemption for businesses with fewer than 50 employees if providing the benefit would jeopardize the viability of the company.

For self-employed persons, the credit is allowed against regular income taxes. The limit on sick leave wages is determined by multiplying the number of days (subject to limitation) the self-employed person is unable to perform services in the trade or business by the lesser of 67% of the taxpayer’s average daily self-employment income, or $200.  The limits are increased to 100% and $511, respectively, in the case of the three scenarios that also apply to the employer payroll tax credit. The same calculation is made for family leave wages, with days unable to perform services

(no more than 50) multiplied by the lesser of 67% of the taxpayer’s average daily self-employment income, or $200.

Extended time to pay tax due April 15, 2020

The time to pay Federal taxes due April 15, 2020 has been extended until July 15, 2020.  This includes balances due for 2019 and 1st quarter estimated tax for 2020.  This did not extend the time for filing.  However, we can still file an automated request for extension of time to file that will extend the deadline for individuals until October 15, 2020.