Employer Obligations Under the Families First Coronavirus Response Act

The Families First Coronavirus Response Act (FFCRA), signed into law on March 18, 2020, imposed new paid leave requirements on employers with fewer than 500 employees. Understanding these obligations is essential for compliance and for accessing the corresponding tax credits.

Two Key Leave Provisions

The FFCRA created two distinct leave categories that employers must understand:

Emergency Paid Sick Leave Act (EPSLA)

All employees, regardless of tenure, are entitled to up to 80 hours of paid sick leave when unable to work (or telework) for qualifying COVID-19 related reasons:

• Full pay (capped at $511/day) when the employee is subject to a quarantine or isolation order, has been advised by a health care provider to self-quarantine, or is experiencing COVID-19 symptoms and seeking diagnosis
• Two-thirds pay (capped at $200/day) when the employee is caring for someone subject to quarantine, caring for a child whose school or care provider is closed, or experiencing a substantially similar condition

Emergency Family and Medical Leave Expansion Act (EFMLEA)

Employees who have been on payroll for at least 30 days are entitled to up to 12 weeks of leave to care for a child whose school or place of care is closed due to COVID-19:

• The first 10 days may be unpaid (though employees can use EPSLA or accrued leave)
• The remaining 10 weeks must be paid at two-thirds of the employee's regular rate, capped at $200 per day and $10,000 in total

Which Employers Are Covered

The FFCRA applies to private employers with fewer than 500 employees. The employee count includes all employees at the time leave is requested, across all locations.

Small business exemption: Employers with fewer than 50 employees may be exempt from the child care leave provisions if compliance would jeopardize the viability of the business. However, this exemption is narrow and must be documented. It does not apply to the paid sick leave provisions.

Employer Tax Credits

The FFCRA provides dollar-for-dollar tax credits against the employer's share of Social Security taxes for all qualifying leave payments. Key details:

• Credits also cover the employer's cost of maintaining health insurance during leave
• Credits are refundable, meaning employers receive the full amount even if it exceeds their tax liability
• Employers can retain payroll taxes they would otherwise deposit to fund leave payments immediately
• Use IRS Form 7200 to request an advance payment of credits if retained payroll taxes are insufficient

Documentation Requirements

Employers should collect and retain the following from employees requesting FFCRA leave:

• Employee's name and the date(s) leave is requested
• The qualifying reason for leave and a statement that the employee is unable to work or telework
• The name of the government entity ordering quarantine or the health care provider advising self-quarantine (if applicable)
• For child care leave: the name of the child, the school or care provider that is closed, and a statement that no other suitable person is available to care for the child

Practical Steps for Compliance

1. Post the required notice. The Department of Labor published a model notice that must be displayed in a conspicuous place. For remote workers, distribute it electronically.

2. Update your payroll system. FFCRA leave must be tracked separately from existing PTO and FMLA leave. Work with your payroll provider to create distinct pay codes.

3. Train managers. Frontline supervisors need to recognize qualifying leave requests and know your internal process for approving them. They should not deny requests without HR review.

4. Coordinate with existing policies. FFCRA leave runs concurrently with traditional FMLA for the expanded family leave provision, but the paid sick leave is a standalone entitlement that cannot be offset against existing PTO banks unless the employee chooses to do so.

5. Document everything. Maintain records of leave requests, approvals, hours taken, and amounts paid for at least four years to support tax credit claims in the event of an IRS audit.

Timeline and Extensions

The FFCRA's mandatory provisions were in effect from April 1, 2020 through December 31, 2020. Subsequent legislation extended the tax credits for employers who voluntarily continued providing leave into 2021, but the mandate itself expired. Employers should consult the latest guidance from the Department of Labor and IRS to confirm current obligations.

By understanding and properly implementing these requirements, employers can fulfill their legal obligations while taking full advantage of available tax credits to offset the cost of providing leave.