COVID-19: Family and Medical Leave Legislation

On Wednesday, March 18th, the President signed into law the Families First Coronavirus Response Act (FFCR). The FFCR applies to all employers with 500 or fewer employees and contains three primary sections related to employers: Emergency Family and Medical Leave Act Expansion; Emergency Paid Sick Leave Act; and Tax Credits for Paid Sick and Paid Family and Medical Leave. The FFCR is slated to take effect April 2, 2020 and will expire on December 31, 2020.

The FFCR applies to almost all private employers with fewer than 500 employees. Exemptions are for health care providers, emergency responders, and businesses with fewer than 50 employees—if the employer can establish that the requirements would “jeopardize the viability of the business”. Guidelines regarding what “jeopardizes the viability of the business” means have not been issued.

Emergency Family and Medical Leave Act

Under the Emergency Family and Medical Leave Act, only employees who have worked for an employer for 30 calendar days are eligible to take leave for a “qualifying need due to a public health emergency.” A qualifying need is defined as an employee who is unable to work because the employee’s child, under the age of 18, is at home due to a school or day care closure or the unavailability of other child care providers because of a COVID-19 emergency. Employees may take up to 12 weeks of leave, with 10 of those weeks  paid as an extra benefit under the Act. The employer is not required to provide paid leave for the first 10 days (2 work weeks) of leave, but employees have the option to use other paid leave benefits to cover this period.  After the first 10 days, the paid leave should be calculated at two-thirds of the employee’s regular pay and capped at $200 a day and $10,000 in total.

Emergency Paid Sick Leave Act

The Emergency Paid Sick Leave Act requires paid sick leave when an employee cannot work due to one of the following:

  • The employee is under a federal, state, or local quarantine or isolation order because of COVID-19;
  • The employee is advised by a health care provider to self-quarantine because of COVID-19;
  • The employee has symptoms of COVID-19 and is seeking a medical diagnosis;
  • The employee is caring for an individual who meets one of the first two conditions, above;
  • The employee is caring for a son or daughter whose school or child care center is closed because of COVID-19 precautions, or whose child care provider is unavailable for the same reason; or
  • “The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.”

The employer must provide paid leave to employees immediately, even if those employees were just hired. Full-time employees are eligible to take 80 hours of paid leave. The calculation for part-time employees should be based on the average number of hours worked over a two-week period.
For reasons 1-3 above, the employee should be paid at the employee’s regular rate of pay capped at $511 a day and $5,110 total. For reasons 4-6 above, the employee should be paid at the employee’s regular rate of pay capped at $200 and $2,000 total.

If an employer offers other types of paid leave, the employer can choose to have the employee use the federal, state, or local “statutory” paid leave first. But an employer cannot make the employee use the employer’s other non-statutory paid leave first.

Understand: an employer may not terminate, discipline, or discriminate against an employee who takes leave under this provision. As well, this law does not preempt any local, state, or federal laws regarding paid leave laws or the employer’s own paid leave policies.

Tax Credits for Paid Sick and Paid Family

Employers are eligible to receive tax credit against the employer’s Social Security tax liability equal to 100% of the sick leave amounts paid by the employer, subject to the limits described above. In addition, certain employer paid health premiums will increase the credit.    

Contact our office if you have questions about this or other legal matters.  We remain open to serve our clients during this crisis.  

This article is provided for general information and should not be relied upon as legal advice for a specific situation. If you are in need of specific advice or legal representation, please do not hesitate to contact us.

©2019 Bea & VandenBerk

Year-End Federal Tax Changes Benefiting NonProfits

On December 20, 2019, the President signed, “The Further Consolidated Appropriations Act” (H.R. 1865), which contained the “Taxpayer Certainty and Disaster Tax Relief Act of 2019” (“Act”).  The Act contains two important changes to federal tax laws affecting nonprofits: (1) repeal of the parking tax and (2) reduction in the private foundation excise tax.

Continue reading “Year-End Federal Tax Changes Benefiting NonProfits”

States Rush to Pass Economic Nexus Legislation

Following the Supreme Court’s June 2018 decision in South Dakota v. Wayfair, states have acted quickly to enact economic nexus laws to require remote sellers to pay sales tax.  “Economic nexus” is the power of a state to compel remote sellers to pay sales tax on their transactions with purchasers in the state.  As of October 1, 2019, economic nexus laws have gone into effect in all states with a statewide sales tax, except Missouri and Florida. States are using economic nexus laws to compel remote sellers, or sellers with no physical presence in the state, to collect sales tax if the seller’s economic activity in the state reaches a pre-determined threshold. Previous laws required the seller to have a physical presence within the state, such as a brick-and-mortar store, office, or warehouse.

Continue reading “States Rush to Pass Economic Nexus Legislation”

Nonprofits and Taxable Parking Expenses

Navigating the Possibility of Incurring UBTI

Nonprofit organizations that provide employee parking benefits may be surprised to learn that they may be subject to incur unrelated business taxable income (UBTI). In addition, organizations with no UBTI may now be required to file form 990-T.   

The Tax Cuts and Jobs Act (Act) amended Section 274 of the Internal Revenue Code (IRC) to disallow for-profit employers from deducting certain expenses related to transportation fringe benefits provided to their employees. The Act added IRC Section 512(a)(7) to what constitutes UBTI for nonprofits and other tax-exempt entities. The Act states that tax-exempt entities are required to increase their UBTI by expenses related to transportation fringe benefits provided to their employees. The transportation fringe benefits subject to this tax include expenses associated with:

Continue reading “Nonprofits and Taxable Parking Expenses”