UPDATE: Jan. 4, 2021: The pandemic relief package signed by President Trump on Dec. 27 has ramifications for employers dealing with coronavirus-related sick pay issues.
Although the package did not extend the sick and family leave provisions in the Families First Coronavirus Response Act, it did extend the FFCRA tax credit, which reimburses employers for the cost of providing FFCRA leave, through March 31, 2021.
The bottom line, according to an article from New York City-based law firm Proskauer, is that employers are no longer required to provide FFCRA leave but covered employers who voluntarily offer such leave may utilize payroll tax credits to cover the cost of benefits paid to employees through the end of March. Nevertheless, some states and localities have enacted COVID-19 leave laws, which may or may not have expired at the end of the year, the article states.
The COVID-19 pandemic has presented challenges for the vast majority of employers, including those in the construction industry. Among the financial impacts to businesses have been the institution of pandemic pay requirements at the federal, state and local levels.
Here is a breakdown of the types of paid coronavirus-related sick leave required by the federal government and state and local authorities and how contractors can recoup some of these expenses:
Unlike direct government aid such as the Paycheck Protection Program and state unemployment benefits, the initial responsibility for paid sick leave and other pandemic-related leave mandated by the Families First Coronavirus Response Act falls to covered employers. But there is good news: For eligible employers, these payments can be recaptured through dollar-for-dollar tax credits, according to the Internal Revenue Service.
Under the FFCRA, which is in effect from April 1, 2020, through Dec. 31, 2020, covered employers, generally those with fewer than 500 U.S.-based employees must pay:
- Up to two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay if the employee cannot work because they must quarantine (under government order or a health care provider’s advice) or are experiencing symptoms of COVID-19 and seeking a medical diagnosis. Employees are entitled to a maximum of $511 per day and $5,110 over the two-week period.
- Up to two weeks (up to 80 hours) of paid sick leave at two-thirds of the employee’s regular rate of pay because the employee must take care of someone under a quarantine order or a child younger than 18 years of age whose school or child care facility is closed because of the pandemic. The FFCRA also makes covered employees eligible for this type of paid sick leave for certain other COVID-19-related circumstances. Under this provision, employees are entitled to up to $200 per day and up to $2,000 over the two-week period.
- Up to an additional 10 weeks of expanded family and medical leave paid sick leave at two-thirds of the employee’s regular rate of pay when an employee who has been working for the company for at least 30 calendar days is unable to work in order to care for a child whose school or care provider is closed for reasons related to COVID-19.
Eligible employees can use one of the two-week programs in conjunction with the 10-week plan for a total of 12 weeks. Employees are entitled to a total of $12,000 over the 12-week period.
There is an exemption available for businesses with fewer than 50 employees “if the leave requirements would jeopardize the viability of the business as a going concern.” Part-time employees are also eligible for paid leave under the FFCRA, and employers must pay those employees based on the hours they would normally work.
While the employer can reclaim these COVID-19 wage payments as a tax credit, they still can put an enormous amount of stress on businesses that are struggling, said attorney Kelly DuFord Williams, founder and managing partner at Slate Law Group in San Diego, California. This is especially true if the business is getting ready to lay off one or more employees who end up getting sick and claiming their leave beforehand.
Tax relief doesn’t come until later, she said, and, for some companies, the extra payout could be too much to bear.
“The federal government might put you out of business if you can’t get an exemption or didn’t request one or didn’t know to request one,” she said.
In addition to COVID-19 pay at the federal level, local government has also made provisions for those workers sidelined by the novel coronavirus. Other governmental entities, said Brandon Ray, senior manager of state and local affairs for the Associated Builders and Contractors, have simply expanded their existing paid leave policies to include COVID-19, but few have enacted new policies specifically for COVID-19.
California and New York are two states that have enacted new sick leave regulations since the pandemic started in the spring.
As part of the 2021 state budget that New York Gov. Andrew Cuomo signed in April, and in addition to the state’s emergency COVID-19 sick pay regulations enacted in the wake of pandemic lockdowns, most employers are required to pay sick leave of at least five days depending on company size.
In California, COVID-19 Supplemental Paid Sick Leave fills in the gap left by the FFCRA by requiring that most employers with 500 or more U.S.-based employees pay the same benefits to state workers.
Employers, Williams said, could find themselves having to tack on the federal COVID-19 pay requirements to existing state requirements.
In a state like California, she said, or any state with different levels of requirements — federal, state and local — employers will be challenged to not only keep up with the various requirements but also to pay the extra money at a time when resources, for some, have been made thin by mandatory lockdowns and uncertainty looms for the coming year.
Importance of keeping track
“As COVID-19 continues to spread and workers call in sick, it’s crucial that employers have proper protocols in place to track COVID sick pay to ensure that they’re in compliance with state and federal guidelines,” said Mindy Honcoop, chief people officer at workforce and time management systems provider TimeClock Plus.
And in the case of FFCRA, if an employer fails to pay employees the COVID-19 pay to which they are entitled, it could be held liable through the same complaint process that takes place when an employer does not abide by other Labor Department wage laws such as overtime.
Automating the task of tracking coronavirus pay, Honcoop said, can also help the employer increase safety by helping to track who has been exposed to the novel coronavirus and perform other necessary notifications. Most reporting requirements of cases and exposure by employers is done separately through the relevant health agency dealing with COVID, Ray said.
“By leveraging workforce management tools that make tracking an employee’s schedule and time and attendance data easier,” Honcoop said, “employers are more likely to stay in compliance with any mandates and ensure that the employee gets paid on time.”
And, of course, it’s important to maintain accurate records for the IRS in case there are any questions about how much the employer has claimed in tax credits.
While the pay aspect of these programs could encourage sick or exposed employees to stay home, thus limiting the spread of COVID-19, Ray said, unfortunately it’s not a cure-all.
“Employers have encountered certain challenges with the paid leave policies,” he said. “[These] include employees voluntarily traveling to states on a travel ban list or not taking appropriate precautions in their personal life.”