Families First Coronavirus Response Act (FFCRA), EPL and EFMLA
Posted by Andrew Kaiser on March 19, 2020
Families First Coronavirus Response Act (FFCRA)
With President Trump’s signature on March 18th, this new law will go into effect on April 2, 2020. Largely nothing changed from the version that passed the House on Monday evening, but here’s a visual breakdown between the two leave provisions contained in the law.
We hope that this helps make a clearer difference between the Emergency Paid Leave (EPL) and Emergency FMLA (EFMLA) provisions and the pay provisions related to each one. Note that the pay for weeks 3-12 only applies when your employees are unable to work (from your place of business or home) due to having to care for their child(ren) due to school being out or child day care being unavailable.
Here are a few key points on this new law:
- Who Does this Law Apply to? This law applies to employers with 500 or fewer employees (common ownership/control counting will apply), but employers with less than 50 employees must apply for a hardship waiver from the US Department of Labor to be exempted from this law’s provisions. How to actually apply for that exception has not yet been determined. We have been told that the employee count will be based on the common ownership/control rules that normally apply under FMLA.
- Employer Tax Credits for Paid Leave. Employer costs related to the paid leave provisions are included in the bill and will be a credit against your FICA obligations. There will be more details about how that works coming out in the next few days. These details will give guidance about how to get that credit sooner, rather than waiting to claim the credit with quarterly filings. Remember that employers can only get the credit for leave outlined in the two provisions above, so, if you have more than 500 employees, you are not mandated to offer these benefits and you cannot claim the tax credit in the event that you voluntarily decide to comply.
- Employer Tax Credit for the Health Insurance Extension. One other find in the new law is a provision that allows the employer to take a tax credit that would offset (without a limit) the employer contribution for health insurance premiums (or premium equivalents for self-funded plans) for the employee who is out of work for the EFMLA provisions only.
Here are a some questions we’ve received over the last couple of days and answers to assist you with this law’s requirements
- We have fewer than 50 employees – how do we get an exemption if needed? We don’t yet know that process but will send to all clients when we receive guidance from USDOL.
- Is there a limit on the timeframe in which an employee can be out and we are obligated to pay? Is our maximum exposure up to the $5110 max and $10,000 for child care regardless of timeframe? Yes. The maximum leave period is two weeks if out due to illness or caring for family member due to the illness, or twelve weeks if caring for a minor child due to their school and/or day care being closed. The maximum benefits are capped per employee as outlined in the chart above.
- Does this apply if the employees are able to work from home? Absolutely not. This is limited to when an employee is unable to work at their regular place of work or from home.
- Will the carriers be allowing employers additional time to make payments before terming coverage? We have not received any specific information about what carriers are doing, but our suspicion is that there will be some flexibility for employers and individuals. As we learn more, we will pass that along to you.
- Should we move those individuals who are unable to work to COBRA or state continuation or keep them active through this period? For those eligible for the leave protections outlined above, employers will need to provide ongoing health coverage as if the employee was still active (including paying their share of the premium). But for other employees, we suspect that will be on a case-by-case basis – see below in the layoff section about actively-at-work and COBRA.
- Could we pay for some employees’ benefits (e.g. management) but not other employees who are out of work? If you are fully-insured, yes, you have that ability under current law, but our advice is to be careful about that during the interim since we suspect that may cause some problems in the aftermath. For self-funded groups (including those with HRAs), the answer to that question is absolutely no.
- If the employee has sick leave, are they required to use it during the first ten days or is this on top of what they already have? The law is written for this to be additional benefits on top of what they are already eligible for as an employee.
- Employers should be careful with layoffs due to COVID-19
- There are a handful of interesting issues to be aware of as employers look at layoffs (meaning that you are closed and not simply working from home) due to the extreme change in the overall economy that have not yet been addressed. We’ve tried to focus on them in discreet sections:
WARN ACT NOTIFICATIONS
Under federal law, if your company employees 100 or more employees and plans to close a facility or conduct a mass personnel layoff, you may be required to file a Worker Adjustment and Retraining Notification—commonly called a WARN notice — with the state, even if such actions are anticipated to be temporary. A number of states have similar laws: Alabama, California, Connecticut, Georgia, Hawaii, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Tennessee, Washington, and Wisconsin. Note: if you have fewer than 100 employees, then this does not apply to you.
- A “mass personnel layoff” means
• You are laying off or have reduction in hours of more than 50% of workers
• The layoff impacts either 500 or more individuals or if fewer than 500 employees, impacts at least 33% of full-time employees who have been working 30 or more days.
For most employers who fall within the WARN Act’s regulation, none of us expect this to last more than six months so there may be limited application of this law. We know that this regulation may be a concern that employers need to review – remembering that the law’s language provides an exception for natural disasters, but the definition does not include an epidemic.
We strongly encourage you to seek counsel on this issue, which may involve contacting the relevant state agency.
ACTIVELY AT WORK REQUIREMENTS
One other main concern in the interim is how your employees being out of work due to some closure would impact an employee being considered actively at work for the purpose of benefits. The biggest impact of this is whether or not to put your employees on COBRA during your layoff or to instead leave them on the plan and have the employee continue contributing what they were contributing before to the cost of coverage.
Unfortunately there is no universal answer to this question. Most health insurance plans provide some extended period of eligibility when someone is out of work temporarily (vacation, sick, FMLA), but layoffs themselves usually are not automatically included. We expect most carriers to allow employers to treat their employees who have been laid off to remain eligible for some period of time, but are continuing to work on those issues to get clear guidelines in the next few days. We also are leveraging our resources at the state and federal level to get assistance and to provide some regulatory weight to get make this to happen.
Finally, don’t forget that if you want your employees to pay their portion while out of work, you need to tell them in advance about what you expect – either to pre-pay, pay as you go or catch up when they return to work.
Layoffs are generally treated like other employment termination situations. There is a COBRA triggering event for the health benefits (medical, dental, vision, health FSA, etc.) upon termination for those covered under one of the component benefit plans. Employers can choose but are not required to subsidize COBRA for terminated employees. Remember that if employees are out for less than 13 weeks, they will not be required to serve a waiting period to go back on to your benefits.
STATE UNEMPLOYMENT BENEFITS
Be sure to look to see what your state is doing to assist with unemployment benefits during this time. Many have implemented special rules related to employees with reduced hours or out of work due to COVID-19 and its impact on the economy.
Other Issues to Keep in Mind for Now
There are a couple of other things that have come up this week that we think you should keep in mind:
We have seen numerous warnings both in the media and from different state and federal agencies about a marked increase in fraud and malware during this time. The consistent advice is to warn your employees to watch out for fraud, such as phishing emails appearing to come from someone high up in the company with an urgent request for confidential employee info and to not take the bait.
HEALTH AND DEPENDENT CARE FSA
Due to closed day cares, many employees have been asking whether or not they can make a midyear change in their Dependent Care FSA election for the current plan year. While some circumstances may allow for this – a layoff or reduction in hours – be careful that you are consistent on this with your employees. Don’t allow them to stay on health insurance but allow the midyear change. We are hopeful for additional guidance on this issue from the IRS, but nothing specific yet.
Again, thank you for the opportunity to work with you and we will remain vigilant about these issues in the coming weeks. If you have other questions please feel free to forward to your contacts within our organization.