Among new legal requirements for businesses are the provisions of the Families First Coronavirus Response Act (the “Act”). The Act was first passed by the United States House of Representatives in the early morning hours of March 14, 2020. The Senate followed suit, passing the Act, including technical amendments, on the afternoon of March 18, 2020. The President signed the Act into law that same day, meaning it will go into effect in 15 days. The Act is one of what appears will be a number of pieces of federal legislation coming from Washington designed to deal with the unprecedented events triggered by the outbreak of COVID-19.
Below is a summary of key provisions of the Act; provisions applicable to privately held companies are highlighted in red.
Families First Coronavirus Response Act
House Passed: March 14, 2020
Senate Passed: March 18, 2020
Top 10 Summary Points:
1. The Families First Coronavirus Response Act is the Congressional response to the coronavirus (i.e., SARS-CoV-2 or COVID-19) outbreak. The House passed the bill in the early morning hours of March 14, 2020, with bipartisan support (363-40-1). The Senate passed the bill on March 18, 2020, again with overwhelming bipartisan support (90-8).
2. President Trump signed the bill into law immediately upon receiving it on March 18, 2020. It will go into effect in 15 days.
3. Paid sick and family leave, free COVID-19 testing, expanded food assistance and unemployment benefits, and additional protections for health care workers.
4. Supplemental appropriations for the:
- Department of Agriculture (USDA) for nutrition and food assistance programs
- Department of Defense for health service programs
- Internal Revenue Service for provision of taxpayer services
- Department of Indian Affairs for health service programs
- Health and Human Services for nutrition programs, implementation of sick-pay and family pay leave programs, and programs that assist the elderly
- Department of Veterans Affairs for medical services
5. Modifies USDA food assistance and nutrition programs to:
- Allow certain waivers to requirements for the school and adult-care food programs.
- Allow states to request waivers to provide certain emergency SNAP benefits.
6. Establishes a federal emergency paid leave benefits program to provide payments to employees taking leave due to the coronavirus outbreak.
7. Expands unemployment benefits and provide grants to states for processing and paying claims.
8. Requires employers to provide Emergency Paid Sick leave to employees.
9. Establishes requirements for providing coronavirus diagnostic testing and related visits at no cost to consumers, including full coverage for COVID-19 testing visits by private healthcare plans.
10. Creates dollar-for-dollar old age, survivors and disability insurance [I.R.C. Sec. 3111(a)] tax credits for Paid Sick and Paid Family Medical Leave; credits are subject to caps.
Summary of Key Provisions:
A. Division A – Second Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (Immediate applicability to private companies not evident)
1. Title I – Food and Nutrition Services, Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
i. Providing for an additional $500,000,000 for WIC.
ii. Providing for an additional $400,000,000 for the Commodity Assistance Program.
iii. In any case in which a school is closed for at least 5 consecutive days during a public health emergency designation during which school would otherwise be in session, each household containing an “eligible child” (one who is eligible for free or reduced price school meals) attending the school shall be eligible to receive assistance pursuant to a state agency plan.
iv. The Secretary of Agriculture may purchase commodities for emergency distribution in any area of the United States during a public health emergency declaration.
2. Title II – Instruction to Department Defense
i. Providing for an additional $82,000,000 to administer COVID-19 related health services.
3. Title III – Internal Revenue Service Taxpayer Services
i. Providing for $15,000,000 to carry out the Act.
4. Title IV – Indian Health Services
i. Providing for $64,000,000 for Indian Health Services.
5. Title V – Administration for Community Living Aging and Disability Services Programs
i. Providing for $250,000,000 for Aging and Disability Services Programs, of which $160,000,000 shall be for Home-Delivered Nutrition Services, $80,000,000 for Congregate Nutrition Services, and $10,000,000 for Nutrition Services for Native Americans.
ii. Providing for $1,000,000,000 for Public Health and Social Services Emergency Funds in coordination with CMS to pay for claims of providers for reimbursement for health services relating to COVID-19 or certain visits for uninsured individuals.
6. Title VI – Veterans Health Administration Medical Services
i. Providing for $30,000,000 for Medical Services relating to COVID-19.
ii. Providing for $30,000,000 for Medical Community Care relating to COVID-19.
7. Title VII – General Provisions
B. Division B – Nutrition Waivers (Immediate applicability to private companies not evident)
1. Title I – Maintaining Essential Access to Lunch for Students (MEALS) Act
i. Provides for states to obtain waivers to school lunch requirements for purposes of providing meals and meal supplements during school closure due to COVID-19.
2. Title II – COVID-19 Child Nutrition Response Act
i. Providing for waivers to school lunch and adult care food program requirements, including to allow non-congregate feeding and exceptions to meal patterns if necessary to provide meals or due to supply chain disruption.
3. Title III – SNAP COVID-19 Response Waivers
i. Providing for certain increased eligibility for supplemental nutrition assistance program benefits.
ii. Providing for emergency allotments to households participating in SNAP to address temporary food needs.
C. Division C – Emergency Family and Medical Leave Expansion Act (Applicable to private companies)
1. Expands the coverage of the Family and Medical Leave Act (“FMLA”) in its various definitions
2. An “eligible employee” means an employee who has been employed for at least 30 calendar days by the employer with respect to whom leave is requested
3. The “employer threshold” includes those employers with “fewer than 500 employees”
4. A “qualifying need related to a public health emergency” means that an employee has need for leave for one of the following reasons:
i. The employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed or child care is unavailable
5. The first 10 days for which an employee takes leave under this section may consist of unpaid leave, but the employee may substitute vacation, personal or sick leave
6. Employer must provide paid leave for each day of leave that an employee takes after taking leave for 10 days
7. Benefit amount equals two-thirds of the employee’s regular rate of pay for the number of hours the employee would otherwise be normally scheduled to work needs to add capped at $200/day or $10,000 in the aggregate
i. For employees with variable hours, look at the number equal to the average number of hours worked over a 6-month period
8. An employer signatory to a multi-employer collective bargaining agreement may fulfill its obligations by making contributions to the fund based on the paid leave each of its employees is entitled to under the agreement
D. Division D – Emergency Unemployment Insurance Stabilization and Access Act of 2020 (Ancillary applicability to private companies, as will set up work-sharing programs, technical assistance related to unemployment insurance programs through the states; no immediate company actions necessary based on bill provisions)
1. Allocates $1,000,000,000 in emergency grants for states for activities related to the administration and continued operation of Unemployment Insurance (“UI”) Programs.
2. Provides Emergency Transfers for Unemployment Compensation Administration, access to interest-free loans to help pay regular UI benefits through December 31, 2020, and technical assistance to states that want to set up work-sharing programs, in which employers reduce hours instead of laying employees off.
3. For states that experience an increase of 10 percent or more in their unemployment rate (over the previous year) and comply with all the beneficiary access provisions, provides 100 percent federal funding for Extended Benefits, which normally require 50 percent of funding to come from states.
E. Division E – Emergency Paid Sick Leave Act (Applicable to private companies)
1. An employer shall provide an employee with paid sick time for any of the following uses:
i. Employee is subject to a self-isolation or quarantine order from a government.
ii. Employee has been advised by a health care provider to self-quarantine.
iii. Employee has COVID-19 symptoms and is seeking a medical diagnosis.
iv. Employee is caring for someone in 1 or 2 above.
v. Employee is caring for a child whose school is closed and childcare provider is not available due to COVID-19 precautions.
vi. Employee is experiencing similar conditions and as specified by Secretary of Health and Human Services.
2. Paid sick leave available to employees shall be limited to $511/day or $5111 in the aggregate if the employee is home due to his/her own isolation/quarantine and limited to $200/day or $2000 in the aggregate if the employee is home caring for a family member with the virus or due to a child’s school closure.
3. Full-time employees are entitled to 80 hours of paid sick time.
4. Part-time employees are entitled to the number of hours that such employee works on average over a 2-week period.
5. There is no carryover of this sick time from 1 year to the next.
6. This paid sick leave is in addition to any paid sick leave already offered by an employer.
7. An employer may not require that the employee search for or find a replacement employee to cover the hours in which the employee is using paid sick time.
8. Paid sick time is available regardless of how long the employee has been employed by an employer.
9. An employer may not require an employee to use other paid leave before using the paid sick time.
10. Each employer is required to post a notice, to be provided by the Secretary of Labor.
11. Employers are prohibited from discharging or disciplining an employee who takes a leave in accordance with the Act.
12. Employers who are signatories to multi-employer collective bargaining agreements may fulfill its obligations by making contributions to the fund, plan or program based on the hours of paid sick time each of its employees is entitled.
13. An “Employer” under this provision is
i. in the case of a private entity or individual, one that employs fewer than 500 employees
ii. i n the case of a public agency or other entity not private, employs 1 or more employees
F. Division F – Health Provisions (Applicable to private healthcare plans)
1. Establishes requirements for providing coronavirus diagnostic testing at no cost to consumers.
2. Private healthcare plans required to provide no-cost coverage for COVID-19 diagnostic testing, including the cost of a provider, urgent care center or emergency room visit in order to receive testing.
3. Waives Medicare, Medicare Advantage, Medicaid and CHIP cost-sharing requirements for COVID-19 visits.
4. Treats personal respiratory protective devices as covered countermeasures that are eligible for certain liability protections.
5. Temporarily increases the Medicaid federal medical assistance percentage (“FMAP”).
G. Division G – Tax Credits for Paid Sick and Paid Family and Medical Leave (Applicable to private companies)
1. For employers, there shall be allowed as a credit against the tax imposed under IRC 3111(a) an amount equal to 100% of the qualified sick leave wages paid by such employer.
i. The credit is subject to caps on the qualified sick leave wages (ranging from $200 to $511 per day) and aggregate number of days to be taken into account
ii. The credit shall not exceed the tax imposed
2. In the case of a self-employed individual, there shall be allowed a tax credit against the tax imposed by IRC Subtitle A in an amount equal to 100% of the qualified sick leave equivalent with respect to the individual.
3. For employers, there shall be allowed as a credit against the tax imposed under IRS 3111(a) an amount equal to 100% of the qualified family leave wages paid by such employer.
i. The credit is subject to caps, such that it may not exceed $200 per day per individual and, in the aggregate with respect to all quarters, $10,000
ii. The credit shall not exceed the tax imposed
4. In the case of a self-employed individual, there shall be allowed a tax credit against the tax imposed by IRC Subtitle A in an amount equal to 100% of the qualified family leave equivalent amount with respect to the individual.
5. Any wages required to be paid by reason of the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act shall not be considered wages for purposes of IRC 3111(a).
6. Payroll Tax credits include employers’ expenses in maintaining qualified health plan expenses related to sick leave payments.
7. Secretary of Treasury to promulgate guidance on allocation of those expenses, but unless otherwise prohibited the expenses may allocated pro rata by covered employees or pro rata on the periods of coverage.
H. Division H – Budgetary Effects (Not applicable to private companies)
1. Discussion of how budgetary effects are to be counted and estimated under applicable provisions of existing Acts.
For more information about recommended steps, please contact your Foley relationship partner. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the CDC and the World Health Organization.
Foley has created a multi-disciplinary and multi-jurisdictional team, which has prepared a wealth of topical client resources and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries. Click here for more information regarding how the Act impacts employers and to stay apprised of relevant developments, insights and resources to support your business during this challenging time.
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