The Families First Coronavirus Response Act

The COVID-19 pandemic has brought unprecedented challenges to the world, and one of the most significant impacts has been on the workforce — employers, traditional employees, and gig economy workers alike. To address the needs of American workers and families, the United States government passed the Families First Coronavirus Response Act (FFCRA) in March 2020.

The FFCRA provides a range of emergency measures, including paid sick leave, expanded family and medical leave, and tax credits, to help employers comply with the new regulations.

In this blog, we will discuss the key provisions of the FFCRA and their impact on workers, employers, and the economy. We will also explore the criticisms of the act and its implementation challenges. Understanding the Families First Coronavirus Response Act is critical for workers, employers, and even 1099 vendors, as it can provide a safety net during these challenging times.

Let’s take a closer look into the details of this important legislation and its significance.

Key Takeaways

• The FFCRA allocated funding to address food insecurity among Americans affected by the pandemic.
• COVID-19-related family medical and paid sick leave was mandated for employees to support those impacted by the virus.
• Employers were eligible for tax credits to reimburse them for providing sick leave and family medical leave, subject to certain limits.
• Free COVID-19 testing was made available to all individuals, though treatment costs were not covered.
• The act also extended unemployment benefits and provided additional funding to states to address the pandemic’s economic impact.

What Is the FFCRA?

Before discussing its key provisions, let’s first cover the definition of the FFCRA.

The Families First Coronavirus Response Act (FFCRA) was a significant piece of legislation designed to help Americans deal with the impact of the COVID-19 pandemic. It was in effect from April 1st through December 31st, 2020, and offered several important benefits.

These included provisions like expanded food assistance programs, paid sick leave, better unemployment benefits, free coronavirus testing, and increased federal funding for Medicaid. The overall goal of the FFCRA was to provide a safety net for workers and families facing the extraordinary challenges brought on by the pandemic.

Provisions of the Act

The FFCRA’s main goal was to provide financial support to workers who found themselves unable to work due to COVID-19. Let’s break down its most important parts:

Emergency Paid Leave

The FFCRA offered two significant ways to help workers who couldn’t work due to COVID-19: paid sick leave and an expanded family and medical leave option. Under the paid sick leave provision, eligible employees could take time off up to two weeks (80 hours) with pay. They could also take up to 12 additional weeks under the expanded family and medical leave option (with 10 of those weeks paid).

Emergency Paid Sick Leave Act (EPSLA)

Employers with fewer than 500 employees had to comply with the Emergency Paid Sick Leave Act (EPSLA). This required them to provide eligible workers with up to two weeks (80 hours) of paid time off for several COVID-19-related reasons. The amount of pay an employee received depended on why they needed the leave:

• Employee Ill or Quarantined: Employees received their regular pay rate, up to a maximum of $511 per day with a total cap of $5,110 for the two-week period.
• Caregiving, Childcare Needs, or Seeking Diagnosis: Employees received two-thirds of their usual pay, up to a maximum of $200 per day, with a total cap of $2,000 over the two-week period.

Support for the Self-Employed

The FFCRA didn’t forget about independent contractors and self-employed individuals. They could claim a special tax credit on their income taxes. This credit was similar to the paid sick leave benefit, offering financial support for up to ten days of missed work due to COVID-19-related reasons.

Emergency Family and Medical Leave Expansion Act (EFMLEA)

The FFCRA also expanded the existing Family and Medical Leave Act (FMLA) for a limited time. This provided an additional 12 weeks of leave for employees of companies with fewer than 500 employees. The main reason for this leave was to care for a child whose school or childcare was closed due to COVID-19. Ten of these twelve weeks were paid at two-thirds of the employee’s regular pay rate.

Key Points About EFMLEA

• Eligibility: Employees had to have worked for their employer for at least 30 days and be covered under the original FMLA.
• Pay: Full-time employees got 80 hours of paid leave. Part-time employees got paid leave equal to their average hours over a two-week period.
• First Two Weeks: The initial two weeks of EFMLEA leave could be unpaid, but employees could use existing paid time off or Emergency Paid Sick Leave (EPSLA) to cover this period.
• No Waiting Period: Unlike some benefits, there was no waiting time or need to build up leave before using EFMLEA or EPSLA.
• Job Protection: The EFMLEA included the same job protection rights as the regular FMLA.
• Self-Employed: Self-employed individuals and freelancers on gig platforms could claim a tax credit similar to paid leave (up to $200 per day or 67% of their usual income, whichever was less) for up to 10 weeks of family leave.

Expert Tip: Employees could use their EPSLA leave or any other saved-up paid time off to cover the potentially unpaid first ten days of EFMLEA leave.

Special Situations

The FFCRA had a few exceptions to keep in mind:

• Healthcare and Emergency Workers: Employers could choose to exempt healthcare providers and emergency responders from taking leave under the EPSLA and EFMLEA. However, if the employer did allow these workers to utilize the leave, they had to pay them according to the regular guidelines of those benefits.
• Small Business Hardship: Businesses with fewer than 50 employees could apply for an exemption from providing paid sick leave or family leave for childcare reasons. This exemption was only granted if the business could prove that providing the leave would make it impossible for them to continue operating.

What is the FFCRA Tax Credit?

To help businesses cope with the new paid leave requirements, the FFCRA included an important tax credit. This credit reimbursed employers for the costs of providing paid sick leave and expanded family/medical leave related to COVID-19. 

Here’s how it worked:

Eligible employers could claim a tax credit to offset their portion of Social Security taxes. This credit covered 100% of the wages paid during qualified leave, plus the cost of maintaining the employee’s health insurance while they were out.

The goal of this credit was to make it easier for businesses to support their workers during the pandemic without facing undue financial hardship.

How to Report FFCRA Credit on Tax Return

Employers who provided paid leave under the FFCRA need to report their total qualified leave wages and related credits each quarter on their federal employment tax returns. This is usually done on Form 941, the Employer’s Quarterly Federal Tax Return.

Here’s the good part: You can claim the tax credits by reducing the amount of employment taxes and income taxes you usually deposit with the IRS. This helps you cover the cost of the leave wages, including health plan expenses and your share of Medicare taxes.

Need the Credit Faster? If your regular tax deposits don’t fully cover the credit amount, you can request an advance payment using Form 7200, the Advance Payment of Employer Credits Due to COVID-19 form.

Important Note: Remember that the FFCRA credits were temporary, so ensure you follow the guidelines for the correct tax year when you file.

Self-Employed Individuals and FFCRA Credits

The FFCRA wasn’t just for employees of traditional companies—if you’re part of the diverse gig economy workforce and couldn’t work due to COVID-19, you might be eligible for a valuable tax credit. This credit can help offset your federal self-employment tax! It’s based on your “qualified sick leave equivalent amount” or “qualified family leave equivalent amount” (basically, how much income you lost due to COVID-19-related reasons).

You have two easy options to claim your credit:

• Plan Ahead: Reduce the amount of your estimated tax payments throughout the year to reflect this credit.
• Tax Time: Claim the full credit when you file your Form 1040.

Important Note: The FFCRA credits were temporary, so make sure you’re checking the rules for the right tax year before filing. 

Employers Exempt From FFCRA

Not every employer was required to provide paid leave under the FFCRA. For instance, companies with 500 or more employees were exempt. It’s important to remember that exemptions and rules may have changed since the FFCRA was first enacted. The best way to ensure you follow current laws is to check official government sources or consult a legal or tax professional for guidance.

Pro Tip: Even if you weren’t eligible for FFCRA benefits (for example, if your workplace closed before April 1, 2020), you might still qualify for unemployment benefits. Be sure to double-check the eligibility requirements with your local unemployment office.

Nutrition Assistance

The FFCRA recognized that food insecurity was a big problem during the pandemic, so it included provisions to help several important nutrition programs:

• WIC (Women, Infants, and Children): Supports pregnant women, new mothers, and young children.
• TEFAP (The Emergency Food Assistance Program): Provides food to families in need.
• SNAP (Supplemental Nutrition Assistance Program): Offers benefits to increase food purchasing power for low-income families.
• School Meals: Provided extra help for families whose children usually got free or reduced-price breakfast and lunch at school, but couldn’t access those meals due to COVID-19 closures.
• Support for U.S. Territories: Additional aid for nutrition programs in places like the Northern Mariana Islands, Puerto Rico, and American Samoa.

The FFCRA also temporarily changed some of the usual rules for these programs to make it easier for people to qualify and get the help they needed. For example, it relaxed some in-person requirements for WIC, waived work and job training requirements for SNAP, and made administrative processes more flexible overall.

Unemployment Insurance

The FFCRA understood the serious impact of COVID-19 on jobs, so it included significant changes to unemployment benefits. It provided almost $1 billion in grants directly to states for their unemployment programs. States with exceptionally high unemployment rates and workers who had already used up their regular benefits got extra help. To further assist the states with the cost of these benefits, interest-free loans were available until December 31, 2020.

In states with a 10% or higher unemployment rate compared to the previous year, the federal government paid 100% of the cost for extended unemployment benefits (usually, states pay half). These changes provided a much-needed safety net for individuals and families who lost their jobs due to the pandemic’s economic effects.

Testing and Health Provisions

The FFCRA aimed to make sure COVID-19 testing was accessible to everyone. It made testing free for all individuals, with costs covered either by insurance or government programs. To help states manage this, the federal government temporarily boosted Medicaid payments by 6.2% – but only if the states didn’t restrict who could get tested or charge extra for COVID-19 tests and treatment.

Additionally, the FFCRA expanded testing coverage under the Children’s Health Insurance Program (CHIP) and provided extra funding to make sure veterans, members of Native American tribes, and uninsured Americans could all get tested. These measures were all about removing financial barriers to testing and making sure everyone had a way to protect their health.

Appropriations

The table below shows how much money was set aside for each part of the FFCRA. It’s important to note that amounts only include directly appropriated funds. However, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) estimate that the FFCRA will actually add $192 billion to the federal deficit between 2020 and 2030.

FFCRA Summary

Source: FFCRA and H. R. 6201 Summary

Wrapping Up: the Impact of the FFCRA

The FFCRA was a major step in addressing the widespread impact of the COVID-19 pandemic. It provided a lifeline to many Americans through expanded food assistance, paid leave for those who got sick or had to care for others, better unemployment benefits, and free COVID-19 testing.

The law also supported businesses by offering tax credits to offset the cost of paid leave, easing the burden of these new requirements. Increased Medicaid funding and nutrition assistance helped some of the most vulnerable people manage the economic fallout of the pandemic.

Overall, the FFCRA demonstrated the importance of a swift and comprehensive response to a public health crisis and served as a reminder of the critical role that government can play in supporting its citizens during challenging times.

Frequently Asked Questions

Do temporary employees count toward an employer’s total?

Employers must include all temporary employees in their total count, even if a temporary staffing agency pays those employees. It’s important to note that the temporary staffing agency and the client company may have different coverage statuses under the FFCRA. For instance, a staffing agency with over 500 employees would not be covered under the FFCRA.

However, if its customer has less than 500 employees, it would be covered under the FFCRA. In cases where the two entities act as joint employers for a particular worker, the customer/employer would be responsible for providing leave to the employee under the FFCRA.

Are employees entitled to reinstatement to their position under the EFMLEA and EPSLA?

In most cases, the usual reinstatement regulations apply to employers. This indicates that an employee taking leave under the Family and Medical Leave Act (FMLA) is not entitled to more protection from layoffs, furloughs, terminations, or any other action than they would have received if they hadn’t taken the leave. As a result, an employee may be furloughed or dismissed in the event of a workforce reduction, as long as the decision isn’t affected by the employee’s leave status.

If a layoff does occur, the employee’s right to take leave (and receive corresponding pay) is essentially terminated, and they may be eligible for unemployment benefits (which could be augmented by state measures to provide funds according to an executive order).

Can an employee take an EFMLEA leave intermittently?

Intermittent leave is permitted under the Family and Medical Leave Act (FMLA) for specific types of leave as prescribed by statute.

The FFCRA does not explicitly address the permissibility of intermittent leave, but according to the Department of Labor (DOL), intermittent leave or reduced schedule leave may be taken with mutual agreement between the employer and employee only if it is deemed appropriate under the circumstances.

However, it is important to note that neither the employer nor the employee can mandate or demand intermittent leave unilaterally.

When did FFCRA expire?

The FFCRA initially expired in December 31, 2020.

Is the Family First Act still in effect, or is there an FFCRA extension?

The Families First Coronavirus Response Act (FFCRA) was a law that required employers to provide paid sick leave and expanded family and medical leave to employees affected by COVID-19. It was signed into law on March 18, 2020. Initially, the FFCRA was set to expire on December 31, 2020.

The Consolidated Appropriations Act, 2021, extended employer tax credits for paid sick leave and expanded family and medical leave that were voluntarily provided to employees. This extension was in effect until March 31, 2021. However, it’s important to note that the Act did not extend the entitlement of eligible employees to FFCRA leave beyond December 31, 2020.

What is the EFMLEA, and how does it relate to the Emergency Family and Medical Leave Expansion Act?

The Emergency Family and Medical Leave Expansion Act (EFMLEA) is a modification to the Family and Medical Leave Act (FMLA) that allows certain employees to take up to twelve weeks of expanded family and medical leave, with ten weeks being paid for specific COVID-19-related reasons. The EFMLEA was enacted as part of the Families First Coronavirus Response Act (FFCRA) on March 18, 2020.

How does the EPSLA impact my W-2 form?

The Emergency Paid Sick Leave Act (EPSLA) mandates that certain employers must provide paid sick leave to employees for specific COVID-19-related reasons, amounting to a maximum of 80 hours. To comply with reporting requirements, EPSLA payments made to employees should be included on Form W-2, either in Box 14 or on a separate statement. These payments are considered taxable income and must be reported on the employee’s W-2 form.

To ensure accurate reporting, the IRS has provided guidance that employers should report EPSLA payments on either the W-2 form itself or a separate statement accompanying the W-2. This ensures that the amounts paid are properly documented.

The tax credits associated with the EPSLA and the Emergency Family Medical Leave Expansion Act (EFMLEA) were extended through September 30, 2021, by the American Rescue Plan Act (ARPA). However, it is important to note that both the EFMLEA and the EPSLA officially expired on December 31, 2020. As a result, these acts are no longer in effect, and employers are no longer required to provide paid sick leave or expanded family and medical leave under these provisions.

Is sick or family leave taken under the FFCRA taxable in California?

In California, sick or family leave taken under the Families First Coronavirus Response Act (FFCRA) is subject to taxes. Specifically, emergency paid sick leave wages received under the FFCRA may be taxable in California, with a maximum limit of $10,000 annually.

It’s important to note that employers who provide qualifying FFCRA sick or childcare leave to their employees are eligible for 100% reimbursement. This means employers can recover the full amount they paid for providing the leave.

Initially, the FFCRA was set to expire on December 31, 2020. However, it was extended until March 31, 2021, through the Consolidated Appropriations Act. Unfortunately, the FFCRA was not further extended beyond March 31, 2021, and has since expired.

Additionally, it’s worth mentioning that in California, providing paid sick leave under state law SB 95 is mandatory. This means that employers in California are obligated to provide paid sick leave under the provisions of SB 95.

Are there any tax credits available for employers who provided FFCRA benefits?

Employers who provided benefits under the Families First Coronavirus Response Act (FFCRA) are eligible for tax credits. These tax credits provide dollar-for-dollar reimbursement for qualifying wages paid under the FFCRA.

The tax credit equals 100% of the amount the employer pays for emergency paid sick leave and emergency paid family and medical leave. Employers subject to the Emergency Paid Sick Leave Act (EPSLA) requirements and the expanded Family and Medical Leave Act (FMLA) are entitled to fully refundable tax credits to cover the cost of providing the leave.

The tax credit covers the wages paid and includes the employer’s share of Medicare tax on those wages and the cost of maintaining health insurance coverage for the employee during the leave period.

What is COVID sick pay in New York?

COVID sick pay in New York refers to the mandated job-protected and paid leave provided by certain employers to employees under a mandatory or precautionary order of quarantine or isolation due to COVID-19.

In New York State, eligible employees are entitled to a minimum of 5 or 14 days of paid sick leave, depending on the size of their employer, to ensure they receive financial support during their required absence from work.

This measure aims to assist employees needing leave due to COVID-19-related circumstances. Also, it ensures they have the necessary financial protection during these challenging times.