The new law establishes a new Paid Sick Leave; expands the existing FMLA to cover some absence due to Coronavirus; and provides for payroll tax credits to reimburse employers for both new types of Sick Leave. The law applies to employers with less than 500 employees. Employers who have fewer than 50 employees can claim an exemption through hardship. Company owners can participate.
The law establishes new Emergency Paid Sick Leave Benefits which are 80 hours for Full Time Employees and two weeks amount of the average number of hours worked per week by Part Time Employees.
- Employees who miss time because the employee himself has been diagnosed, is seeking diagnosis, is seeking treatment, or is under quarantine or isolation order from a government agency or doctor, will be paid for these hours at the employee’s full pay rate, capped at $500 per day.
- Employees who miss time providing care to a child due to school or day care being closed, will be paid for these hours at 2/3’s of their regular rate of pay, capped at $200 per day.
The law Expands the FMLA to provide 10 weeks of pay, after two unpaid weeks, which are 40 hours for per week for Full Time Employees and 10 weeks amount of the average number of hours worked per week by Part Time Employees. The employee may use the Emergency Paid Sick Leave (above) for the first two unpaid weeks, combining the two. Employees must have been employed 30 days before eligible.
- Employees who miss time providing care for a son or daughter under age 18 because the school or day care has been closed due to Coronavirus, will be paid for these hours at 2/3’s of their regular rate of pay, capped at $200 per day.
The law enables Employers to take a Credit against federal payroll taxes due for the company to recoup the outlay for both of these new Paid Sick Leaves.
- The Paid Sick Leave is not subject to the employer portion of Social Security Tax (6.2%.)
- The total Paid Sick Leave paid by the employer may be taken as a credit against the regular wage’s social security tax. If the amount of Paid Sick Leave exceeds the employer portion of social security tax, the employer can file a new Form 7200 to receive the remainder of the credit.
The employees and officers of Checkright are neither Attorneys nor CPA’s. This document is not meant to be used as Tax Advice or Legal Advice and this document is intended to provide a general understanding of the new law. Please seek specific advice from your CPA or Attorney for your particular situation.