To better help your company manage risk, on April 14, we had attorney Eric Buchanan of Eric Buchanan & Associates with us to share the plantiff's perspective on the COVID-19 pandemic and leave entitlements.
ERISAfire COVID-19 Town Hall - Week 4
April 14, 2020
Families First Coronavirus Response Act (FFCRA)
What payroll taxes need to be paid for employees who are on FFCRA-mandated leave?
Employers will not need to pay the 6.2% Social Security tax, but must pay the 1.45% Medicare tax. Employers will, however, receive a FICA credit for wages paid to employees who are out on one of the mentioned leaves.
Can an employer require employees to use their accrued PTO, paid vacation or paid sick time first before providing FFCRA-mandated paid sick/quarantine leave?
No. The FFCRA requires that employees be free to choose from the leave types at their disposal. Requiring employees to exhaust existing leave before providing FFCRA-mandated paid sick/quarantine leave is prohibited.
If an employer's employees are furloughed—either by temporary layoff or reduction in hours to zero—do the FFCRA paid leave mandates apply?
No, but there is one caveat.
The FFCRA does provide for a refundable payroll tax credit to cover the cost of its paid leave mandates, but the paid leave must be provided first and then later reimbursed through payroll taxes, which could present real cash flow concerns for employers. Furloughs, reductions in force (RIFs) and layoffs may be the only option for some employers.
DOL threw employers a bone here. In its FAQ guidance DOL expressly stated that employees do not have any FFCRA paid leave entitlement after employment is terminated (even temporarily) or hours are reduced to zero.
Be careful, though, because both the statute and the temporary regulations contain non-interference provisions that prohibit employers from interfering with an employee's exercise of FFCRA rights. If an employer terminated employment or reduced hours to zero for the purpose of avoiding the FFCRA paid leave mandates, it's possible the employer could be held liable.