Approximate appropriation: $104 billion
This is a summary of the second bill Congress passed to help with the effects of the coronavirus outbreak. This guide highlights the specific provisions of that bill that may impact the charitable sector. The Congress has passed four other bills which are included in the Comprehensive Guide.
The bill primarily addresses immediate needs of individuals and families related to the Coronavirus pandemic in the United States.
Specific items include:
- Mandates for paid sick and family leave for small businesses
- free coronavirus testing
- support for unemployment benefits
- expansion of food assistance for vulnerable children and families
- protections for front-line health workers
- additional funding to states for the ongoing economic consequences of the pandemic
Relevance to the Charitable Sector including Funders and Nonprofits
This bill includes a mix of appropriations that may benefit nonprofit organizations and/or alleviate certain community needs thereby allowing funders and nonprofits to focus on other unmet needs. Specific appropriations and provisions include:
Included in the FFCRA is up to $900 million for the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) and other programs that provide school meal assistance to eligible families in public health emergencies.
An additional $64 million is allocated under HHS for Indian Health Services, to be further allocated at the discretion of the Director of Indian Health Service.
An additional $250 million is allocated for Aging and Disability Services Programs under HHS, including home delivered nutrition services, and an additional $1 billion is allocated to the Public Health and Social Services Emergency Fund for health services reimbursements under the administration of the Centers for Medicare and Medicaid Services.
The FFCRA allocates a total of $60 million for medical services and medical community care under the Veterans Administration (VA).
The FFCRA contains the “Maintaining Essential Access to Lunch for Students Act” that would remove a requirement that prevents the U.S. Department of Agriculture from granting state waiver requests related to the Richard B. Russell National School Lunch Act if those waivers would increase costs for the federal government. The FFCRA also contains the “COVID-19 Child Nutrition Response Act” that allows parents and guardians to pick up meals for students.
The FFCRA contains provisions to provide increased flexibility and waivers of certain requirements for the Supplemental Nutrition Access Program (SNAP) for low-income jobless workers.
Relevance to the Charitable Sector as Businesses and Employers
In addition to the appropriations described above, the FFCRA includes new provisions that apply to private employers with fewer than 500 employees to expand paid leave for covered employees in certain circumstances related to COVID-19. The Act also creates corresponding tax credits to help employers cover the cost of the expanded leave requirements.
This provision amends the existing Family and Medical Leave Act (FMLA) to provide covered employees the ability to take up to 12 weeks of job-protected leave if the employees have a “qualifying need” related to a public health emergency. This provision applies to employees who have been employed for at least 30 calendar days.
- The FFCRA amends the Family and Medical Leave Act (FMLA) to provide employees who have been employed for at least 30 days the right to take up to 12 weeks of job-protected FMLA leave.
- The bill also mandates that 10 of the 12 weeks be paid by the employer at the rate of no less than two-thirds of the employee’s regular salary or rate-of-pay.
- The remaining two weeks can be covered by the employee’s vacation or sick leave at the employee’s discretion (employers cannot require employees to use vacation or sick leave).
- This amendment applies to employers with less than 500 employees and is intended to target smaller businesses that may not normally offer paid leave benefits.
- Under the bill, the Secretary of Labor may issue regulations exempting small businesses (less than 50 employees) if granting leave would jeopardize the viability of the business.
- The Secretary may also issue exemptions for certain health care providers and emergency responders.
The new paid leave requirements apply only for leave situations related to the Coronavirus/COVID-19. FMLA leave for other reasons remains unpaid. To take advantage of the new rules, the FMLA leave must be used for one of the following reasons:
- To follow a recommendation or requirement to quarantine due to exposure or symptoms of coronavirus
- To care for a family member who is following a recommendation or requirement to quarantine due to exposure to or symptoms of coronavirus
- To care for the employee’s child if the child’s school or daycare has been closed, or the childcare provider is unavailable, due to the coronavirus.
As with any FMLA leave, the employee’s job is protected while on leave and employers must assure that employees return to the same or an equivalent position. For employers with less than 25 employees, there is an exception to this rule if an employee’s job has been eliminated due to the coronavirus pandemic, but the employer must still make reasonable efforts to return that employee to an equivalent position within one year. These FFCRA amendments to FMLA are temporary and will expire on December 31, 2020.
This provision provides up to two weeks (maximum 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or two weeks of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19.
The new paid sick leave provisions in the FFCRA apply to employers with fewer than 500 employees.
- There is no 30-day employment requirement and this sick leave is available immediately regardless of how long the employee has been employed.
- The paid sick leave provisions expire on December 31, 2020.
For full-time employees, employers are now required to provide 2 weeks (up to 80 hours) of paid sick leave at the employee’s regular salary or rate of pay, for the following reasons:
- To self-isolate because of a diagnosis of COVID-19, or to comply with an order or recommendation to quarantine due to exposure or symptoms
- To obtain a medical diagnosis or medical care due to symptoms of the coronavirus. If the employee is needed to care for a family member who is quarantined, self-isolating due to a diagnosis, or experiencing symptoms of coronavirus and/or needs to obtain medical diagnosis or care, or the employee is caring for a child due to school or daycare closures, the sick leave pay can be reduced to two-thirds of the employee’s regular rate-of-pay.
- Employers must also cover part-time employees by providing paid sick leave based on the average number of hours the employee works over a two-week period.
- It is important to note that the paid sick leave in the FFCRA is intended to be in addition to any paid sick leave the employer already provides, and employers may not change their leave policies due to these new provisions. For example, an employer who already provides one week of paid sick leave cannot eliminate that benefit and replace it with the two weeks mandated by the FFCRA. Rather, the employer will now be required to provide three weeks of paid sick leave. Additionally, employers cannot require employees to use other types of paid leave before using the sick leave provided by the FFCRA.
Employers covered under the FFCRA's paid sick leave and family and medical leave (i.e., certain public sector employers and private employers with fewer than 500 employees) are advised to do the following:
- Use the model notice provided by the DOL. Notice does not have to be translated into other languages, although the DOL is working on translated versions of the notice.
- Post Notice and/or provided electronically by April 1, 2020.
- Posting includes on premises in conspicuous places such as breakrooms, lunchrooms, and heavily visited areas.
- Remote delivery includes through email, intranet, external website, or direct mail.
The FFCRA provides for emergency transfers of funds to states to ensure the stability of the unemployment insurance system as well as technical assistance intended to improve employer awareness of short-term compensation programs. The FFCRA also provides federal matching for the first week of unemployment benefits for states with no waiting periods.
The FFCRA includes provisions that mandate all private health insurance programs and public programs (Medicare, Medicare Advantage, Medicaid and CHIP) cover testing for COVID-19 with no co-pay, deductible or pre-authorization.
Under the FFCRA, employers with fewer than 500 full-time or part-time employees can receive two new refundable tax credits designed to reimburse employers the cost of providing the new required sick and family leave to employees affected by COVID-19. The reimbursements are available for the periods of April 1, 2020 through December 31, 2020.
- Employers subject to the EPSLA and the expanded FMLA paid leave requirements are entitled to fully refundable tax credits to cover the cost of the leave required to be paid for these periods of time during which employees are unable to work (which for purposes of these rules, includes telework).
- Certain self-employed persons in similar circumstances are entitled to similar credits. Eligible employers are entitled to refundable tax credits for qualified sick leave wages and qualified family leave wages (collectively “qualified leave wages”), under sections 7001 and 7003 of the FFCRA respectively.
When determining the “cost” to employers of the leave provided for purposes of the tax credit, employers should add any amounts paid for qualified health plan expenses as well as the employer’s share of Medicare tax on the qualified leave wages.
- Eligible Employers are businesses and tax-exempt organizations with fewer than 500 employees that are required to provide paid sick leave under the EPSLA and to provide paid family leave under the expanded FMLA. Self-employed individuals are entitled to equivalent credits based on similar circumstances in which the individual is unable to work.
- The refundable tax credits apply to qualified sick leave wages and qualified family leave wages paid during the period beginning April 1, 2020, and ending December 31, 2020. The same period is used to determine credits for qualified sick leave equivalent amounts and qualified family leave equivalent amounts for certain self-employed individuals. The eligible employer is not subject to the employer portion of social security tax imposed on those wages.
To offset the cost:
- Eligible employers that pay qualified leave wages can retain the federal employment taxes that are normally paid to the IRS each quarter.
- The amount retained should be equal to the amount of the qualified leave wages paid plus qualified health plan expenses and the amount of the employer’s share of Medicare tax.
- In other words, rather than depositing all employment taxes with the IRS, employers can keep these taxes up to the amount that equals the qualified leave wages plus health plan expenses and the employer’s share of Medicare tax.
- To retain an amount that equals qualified leave wages plus health plan expenses plus Medicare taxes, employers can look to all the different taxes that are normally withheld and can retain federal income taxes normally withheld from employees, the employees’ share of social security and Medicare taxes, and the employer’s share of social security and Medicare taxes with respect to all employees.
- If all of these federal employment taxes yet to be deposited are not sufficient to cover the employer’s cost of qualified leave wages, plus health plan expenses plus the employer’s share of Medicare tax, the employer will be able file a request for an advance payment from the IRS.
- The IRS expects to begin processing these requests in April 2020.
It is important to note that the employer may fund the new required paid leave wages by accessing federal employment taxes, including those that the employer has already withheld, that are set aside for deposit with the IRS. That is, an eligible employer that is paying qualified leave wages to its employees in a calendar quarter before it is required to deposit federal employment taxes with the IRS for that quarter may reduce the amount of federal employment taxes it deposits for that quarter by the amount of the qualified leave wages plus health plan expenses plus the employer’s share of Medicare tax paid. The eligible employer must account for the reduction in deposits on the Form 941, Employer's Quarterly Federal Tax Return, for the quarter.
- Eligible Employers claiming the credits for qualified leave wages, plus allocable qualified health plan expenses and the Eligible Employer’s share of Medicare taxes
must retain records and documentation related to and supporting each employee’s leave to substantiate the claim for the credits, as well as retaining the Forms 941, Employer's Quarterly Federal Tax Return, and 7200, Advance of Employer Credits Due To COVID-19, and any other applicable filings made to the IRS requesting the credit. Eligible employers will report their total qualified leave wages and the related credits for each quarter on their federal employment tax returns, usually Form 941, Employer's Quarterly Federal Tax Return. Form 941 is used to report income and social security and Medicare taxes withheld by the employer from employee wages, as well as the employer’s portion of social security and Medicare tax.
Example (from the IRS website): An Eligible Employer paid $5,000 in qualified sick leave wages and qualified family leave wages (and allocable health plan expenses and the Eligible Employer’s share of Medicare tax on the qualified leave wages) and is otherwise required to deposit $8,000 in federal employment taxes, including taxes withheld from all of its employees, for wage payments made during the same quarter as the $5,000 in qualified leave wages. The Eligible Employer may keep up to $5,000 of the $8,000 of taxes the Eligible Employer was going to deposit, and it will not owe a penalty for keeping the $5,000. The Eligible Employer is then only required to deposit the remaining $3,000 on its required deposit date. The Eligible Employer will later account for the $5,000 it retained when it files Form 941, Employer's Quarterly Federal Tax Return, for the quarter.