March 19, 2020 | Covid-19 | Posted by Bob Greene, Senior HR Industry Analyst at Ascentis
The Families First Coronavirus Response Act Became the Law: Do You Know How You’ll Support It?
On Wednesday, March 18, 2020, the Senate passed the Families First Coronavirus Response Act, by a vote of 90-8, and President Trump signed it shortly thereafter. This is the technically corrected House bill (H.R. 6201) which passed the House of Representatives over the weekend. This law comes in at a budgetary impact of $150 billion, and both houses of Congress have now turned their attention to "Corona Phase 3,” the much-talked-about bill that is expected to have a $1 trillion price tag.
"Families First" includes many different provisions, including amplified food and nutrition support for needy children and families (including free “school” lunch replacement for millions of children whose schools are closed), mandated free virus testing, higher unemployment benefits, and an increase in Medicaid funding. But of particular interest to HR and Payroll departments nationwide will be three specific, broad employer mandates:
1.) Emergency PAID Family and Medical Leave. This is the first ever paid FML provision at the federal level that is applicable to private sector employers emergency family and medical leave program will be created in response to the coronavirus. Private-sector employers with fewer than 500 workers and government entities will have to provide up to 12 weeks of job-protected leave to employees at a minimum of two-thirds pay due to a recommendation or order by a public official or health care provider to care for a family member with coronavirus, or to care for a child whose school or place of care is closed more than five days due to a public emergency. The first 14 days could be unpaid, although a worker could choose to use other accrued leave. The Labor Department is authorized to issue regulations to exclude certain health care providers and exempt small businesses with fewer than 50 employees.
Impact on Employers: Employers with more than 500 workers, and (upon hardship approval) fewer than 50 employees, are EXEMPTED from this provision of the law. Statistically, about 20% of all workers are covered by this provision, but well over 50% of all employers are impacted. Employers will need to verify, and possibly enhance, the HRIS, Payroll and Time & Attendance capabilities within their HCM infrastructures to support the documentation tracking and payment of these benefits. This is an unfunded employer-mandate but see #3 below for an included partial funding offset.
2.) Emergency PAID Sick Leave. Private-sector employers with fewer than 500 employees and all government entities will have to provide paid sick leave of 80 hours for full-time employees, and average hours over a two-week period for part-time employees, due to coronavirus diagnosis, symptoms, or preventative care, or due to a recommendation or order by a public official or a health care provider to care for a family member with coronavirus, or to care for a child whose school or place of care is closed due to a public emergency. Workers will be paid the greater of their normal wage or local minimum wage, or two-thirds pay for providing care to a family member. This provision will expire at the end of 2020 if not renewed.
Impact on Employers: The need to be able to calculate, pay, record and limit (where applicable) the pay to qualifying employees should not be overlooked. This requires a set of well-integrated Workforce Management, HRIS and Payroll modules; alternatively, the degree of upgrade and redevelopment of interfaces among these applications could be significant…and expensive!
3.) Tax Credits for Paid Sick and Family & Medical Leave: The law provides payroll credit for required paid sick ($511 per day limit for employees caring for themselves and $200 per day limit to care for a family member or if a child's school is closed) and family leave ($200 per day limit or an aggregate of $10,000) for wages through the end of 2020.
Impact on Employers: Once again, more calculations. In this case, hours from Workforce Management or time recording need to be put through a calculation to convert to tax credit value, and then, once the amounts are paid through payroll, sent to the general ledger system in a segregated account for “Pending Corona Pay Tax Credits”. Employers who cannot do this accurately (or at all) could end up absorbing substantially more cost for these mandates than they will otherwise be required to absorb.
Once again, we in HR technology roles are reminded that, when legislation moves fast in this country, there is rarely consideration given to the recordkeeping impacts of those laws. We are expected to simply “make it work”! Flexible HR, Payroll, Benefits and Workforce Management technology is often the key to success in doing so.
Bob Greene currently serves as Senior HR Industry Analyst at Ascentis. Bob’s 40 years in the human capital management industry have been spent in practitioner, consultant and vendor/partner roles. As practitioner, he managed payroll for a 5,000-person bank in New Jersey. As consultant, he spent 8 years advising customers in HRMS, and payroll and benefits system design as well as acquisition strategies. Bob also built a strategic HCM advisory practice for Xcelicor (later acquired by Deloitte Consulting.)