The Families First Coronavirus Response Act (“FFCRA”) was enacted as HR 6201 and signed into law on March 18th, 2020. The Act consists of three divisions which are relevant to the provision of family and medical and sick leave and providing for tax credits in connection with the mandatory family and medical and sick leave. Division C is entitled the Emergency Family and Medical Leave Expansion Act (“EFMLEA”). This division amends the Family Medical Leave Act (“FMLA”) to include certain required leave in connection with sickness and family care requirements associated with the coronavirus COVID-19. Division E of the FFCRA is entitled the Emergency Paid Sick Leave Act (“EPSLA”) and it provides certain mandatory sick leave payments by employers to employees who are affected by the COVID-19 virus. Division G provides for tax credits for the paid sick and paid family medical leave, so that it should be read together with Division C and Division E so as to provide the federal tax credits for payments made by employers under Division C and Division E. The FFCRA and the divisions thereunder generally apply for the period April 1st, 2020 thru December 31st, 2020.


The Emergency Family Medical Leave Expansion Act adds a provision to the FMLA to apply during the period April 1st, 2020 to December 31st, 2020 because of a qualifying need related to a public health emergency.  FFCRA Section 3102, the Expansion Act, adds at the end of FMLA Title 1 a new section Section 110 Public Health Emergency Leave. That section defines an eligible employee as a person who has completed 30 days of employment with the employer and who requests leave. An employer is defined to include a private person who employs fewer than 500 employees and a government employer; note that 500 is substituted for 50 or more employees in the definition of an employer that is subject to FMLA. Note further that this expanded definition of an employer only applies for qualifying needs related to the public health emergency associated with the COVID-19 virus.

In determining whether an employer has fewer than 500 employees, different employer entities may be aggregated under the FFCRA.  The 500-employee threshold is determined by aggregating employees of employers.  For the family and medical leave expansion, the test is determined by looking at the FMLA integrated employer test. This test is different from the common control rules that apply for employee benefit purposes. The FMLA rules are not as broad, and employers may not be aggregated necessarily even though they would be aggregated under the employee benefit rules of IRC Section 414(b) and (c).  Leased employees are covered, as well as part time and temporary employees.

The CARES Act, which was passed after the FFCRA, changed the 30-day rule for rehired employees.  An employee laid off March 1, 2020 or later, who worked for 30 out of 60 days prior to the layoff, and who was rehired is entitled to paid leave.

The EFMLEA provides for required leave payments to be made by an employer where the qualifying need is related to the public health emergency, the employee is unable to work or telework due to a need for leave to care for a child under 18 if the child’s school or place of care has been closed or the child’s care provider is unavailable due to the public health emergency.  A public health emergency is defined as an emergency with respect to COVID-19 declared by federal, state or local authority. A childcare provider is defined as a person who provides childcare services for compensation on a regular basis. Schools affected are elementary or secondary schools.

Generally, private employers with fewer than 500 employees and governmental employers are included; however, the Department of Labor (“DOL”) can exclude in its regulations employees of healthcare providers and emergency providers from the definition of eligible employees, and the DOL has indicated that this exclusion will be fairly broad. The DOL can also exclude small businesses with fewer than 50 employees if requiring them to provide the leave would jeopardize the viability of the business as a going concern.  It has been speculated that such a determination would be made on a case by case basis, in which situation there would inevitably be long delays; for that reason, such employers should not rely on the potential exemption unless and until further guidance is provided by DOL. Under the CARES Act, passed after the FFCRA, the Office of Management and Budget may exclude certain U.S. government employees from the paid leave requirement for good cause.

Under the EFMLEA, employers must extend leave to employees for an initial 10 days, but do not have to pay the employees for those initial 10 days. The employees may elect to substitute paid leave for this unpaid leave. After the 10 days unpaid leave is over, the employer is required to provide paid leave for the next 10 weeks in an amount not less than two-thirds of regular pay multiplied by the number of hours that the employee is regularly scheduled to work, but not in excess of a dollar limit per day per employee.  Both full time and part time employees are required to be provided the leave.  The amount required to be paid to an employee cannot exceed $200 per day or an aggregate of $10,000 per person. For employees who are not full-time and who have varying hours, the employer would look at the number of hours scheduled over the six-month period ending on the date that the leave started, including leave time, or if the employee did not work for at least six months, the amount of time that the employee reasonably expected to work determined as of his date of hire.

Employees are required to provide notice to the employer, but only as is practicable, which means that many employees may not be providing notice until such time as they actually go on leave.  Employers are expected to work with employees with regard to the notice requirement. That is, the regular employee notice requirement under FMLA is made less strict.  Employers are required to provide notice to employees of their rights under the Act, and the DOL will provide a sample notice for employers to distribute or post for the employees.

Employees also have an opportunity for restoration to their position under FMLA when the employee takes leave. This does not apply if an employer has less than 25 employees, if the employee takes leave as a result of circumstances caused by the public health emergency, and the employee’s position does not exist when the employee seeks to return to employment as a result of circumstances caused by the public health emergency during the period of leave. The employer must make reasonable efforts to restore the employee to the position or to a position with equivalent benefits, pay and other terms of employment. If the employer fails to find such work for the employee, the employer must keep the employee informed and attempt to find the employee a position for the next one-year period.

For union employees covered under a multiemployer bargaining agreement, leave may be funded through a funded leave plan under the multiemployer fund. If that is the case, then the employer satisfies the obligation under EFMLEA by making contributions to the fund and the employee has the right to ask the fund for payments in connection with such leave.

Employers who have employees who are healthcare providers or who are emergency responders may elect not to make such emergency leave payments and to exclude such employees from the consequences of the EFMLEA.


Division E of the FFCRA provides for emergency sick leave. Employers are required to provide each employee with paid sick time to the extent the employee is unable to work (or telework) due to the need for leave as a result of: 1) quarantine or isolation order related to COVID-19, 2) advised by a healthcare provider to self-quarantine; 3) employee is experiencing symptoms of COVID-19 virus and is seeking diagnosis; 4) employee is caring for an individual who is quarantined or isolated or advised by a healthcare provider to self-quarantine; 5) the employee is caring for a child if the school or the child’s place of care is closed or the provider is unavailable due to COVID-19 precautions; and 6) the employee is experiencing similar conditions in accordance with rules issued by the Department of Health and Human Services. However, the employer of healthcare providers or emergency responders may elect to exclude such employees from the emergency leave payment.

The paid sick leave for a full-time employee is 80 hours of paid sick leave, and for a part-time employee is payment for the number of hours that the employee works on average over a two-week period. There is no carryover from one year to the next. This sick leave requirement terminates beginning with the next scheduled work shift immediately following the termination of the need for paid sick time. The employer may not request the employee to obtain a replacement worker or to use any other leave besides the EPSLA leave.

All employees are entitled to the emergency paid sick leave, including newly hired employees.

Employers are required to provide a notice to employees and the DOL will issue model notices. The employer may not retaliate against the employee for the use of leave or for making a claim or complaint.

The EPSLA terms are enforced as if the failure to pay the sick leave was a failure to pay minimum wages under the Fair Labor Standards Act (“FLSA”). The termination of an employee who makes the leave claim would be a violation of the FLSA and would be enforceable under the FLSA.

An employer who is covered by a collective bargaining agreement under which employees are covered by a multiemployer fund that provides for leave may in fact satisfy the obligation under the Act by making payment to the fund. The employee would have the right to go against the fund for any leave payments.

Employees keep all of the other rights under the law under the collective bargaining agreement or under employer policy. However, the employee may not request payment for unused sick leave (under the EPSLA) if he voluntarily terminates employment. Under the EPSLA all employees are covered.  Private employers with under 500 employees are covered as well as all public agencies regardless of the number of such employees.  The calculation of the number of employees is made in the same manner as for the EFMLEA, except that when aggregating employers, the FLSA test is applied.

The calculation of the paid sick leave is based on the employee’s regular compensation and the number of hours normally scheduled to work. If the payment is made for reasons 1 thru 3 above, the payment may not exceed $511 per day or an aggregate of $5,110. If the payment is made for reasons 4, 5 and 6 (generally for care for children and others) the rate of payment may not exceed $200 per day with a maximum of $2,000 in the aggregate per employee. Required compensation for the purposes of the paid leave is the greater of the employee’s regular rate of pay or the minimum wage under the FSLA, either state or federal. For the care of a family member the rate of pay is two-thirds of the regular rate of pay. Employees with varying schedules would have the six-month average utilized. The DOL is supposed to provide guidance on the calculations of these amounts. Employees are required to provide reasonable notice.

The DOL is permitted to issue regulations relating to the exclusion of healthcare providers and emergency responders. The DOL can also exempt businesses with fewer than 50 employees if the payment of such sick pay would jeopardize the employer’s ability to continue as a going concern. The DOL can also coordinate the rules under Division E with those under Division C (EFMLEA).


Division G of the FFCRA provides for a payroll credit for required paid sick leave. The credit is a credit against the tax imposed by IRC Section 3111(and 3221), which is the employment taxes associated with Social Security or the Railroad Retirement Tax Act. The credit is calculated for each calendar quarter. The amount of the credit is equal to 100 percent of the “qualified sick leave wages” paid by the employer with respect to such calendar quarter. The qualified sick leave wages with respect to any individual cannot exceed $200 per day, or for any person who is quarantined or isolated, or who has been advised by a healthcare professional to self-quarantine, or who is symptomatic and is seeking diagnosis, no more than $511 per day for any day or portion thereof for which the individual is paid qualified sick leave wages. The number of days for which the credit applies will not exceed 10 days. The credit is limited to employment taxes on wages paid in respect to all employees of the employer. However, if the amount of the credit as calculated would exceed the amount of employment taxes for the quarter then the excess should be treated as an overpayment of employment taxes that shall be refunded under the rules for refunding employment taxes, IRC Section 6402 (and 6413).  Although the statute limits the credit to employment taxes,  the IRS has issued guidance in I.R. 2020-57, under which both the employer’s and the employee’s share of the Social Security and Medicare taxes, as well as Federal income tax withholding, can be used as the source of the credit.  In short, the limit to employment taxes does not prevent the employer from getting the benefit of the credit.

Qualified sick leave wages include regular 3121(a) wages and 3231(e) compensation paid by the employer which are required to by paid under the EPSLA.

Note further that the qualified sick leave wages are increased by the employer’s “qualified health plan expenses” which are properly allocable to the qualified sick leave wages.  Qualified health plan expenses are amounts paid or incurred by an employer to provide and maintain a group health plan but only to the extent the amounts are excluded from gross income under IRC Section 106(a). The allocation of health plan expenses among employees some of whom are provided the leave payments and some of whom are not may be paid on a pro rata basis among covered employees and may be made pro rata on the basis of periods of coverage relative to the employees who are recipients of the sick leave payments.

Double benefit of the credit is avoided by increasing the gross income of the employer by the amount of the credit. The employer may elect not to have the credit provisions apply; in which case the employer will not be subject to such limit. Finally, the credit does not apply to governmental employers. The Secretary of the Treasury is permitted to issue regulations intended to eliminate the credit for employers who avoid the purposes of the Act, to minimize record keeping, to waive penalties for failure to deposit amounts in anticipation in allowance of the benefit, recapture of the credit to the extent of any adjustments to the credit amount and the definition of what constitutes wages under the EPSLA.

Section 7002 of the FFCRA provides credit for sick leave for certain self-employed individuals. The amount of the credit is the qualified sick leave equivalent amount, and it is available to be taken against the self-employment tax. It applies for an eligible self-employed individual who carries on a trade or business regularly and who would be entitled to paid leave under the EPSLA if he were an employee of an employer other than himself.  The qualified sick leave equivalent amount is determined by taking the number of days the individual was unable to perform services in the trade or business for the reasons related to the Coronavirus multiplied by the lesser of $200 per day or sixty-seven percent of the average daily self-employment income for leave needed to take care of children or the lesser of $511 per day or 100 percent of the average daily self-employment income for leave taken in connection with quarantine or isolation, or a healthcare provider’s recommendation of self-quarantine, or symptoms of COVID-19 and an effort to seek a diagnosis.

Average daily self-employment income includes the net earnings for self-employment for the taxable year divided by 260. The number of days for which the payment is made equals the excess of 10 days over the number of days taken in the preceding year. The credit is a refundable credit and it applies to self-employment taxes that would ordinarily be due for the calendar quarter, of if the amount involved exceeds the self-employment tax then the credit can be refunded. The self-employed individual is required to provide documentation to maintain this documentation. Interestingly enough, Treasury is permitted to issue regulations to effect the purpose of the sick leave and to minimize record keeping.

Section 7003 of the FFCRA provides a payroll credit for required paid family leave. The credit is against the payroll tax of an amount equal to 100 percent of the qualified family leave wages. The maximum amount of the credit is $200 times the number of days up to a maximum of $10,000, and it is limited to employment taxes under IRC Section 3111(a) or 3221(a) reduced by credit allowed the employer for employment of qualified veterans and for research expenditures and by credits under Section 7001 which is the credit for required paid sick leave. The credit can be taken against the wages with respect to the employment of all employees not just the persons who took the sick leave. If after the wages of all the employees are taken into account, there remains an excess credit over the limit then that amount is refundable under the IRS rules relating to credits and refunds, IRC Sections 6402(a) and 6413(b), which give broad latitude to the Treasury to determine.  See guidelines under IR 2020-57.

Employers for whom the credit applies would be private employers with fewer than 500 employees, calculated in the same manner as for FMLA.  However, if an employer has 500 or more employees, the employer could still have the credit under IRC sec. 45S (pre-FFCRA law) available if the conditions for the credit were satisfied.

Qualified family leave wages include regular wages under IRC Section 3121 and compensation under the Railroad Retirement Tax Act, IRC section 3231(e) that are required to be paid by the EFMLEA. In addition, health plan expenses increase the credit by the amount that the employer spends to provide and maintain health plan to the extent that the health plan expenditures on behalf of the covered employees are excluded from income under IRC Section 106(a). In determining the amount attributable to an employee who receives paid leave, an allocation is made pro rata among all employees and over the time the employees received the paid leave. In order to avoid a double benefit, the gross income of the employer is increased by the amount of the credit. Wages paid under EFMLEA are not taken into account for purposes of the credit given under the FMLA paid leave provisions as it existed before the adoption of the FFCRA.

Note that the employer may elect not to have the tax credit section apply and may make this election on a quarterly basis. The credit does not apply to governmental employers.

Treasury regulations may be issued to prevent the avoidance of the purpose of the credit, to minimize record keeping, to waive penalties for failure to deposit amounts in anticipation of the allowance of the credit, to recapture credits resulting from a subsequent adjustment, and to conform with the EFMLEA.

Section 7004 provides credit for family leave for certain self-employed individuals. As discussed with respect to Section 7002, the credit is applied against the self-employment tax that applies to an eligible self-employed individual who regularly carries on a trade or business and who would be entitled to leave if he were employed by an employer rather than self-employed. The amount of the self-employment pay cannot be greater than the lesser of the average daily self-employment income multiplied by the number of days not greater than 50 and by sixty-seven percent, or $200 per day maximum. The average daily self-employment income is equal to the net earnings from self-employment divided by 260. If the credit exceeds the amount of the self-employment tax, then the application can be made for refund. The self-employed individual must provide and retain documentation demonstrating that he is entitled to the credit.

Finally, and not insignificantly, FFCRA Section 7005 provides that the sick leave payments and family leave payments are not considered wages under IRC Section 3111(a) or 3221(a). Thus, payroll tax does not apply on the sick leave or family leave payments. This would also have the consequence of not making such amounts includable in compensation for purposes of a qualified plan contributions, where the definition of compensation under the qualified plan was based on W-2 compensation or 3401(a) withholding compensation.