On Friday, the House passed the Families First Coronavirus Response Act, which is designed to give relief to people and businesses affected by Covid-19. It passed, CNN reports, after "intense negotiations between House Speaker Nancy Pelosi and the Trump administration." It passed by a vote of 363-40, which means it had bipartisan support. We can expect that the Senate will pass the bill (although undoubtedly with modifications).
It specifically amends the Family Medical Leave Act (FMLA), giving some key changes. The most important is that this affects all companies with fewer than 500 employees--it doesn't have the 50-employee floor that FMLA has. However, the Department of Labor has the ability to exempt small businesses if they can show this would cause financial hardship. These changes do not affect larger businesses with over 500 employees. This means that your mom-and-pop shop with three employees is affected, while Google is not.
Changes to FMLA
- It amends the definition of employee to anyone who has been employed by an employer for at least 30 days.
- It changes the definition of employer from "50 or more employees" to "fewer than 500 employees."
- It expands the definition of parent to include foster and adoptive parents, step-parents, parents of a domestic partner, parental in-laws, guardians, and those who stood in loco parentis.
- It provides leave to provide care for a family member who is under a coronavirus-related quarantine.
- It provides leave to care for a minor son or daughter of an employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, related to coronavirus.
- It expands the definition of family member to include next of kin and grandparents.
- It provides that leave after the first 14 days of any coronavirus-related family leave. It is to be paid in an amount that is not less than two-thirds of an employee's regular rate of pay for the number of hours the employee otherwise would have worked.
- It requires job restoration following any such leave for any employee of an employer with 25 or more employees.
The school closures are especially important as countless school districts have closed across the country.
FMLA is specifically unpaid leave, but the Families First Coronavirus Response Act provides 80 hours of paid coronavirus-based leave. This means that you won't need to provide pay for someone who has cancer, but you will for someone who is quarantined for coronavirus.
First 14 days
The first 14 days of leave may be unpaid, but an employee can choose to substitute accrued vacation leave, personal leave, or other medical or sick leave during the leave. The employer cannot force an employee to use their accrued paid leave.
After the first 14 days
After 14 days of unpaid leave, employers must pay FMLA leave (only for the reasons above) at no less than two-thirds the employee's regular rate of pay for the number of hours the employee would have been normally scheduled.
How will businesses pay for this?
The bill provides tax credits for businesses that provide benefits for companies and self-employed individuals who are affected by coronavirus. It can cover up to 100 percent of qualified paid sick leave, for employers, and a 67 percent refundable tax credit for self-employed people caring for a child or family member. For the self-employed, the benefits are capped at either $200 per day or the average daily income rate, whichever is smaller.
These things, obviously, will help many employees and small-business owners and the self-employed. However, it won't cover all costs 100 percent.
Other benefits in the bill
Not everything is expressly employment related. This bill also provides additional funding for children who lose school lunches, SNAP, veterans benefits, and so forth. The House produced a readable summary that can help you see what is available.
Why aren't large businesses included?
The bill doesn't specify why the bill only covers employers up to 500 people. Perhaps there is another bill brewing that will cover the big employers. In 2016, 48.6 percent of employees worked for businesses with less than 500 people. So, this bill covers almost half of the population.
It's also possible that Pelosi and Trump felt that large businesses didn't need tax breaks to help their employees through this crisis. We will have to wait and see what happens.
The bill is not yet the law. The Senate will need to hold hearings, and if they pass it with changes, it will have to go to a conference committee before landing on President Trump's desk. However, given the current bipartisan support and the president's promise to sign it, you can expect that this will become law shortly.
As of Wednesday, March 18, a modified version of this bill has passed both the House and the Senate and President Trump signed it. It goes into effect 15 days after the signature.