This weekend, the House of Representatives passed the Families First Coronavirus Response Act, a relief bill negotiated with the agencies and supported by the President.  On Monday night, the House of Representatives substantively modified that bill in a follow-on resolution, H. Res. 904, referred to as technical corrections.  Despite the changes, concerns have been expressed about potential gaps in the proposed legislation.  Nonetheless, it is probable that legislation providing relief to at least some affected employees and employers will pass at some point in the not too distant future.


The following provisions are included in the House bill and are likely to attract the attention of private businesses and their employees.

Emergency FMLA Expansion. The bill would require employers with fewer than 500 employees to provide employees, who have been on the job for at least 30 days, to the extent they cannot work or telework, with the right to take up to 12 weeks of job-protected leave under the FMLA to care for a child, under the age of 18, of an employee who has lost access to child care, due to coronavirus.  The original legislation would have provided broader paid leave rights for those who were subject to a required or recommended quarantine or to care for a family member subject to a required or recommended quarantine.

  • After 10 days of unpaid leave (down from 14 days in the original House-passed measure), an employer will be required to pay an employee no less than 2/3 of the employee’s usual wages up to a maximum of $200 per day and $10,000 total. The original legislation did not impose such caps on the amount of leave.
  • The technical corrections add an exception permitting employers of health care providers or emergency responders to elect to exclude such employees from these emergency leave provisions.
  • The Department of Labor (“DOL”) may also issue general hardship waivers to employers with fewer than 50 employees.
  • The restoration provisions of the FMLA do not apply to employees who take such leave if they are employed by an employer with fewer than 25 employees provided that certain conditions are met. Generally, such an employer is not required to reemploy an employee who takes leave under the bill if that employee’s job no longer exists, on account of economic conditions at least nominally related to the outbreak of the coronavirus, and the employer makes reasonable efforts to restore the employee to an equivalent position.  Most notably, the employer must also make reasonable efforts to contact the former employee for up to one year if the a position becomes available.

Emergency Paid Sick Leave. In a separate provision, the bill would require employers with fewer than 500 employees to provide employees, to the extent they cannot work or telework, with two weeks (80 hours for FT) of paid sick leave, paid at the employee’s regular rate (up to a cap of $511 per day and $5,110 total), to quarantine or seek a diagnosis for coronavirus or, paid at 2/3 the employee’s regular rate (up to a cap of $200 per day and $2,000 total) to care for a family member for such purposes or to care for a child.  The original House-backed legislation did not impose caps on the value of such leave.

  • Employers may not retaliate against employees for using this leave and may not require an employee to find a replacement to cover a missed shift.
  • Employers of health care providers or emergency responders may elect to exclude such employees from these emergency leave provisions.
  • Unlike the original legislation, the technical corrections remove the requirement that the paid sick leave required under the law be in addition to any sick time allowed under existing employer policies.
  • DOL will provide a notice outlining employee rights that employers must post.
  • DOL may also issue general hardship waivers to employers with fewer than 50 employees.

Testing.  Another provision of the bill would require private health plans to provide coverage for diagnostic testing, including the cost of a provider, urgent care center, and emergency room visits for such purposes, at no cost to the participant.

Tax Credits. The bill includes a dollar-for-dollar refundable credit in an amount equal to the sick and FMLA leave required to be paid under the bill.  The amount of the credit allowed may also be increased by an employer’s additional qualified health plan expenses that are allocable to leave wages, and by the amount of additional tax imposed for hospital insurance.  However, caps do apply ($200 per day per employee to $10,000 per employee for all calendar quarters for paid family leave and $511 per day per employee to $7,156 per employee for all calendar quarters for paid sick leave).

  • The credit is applied against the employer share of FICA taxes. It is unclear whether employers will  be able to reduce their deposit liabilities as the required leave benefits are paid or if they will have to front the cost of the leave until after the quarterly Form 941 is filed.  We anticipate IRS guidance on the implementation of the credits will be provided quickly if the measure is enacted.
  • In addition to the tax credit, amounts paid for sick and FMLA leave under the bill are not included in wages for purposes of the employer share of Social Security tax. Although the benefits are not excluded from wages for purposes of the employer share of Medicare taxes, the credit calculation will offset the employer share of Medicare tax due on the leave payments.
  • Leave payments would be subject to the withholding of both federal income tax wages (and state income tax in most states) and all employee FICA taxes.
  • No tax credit is allowed under the bill for amounts subject to the credit under section 45S, which provides a temporary income tax credit for paid family and medical leave and was added as part of the Tax Cuts and Jobs Act of 2017. The section 45S credit is only available for taxable years that began before December 31, 2019.
  • Employers of more than 500 employees are not eligible for either tax credit under the bill because they are not subject to either leave mandate.

Key Issues

The provisions of the House bill expanding leave (sick and FMLA leave) and offering tax credits to subsidize this expansion apply only to employers with 500 or fewer employees.  On the one hand, this means that small businesses, which are historically less likely to offer paid leave compared to larger employers, will be subject to a new paid leave mandate but, on the other hand, large businesses that offer existing leave programs or voluntarily expand their leave programs will not benefit from the bill’s new tax credits. Given that the current national emergency will likely result in a large increase in the amount of leave taken by employees, the lack of financial assistance in the form of tax relief may force some large employers to cut back on their leave programs or turn to layoffs or furloughs given the simultaneous restrictions on their ability to earn revenue through operations (particularly in the restaurant, entertainment, travel, and fitness industries).

The limitation of child care to care of children under the age of 18 (in the FMLA portion of the bill) would exclude parents of older children with disabilities (e.g., the parent of a child whose severe autism has kept that child in the public schools past age 18).  This gap in FMLA is striking because the definitions used in the paid sick leave portion of the bill include children who are 18 years or older and incapable of self-care because of mental or physical disability.  It is possible that the bill will be modified to account for this issue, or that administrative relief will be offered by DOL in such instances.

The bill includes special rules for union plans.  Multiemployer plans may cooperate with employers to provide both the bill’s enhanced FMLA and sick leave benefits.  Such multiemployer plans will need to carefully consider how best to integrate any such offerings into existing welfare programs.

Yesterday, conflicts between the White House and House Democrats arose over the terms of the House-passed and President Trump-endorsed bill, leading to the technical corrections.  However, Senators have indicated that the original bill, which the technical corrections pared back, may not do enough.  This creates additional uncertainty regarding what the final legislation will contain.  Senator Tom Cotton (R-Ark.) has been quoted indicating that some senators are concerned that the leave system and tax credits in the bill will put pressure on some companies to layoff workers.  He indicated that the bill doesn’t go “far enough . . . fast enough” and expressed doubt that the Senate would pass the House bill without revisions.  Nonetheless, current indications are that the Senate will look to pass the House measure without changes and focus on another stimulus bill to address senators’ concerns.