Families First Coronavirus Response Act (FFCRA)

Update to Clients Regarding Covid-19 Enacted Legislation

Posted by Alan F. Burke, CPA, PA on March 23, 2020

We continue to keep up with the daily changes and updates regarding governmental relief in regards to the Covid-19 virus.  This notice is an attempt to keep you informed of what we understand to be actual enacted rules and regulations.  We are not addressing what we understand to be proposals, opinions and/or speculations.

On Thursday March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was passed and signed by President Trump.  This legislation is primarily to support businesses with fewer than 500 employees who continue to pay employees who are not working (neither on-site nor tele-working) due to:

1. Employee Subject to quarantine or isolation order
2. Employee who has been advised by a health provider to self-quarantine,
3. Experiencing symptoms and seeking diagnosis,
4. Caring for an individual subject to quarantine or isolation order, or
5. Caring for a child whose school has been closed

A very important provision of this act is that it does not come into effect until 15 days after enactment (March 18, 2020).  Therefore, these provisions appear to only apply after April 2, 2020.  We believe there will be additional guidance forthcoming, and we will continue to update and advise or clients as we obtain additional guidance.

The FFCRA is designed to reimburse employers who continue to pay their employees even though the employee is not working due to one of the five reasons mentioned above.  The mechanism to do this is through tax credits against payroll tax deposits (i.e. subtract from Form 941 deposits) and if the credits exceed the total Form 941 deposit requirements, the excess would be refunded after filing the quarterly payroll tax reports.

There are numerous requirements that include continuing to pay the affected employee a certain specific percentage of their normal compensation (in some cases required to be 100% of their compensation).  There are also limits in the reimbursement (for example, for qualifying reasons 1-3, the maximum is $511/day – $5,110 total; for qualifying reasons 4-5, the maximum is $200/day – $2,000 total).

Recap:

Due to the deferral of enactment to April 2, 2020, we recommend documenting every employee who is not coming to work due to one of the reasons above and notify your contact at our office that you have one of these situations and you are in a position to consider continuing to pay them, even though they are not actually working.