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CARES Act: Paid Family Mandates FAQs

Do the new paid leave mandates from the Families First Coronavirus Response Act (FFCRA) exempt nonprofits?

No. The FFCRA creates two new mandates related to paid leave for employees: a) the Emergency Paid Sick Leave Act (PSLA), which requires up to two weeks of fully paid leave for any one of a number of COVID-19-related causes; and b) the Emergency Family and Medical Leave Expansion Act (EFMLA), which requires up to twelve weeks of leave (the first two weeks unpaid, the latter ten paid at 2/3 of the regular rate of pay) for leave related to the public health emergency, including to care for a child whose school or childcare facility has closed. Payments are capped and reimbursed by the federal government through advance refundable payroll tax credits. Neither mandate exempts nonprofit employers.

If I have fewer than 50 employees, am I exempted from these new mandates?

Not necessarily. Employers with fewer than 50 employees may be exempt from providing PSLA leave to an employee whose child’s school is closed or whose childcare provider is closed or unavailable, but only if “the imposition of such requirements would jeopardize the viability of the business as a going concern.” DOL has indicated that it plans to issue regulations, most likely in April, to establish criteria for this “viability’ exemption. In the meantime, due to the expected stringent governmental requirements, each employer would need to be reviewed on a case by case basis.

Employers with fewer than 50 employees may also be exempt from providing EFMLA leave, under the same “viability” standard applicable for certain types of PSLA leave. Again, employers who believe that they qualify should review relevant DOL guidance documents and, if applicable, document their determination that they should be exempt, based on available criteria.

When do these new mandates take effect?

The FFCRA’s new mandates take effect on April 1, 2020 and last for the remainder of calendar year 2020, after which point they expire. On March 24, the Wage & Hour Division of DOL published a Field Assistance Bulletin announcing that the Department would not take enforcement action against employers for violations of the FFCRA through April 17, 2020. That said, the Department has conditioned its non-enforcement policy on good-faith attempts at compliance by employers.

Are non-profits eligible for the new payroll tax credit?

Yes. Non-profits are explicitly included in this program. The bill establishes an employee retention credit for employers subject to closure due to COVID-19. The provision provides a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shutdown order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. The credit is based on qualified wages paid to the employee. For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID- 19-related circumstances described above. For eligible employers with 100 or fewer full- time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first

$10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.

Caveat: You cannot apply for the Payroll Protection Program Loan and also receive this tax credit.

What changes were made to the Social Security tax?

The bill allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees. Employers generally are responsible for paying a 6.2-percent Social Security tax on employee wages. The provision requires that the deferred employment tax be paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. The Social Security Trust Funds will be held harmless under this provision.  This is a benefit to non-profits as well, as they currently match the Social Security and Medicare withholding from their compensation to their employees.

Disclaimer: The information above, should not be considered legal or tax advice from UNYUMC or its vendors. Local churches, or other UMC employers should consult with their own counsel in considering the application to any of the Legislative Acts, in accordance to their circumstances.