Many of Our clients have asked us for an analysis on the new COVID-19 related legislation enacted by the federal government and how their businesses should elect to proceed. The legislation is comprehensive and we are continuing to review the new laws without the benefit of additional guidance and regulations that will be forthcoming in the next few weeks.
The FFCRA was signed into law on March 18, 2020 and is effective April 1, 2020 while the CARES Act was enacted and effective March 27, 2020. Below is a general discussion of employee paid sick leave and unemployment related provisions of these acts. Additional information regarding other employer focused provisions of the Acts will be forthcoming. Individual facts and circumstances may differ and you are urged to call us with questions.
Paid Sick Leave
Qualification for coverage under the FFCRA is as follows:
1. Employee is subject to a federal, state, or local quarantine or isolation related to COVID-19;
2. Employee advised by health care provider to self-quarantine due to concerns;
3. Employee experiencing symptoms of COVID-19 and seeks medical diagnosis;
4. Employee is caring for individual subject to federal, state, or local quarantine or self-isolation;
5. Employee caring for employee’s child, if school or child care facility has been closed; or
6. Employee is experiencing any other substantially similar condition specified by U.S. Department of Health and Human Services
An employer can determine which of the above qualifications is implicated in determining what paid sick leave benefits are available under the Emergency Family and Medical Leave Expansion Act.
For qualifying reasons 1, 2 and 3: Employee can receive full pay, up to $511 per day; $5,110 total for ten days.
For qualifying reasons 4, 5 and 6: Employee can receive paid leave at two-thirds 2/3 employee’s regular rate of pay, up to $200 per day; $2000 total for ten days.
There is an additional child care leave credit equal to 2/3 regular pay capped at $200 per day or a total of $10,000 in aggregate. Up to 10 weeks of leave can be counted toward the child care leave credit.
A small business with fewer than 50 employees may be exempt from the requirements to provide paid sick leave or expanded family and medial leave only if it would jeopardize the business as a going concerns broadly meaning the expenses and financial obligations would exceed revenue and cause the business to cease operating at a minimal capacity; the absence of the employee results in a risk to the business due to the employee’s specialized skill or there are not sufficient workers to allow the business to operate at a minimal capacity.
Unemployment Compensation
On or after April 1, 2020 (the effective date of FFCRA), if an employer furloughs an employee, because it does not have enough work or because it is closed down completely, the above emergency family and medical leave payments do not apply but instead the employee may become eligible for unemployment.
The federal legislation expanded New Jersey’s 26 weeks of unemployment benefits to 39 weeks of unemployment benefits. In addition, the CARES Act, provides an emergency increase in traditional benefits, as the federal government will provide to states an additional $600 per week for unemployed individuals for a period of 16 weeks, which amount is in addition to the state law unemployment benefits.
Thus, if employers in New Jersey elect to furlough employees after April 1, 2020, for 12 weeks, the employee who earns an annual salary of approximately $60,000 or less, will generally earn the same amount or slightly greater amount if receiving unemployment compensation. In general, employees that earn in excess of approximately $60,000 will not have the same result based on New Jersey’s maximum unemployment benefit of $713.00 per week.
By way of example:
Employee earns $40,000 per year
$40,000/52 weeks in year = $769 per week
NJ unemployment pays 60% of salary, so $461 per week
If employee is furloughed on April 1st and returns August 1, 2020 Employee will receive
$461 x 16 weeks or $7,376 plus $600 per week x 16 weeks or $9,600
Total received from unemployment is $16,976
Amount received if working: $769 per week x 16 weeks or $12,304
NOTE: If working, the full amount is taxable to employee for Federal and State purposes.
If receiving unemployment, amount received is not subject to New Jersey tax. It will be subject to Federal tax.
By way of second example:
Employee earns $60,000 per year
$60,000/52 weeks in year = $1,154 per week
NJ unemployment pays 60% of salary, so $692 per week
If employee is furloughed on April 1st and returns August 1, 2020, Employee will receive
$692 x 16 weeks or $11,072 plus $600 per week x 16 weeks or $9,600
Total received from unemployment is $20,672
Amount received if working $1,154 x 16 weeks or $18,464
If working, the full amount is taxable to employee for Federal and State purposes.
If receiving unemployment, amount received is not subject to New Jersey tax. It will be subject to Federal tax.
Additional Resources:
Additional information from NJ website Division of Unemployment Insurance on how to calculate benefits states as follows:
If you qualify for Unemployment Insurance benefits, the amount of money you’ll get each week is called your weekly benefit rate (WBR). This amount will depend on how much you earned in the base year period before you applied for Unemployment Insurance benefits.
There are other factors that may reduce your WBR, like whether you are working part-time or collecting a pension.
Note: To be eligible for Unemployment Insurance benefits in 2020, you must have earned at least $200 per week (a base week) during 20 or more weeks in covered employment during the base year period, or you must have earned at least $10,000 in total covered employment during the base year period.
Weekly Benefit Rate (WBR)
The weekly benefit rate is capped at a maximum amount based on the state minimum wage.
For 2020, the maximum weekly benefit rate is $713. We will calculate your weekly benefit rate at 60% of the average weekly wage you earned during the base year, up to that maximum. We determine the average weekly wage based on wage information your employer(s) report.
If you are not entitled to the weekly maximum benefit amount, you may be able to increase your entitlement with dependency benefits.
If after we calculate your weekly benefit rate, you realize that we did not include wages because they were not reported by your employer(s), contact us for a monetary review. You will need to provide pay stubs as proof of your earnings.
For workers who don’t qualify with a standard base year, we have other ways of calculating a base year.
U.S. Department of Labor FFCRA Questions and Answers can be found at
https://www.dol.gov/agencies/whd/pandemic/ffcra-questions