Coronavirus: How Will Emergency Sick Leave and Family Leave Affect Ministry Payroll?
A new federal law provides paid sick leave and other benefits to thousands of U.S. employees affected by the COVID-19 outbreak. Generally, the Families First Coronavirus Response Act (“Act”) applies to a number of public employees and to private businesses with fewer than 500 employees. There is no specific exemption in the Act for religious organizations (although some small businesses with fewer than 50 employees may apply for an exemption), so it may also affect many ministries.
We’re examining how these measures could affect Christian churches, schools, and nonprofits who rely on Brotherhood Mutual for insurance coverage and on MinistryWorks® for assistance with payroll. Many details about implementation are still not known. Like you, we continue seeking expert guidance and will update these materials as new details emerge. Here are answers to some questions you may have about the new law.
UPDATE: Tax Credits Expire End of September 2021
The paid sick and family leave credits, described in Emergency FMLA Expansion Act section below, reimburse eligible employers for the cost of providing paid sick and family leave for reasons related to COVID-19.
On July 29, 2021, the IRS clarified its intention regarding the paid sick and family leave tax credits under the American Rescue Plan Act of 2021 (ARP). The updates to the FAQs clarify that eligible employers can claim the credits for providing leave to employees to accompany a qualifying individual to receive a COVID-19 vaccination or to care for qualifying individual recovering from the immunization. To read more about who qualifies, see “8. What are ‘qualified sick leave wages’?” on the Tax Credits General Information page. The revised FAQs make clear this applies to those recovering from a COVID-19 vaccination. Comparable credits are available for self-employed individuals.
The tax credits under the Act, as amended and extended by the Tax Relief Act, covered leave takenbeginning April 1, 2020, through March 31, 2021. The ARP amends and extends these credits to leave taken beginning April 1, 2021, through September 30, 2021.
The FAQs include information on how eligible employers may claim the paid sick and family leave credits, including how to file for and compute the applicable credit amounts, and how to receive advance payments for and refunds of the credits. Under the ARP, eligible employers, including ministries with fewer than 500 employees may claim tax credits for qualified leave wages and certain other wage-related expenses (such as health plan expenses and certain collectively bargained benefits).
Overview: The Families First Coronavirus Response Act
The Families First Coronavirus Response Act (“Act”) requires qualifying employers to provide paid leave for certain employees affected by the COVID-19 pandemic if those employees are unable to work or telework. It also expands the Family and Medical Leave Act and provides emergency federal funds for such things as COVID-19 testing, unemployment compensation, and nutrition assistance programs. The Act was signed into law on March 18, 2020. It takes effect April 1 and expires on December 31, 2020.
The Act requires qualifying employers to provide paid and unpaid leave to certain employees affected by the COVID-19 pandemic. There are two components to the Act’s sick leave provision: Emergency paid sick leave and an expansion of the Family Medical Leave Act (FMLA). The Act provides refundable tax credits to fund the emergency measures. It may also allow businesses with fewer than 50 employees to apply for an exemption if compliance would jeopardize the viability of a business. At this time, it’s unclear how to apply for this exemption. The U.S. Department of Labor is to provide additional guidelines and regulations in April 2020.
Review the highlights and get answers to some common questions, below.
Emergency Paid Sick Leave Act
This measure requires qualified employers to provide an additional two weeks (80 hours) of paid sick time for full-time employees who are unable to work or telework because of the COVID-19 pandemic. Part-time employees can receive an amount of paid sick time equal to the average number of hours the employee works in a 2-week period.
This emergency paid sick leave is to be available for use immediately by employees, regardless of how long the employee has been employed with the ministry.
Are ministries exempt from paying emergency sick leave?
Which employees qualify for emergency paid sick leave?
Qualifying employers must provide paid sick leave in situations where the employee cannot work or telework due to any of the following circumstances:
The employee is subject to a federal, state, or local government quarantine or isolation order related to COVID-19.
The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
The employee has symptoms of COVID-19 and is seeking a medical diagnosis.
The employee is caring for an individual subject to either paragraphs (1) or (2).
The employee needs to care for a child whose school or place of care is closed or whose childcare provider is unavailable due to COVID-19.
The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and Secretary of Labor.
Can emergency paid sick leave time be tracked by your payroll service with MinistryWorks?
Yes, it can.
Should employees on COVID-19 sick leave receive their normal rate of pay?
This sick leave is paid at the employee’s regular rate of pay if the leave is taken for the employee’s own health (Categories 1, 2, or 3 listed above). Benefits are capped at $511 per day and $5,110 total.
For employees who use this leave to care for others (Categories 4, 5, and 6 listed above), the benefit is provided at two-thirds of the employee’s regular rate of pay. Benefits are capped at $200 per day and $2,000 total.
Must employees prove that they qualify for paid COVID-19 leave?
Ministry leaders will want to note that the there are no certification requirements under the Act. However, you may require an employee to follow reasonable notice procedures when he or she opts to take paid sick leave.
Can I require the person requesting sick leave to find a replacement?
Ministries cannot require an employee using emergency paid sick leave under this act to search for or find a replacement employee to cover the hours he or she would have worked.
Must employees exhaust other time-off benefits before receiving paid sick leave for COVID-19?
Ministries may not require an employee to use other paid leave benefits, such as vacation or sick time, before using paid sick leave under this Act. The Act allows employees to use the new paid sick time first.
May our ministry deny an employee’s request for emergency paid sick leave?
Failure of qualifying employers to provide emergency paid sick leave could subject the ministry to monetary penalties.
Additionally, an employer may not discipline, discharge, or discriminate in any other manner against an employee who takes paid sick leave pursuant to the Act.
Emergency FMLA Expansion Act
This emergency expansion of the Family Medical Leave Act (E-FMLA) requires qualifying employers to provide up to 12 weeks of protected leave to employees caring for children under the age of 18 whose schools or childcare providers have been closed due to the COVID-19 crisis.
Qualifying employers must provide limited paid leave to employees during these absences. The law gives employers refundable tax credits to cover the cost of providing paid E-FMLA leave to employees (see the update about tax credits at the beginning of this article).
Does the E-FMLA provide paid or unpaid leave?
The first 10 days of E-FMLA leave are unpaid. After that, employers must provide up to 10 weeks of paid leave. Please note that employees have the right to use Emergency Paid Sick Leave (described above) during the first 10 days of E-FMLA leave. Qualifying employers must offer employees this option.
How much do we pay employees during the “paid” portion of E-FMLA leave?
After the first 10 business days (two weeks) of E-FMLA leave have been completed, employers are to pay at least two-thirds of an employee’s regular rate of pay, subject to certain limits. The Act caps payment at $200 per employee per day and at $10,000 for the length of an employee’s E-FMLA leave.
Can an employee used emergency paid sick time during the “unpaid” portion of E-FMLA leave?
An employee can choose to use emergency paid sick leave, described above, for the first 10 business days of E-FMLA leave.
Is there a waiting period for eligibility?
The E-FMLA benefit is available to any employee who has been employed with the ministry for at least 30 days.
If you’re a MinistryWorks client, please direct questions to your ministry’s personal payroll specialist. They’re available, Monday-Friday, from 8 a.m. to 4:30 p.m. daily. If you cannot reach your payroll specialist directly, call MinistryWorks’ toll-free hotline: 866.215.5540. A receptionist will direct your call to a person who can help you.
If you’re not a MinistryWorks client, and you wonder how the Act’s provisions might apply to your situation, consider contacting the Department of Labor or the Department of Treasury at the telephone numbers below. You may also wish to review information for ministries related to COVID-19 in Brotherhood Mutual’s Safety Library: brotherhoodmutual.com/coronavirus.
The information provided in this article is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. We strongly encourage you to regularly consult with a local attorney as part of your risk management program.
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