In response to issues arising in connection with the coronavirus pandemic, a new federal law, the Families First Coronavirus Response Act (“Act”), was enacted on March 18, 2020 to provide paid sick leave and expand the Family and Medical Leave Act for employees who are out of work due to certain impacts of COVID-19. The nation has been awaiting further guidance from the Department of Labor (“DOL”) and the IRS as to how these new programs will be implemented. Here are a few highlights of the first round of guidance issued by the DOL (on March 20, 2020) and IRS (on March 24, 2020):

• What does the Act provide?  Certain employers must provide employees with two weeks (up to 80 hours) of paid sick leave if an employee is unable to work due to being quarantined, experiencing symptoms of COVID-19 and seeking care, caring for another person who is quarantined, or caring for a child whose childcare or school is unavailable for reasons related to COVID-19. In addition, certain employers must provide up to 10 weeks of paid family medical leave at two-thirds of the employee’s pay to care for a child whose childcare or school is unavailable for reasons related to COVID-19. 
• When does the Act go into effect?  Much to the surprise of those following the law, the DOL announced that the Act will go into effect as of April 1, 2020, not April 2, 2020, as was originally believed based on the dates set forth in the Act itself (and, no, this does not appear to be an April Fool’s joke). 
• Are the leave programs retroactive? No. Any paid leave employers have already provided prior to the Act’s effective date will not count towards the paid leave required by the Act.
• Does the Act apply to part-time employees? Yes. Part-time employees will be entitled to leave for his or her average number of hours in a two-week period. There is tentative guidance as to how to calculate averages for new employees or for employees with fluctuating schedules. 
• As an employer, how am I supposed to pay for this? To offset employers’ costs of compliance, the IRS has indicated that employers will receive 100% reimbursement for paid leave under the Act in the form of immediate dollar-for-dollar tax offsets against payroll taxes. You can read the IRS’s press release here, but you should contact your CPA for more information.

What we still don’t know:

• Small business exemption: The DOL has stated that regulations are coming to provide an exemption to businesses with less than 50 employees that may be put in financial jeopardy due to compliance with the Act. 
• Impact for employees who have already been laid off: So far, it appears that this Act may not apply to individuals who have already been furloughed or laid off (ie., prior to April 1, 2020); however, the Act applies to leave taken between April 1, 2020 and December 31, 2020. In other words, employees working reduced hours or who return to work after April 1, 2020 would be eligible for paid leave. 

Please note the guidance provided so far (as of March 27, 2020) by the DOL and IRS is merely informal in nature and is subject to change as additional or formal guidance becomes available. You can find more information from the DOL here, and you should speak with legal counsel and tax advisors if you have specific questions.