As part of the Families First Coronavirus Response Act, Congress for the first time would mandate that employers provide paid sick and family leave. On top of that, large portions — but not all — of the pay to employees during leave would be subsidized through refundable tax credits to employers.
After parsing the language of the House-passed version of the bill (H.R. 6201) and doing the math, the following highlights emerge:
The personal and family health conditions that trigger employee eligibility for coronavirus sick and family leave are far from stringent.
For reasons that challenge conventional policy and political wisdom, businesses with 500 or more employees are exempt from requiring coronavirus paid leave. In 2019, out of a total U.S. private-sector workforce of 124 million, 59 million (48 percent) were employed by business with more than 500 employees.
The secretary of labor can exempt businesses with fewer than 50 employees from the requirement to provide 10 weeks of paid family leave (but not from the requirement to provide two weeks of sick leave) if “the imposition of such requirements would jeopardize the viability of the business as a going concern.” In 2019, 34 million (27 percent of the private sector workforce) were employed by businesses with fewer than 50 employees.
Depending on the circumstances (more below), employers must provide paid leave equal to 100 percent or two-thirds of an employee’s regular rate of pay for up to 12 weeks.
Employers can receive credits (against payroll tax) equal to 100 percent of leave pay. Self-employed individuals can receive credits (against income tax) equal to 100 percent of leave pay. But, importantly, there are caps. If the employer is required to provide leave pay equal to 100 percent of regular pay, the credit is limited to $511 per employee per day. If the employer is required to provide leave pay equal to two-thirds of regular pay, the credit is limited to $200 per employee per day. This means paid leave of low- and middle-pay workers is completely subsidized. Part of the burden of higher-paid workers is not subsidized with credits and therefore must be shouldered by employers.
Are You Eligible?
H.R 6201 distinguishes between sick leave and family leave. The biggest substantive difference is that sick leave applies to the first two weeks of coronavirus paid leave. Family leave refers to weeks three through 12 of coronavirus paid leave.
Sick leave can be divided into two parts. The first addresses what we will call here “self-care” coronavirus issues. The second we can call “family-care” coronavirus issues. You get more paid leave and your employer gets more tax credits if you and not your family members have the coronavirus-related problem.
An employee can get self-care paid sick leave: (1) to self-isolate because the employee is diagnosed with the coronavirus; (2) to obtain a medical diagnosis or care if experiencing the symptoms of the coronavirus; (3) to comply with a recommendation or order by a public official with jurisdiction or a healthcare provider on the basis that the physical presence of the employee on the job would jeopardize the health of others because of the exposure of the employee to the coronavirus; or exhibition of symptoms of the coronavirus by the employee. Employees in this category can get full paid leave for two weeks. Employers can get corresponding tax credits limited to $511 per day per employee.
An employee can get family-care paid sick leave (1) to care for or assist a family member who is self-isolating because such family member has been diagnosed with the coronavirus or is experiencing symptoms of the coronavirus and needs to obtain a medical diagnosis or care; (2) to care for or assist a family member when a public official or a healthcare provider makes a determination that the presence of the family member in the community would jeopardize the health of other individuals in the community because of the exposure of such family member to the coronavirus or exhibition of symptoms of the coronavirus by such family member; (3) to care for the child of such employee if the school or place of care has been closed, or the child care provider of such child is unavailable because of the coronavirus. Employees in this category can get two-thirds pay for two weeks. Employers can get tax credits limited to $200 per day per employee.
Family leave eligibility encompasses all the circumstances described in the prior two paragraphs. The difference is that the family paid leave for an employee and corresponding employer tax credit come into effect after two weeks of sick leave has expired, that is, in weeks three through 12. Employees in this category can get two-thirds pay for up to 10 weeks (three through 12). Employers can get corresponding tax credits limited to $200 per day per employee.
Although there is tremendous uncertainty about the future spread of the coronavirus across the U.S. population and the about duration of the crisis, it is certainly possible that broad swaths of the U.S. workforce will qualify for paid leave and that this leave could be of a duration of many weeks. However, as noted previously, you do not qualify for any paid leave if your employer has more than 500 employees, and you do not qualify for paid family leave if your employer has fewer than 50 employees. Other private sector employees — that is, of employers with between 50 and 500 employees — as well as government employees and the self-employed do qualify for benefits.
Crunching the Numbers
Table 1 shows calculations of sick and family leave pay and corresponding employer tax credits for an employee with $50,000 of annual wages. During the first two weeks of leave, the employee may be eligible for leave pay equal to 100 percent or two-thirds of normal wages. If 100 percent, leave pay per day is $192.30. The employer is entitled to a credit subject to a $511-per-employee-per-day cap. The cap is not binding. If two-thirds, leave pay is $128.20. The employer is entitled to a credit subject to a $200-per-employee-per-day cap. The cap is not binding. For weeks three through 12, leave pay is two-thirds ($128.20) of normal pay. The $200 cap is not binding. The employer is totally compensated for leave pay through refundable credits.
| Sick Leave | Sick Leave | Family Leave |
|---|---|---|---|
1st Possibility: | 2nd Possibility: | Either Self-Care or Family Care | |
Employee Characteristics: | |||
Annual pay | $50,000 | $50,000 | $50,000 |
Weekly pay (52 weeks) | $962 | $962 | $962 |
Daily pay | $192 | $192 | $192 |
Nontax Portions of H.R. 6201: | |||
Leave pay fraction (minimum) | 100% | 66.7% | 66.7% |
Leave pay (daily) | $192.3 | $128.2 | $128.2 |
Total possible weeks | 2 | 2 | 10 |
Tax Credits: | |||
Tax credit rate | 100% | 100% | 100% |
Daily credit (wage) cap in H.R. 6201 | $511 | $200 | $200 |
Tax credit (daily) | $192.3 | $128.2 | $128.2 |
Total possible credit | $1,923.1 | $1,282 | $6,410 |
Limit applies? | not limited | not limited | not limited |
Unsubsidized required pay (daily) | $0 | $0 | $0 |
Total possible unsubsidized required leave pay | $0 | $0 | $0 |
Table 2 shows calculations of sick and family leave pay and corresponding employer tax credits for an employee with $100,000 of annual wages. During the first two weeks of leave, the employee may be eligible for leave pay equal to 100 percent or two-thirds of normal wages. If 100 percent, leave pay is $384.60. The employer is entitled to a credit subject to a $511-per-employee-per-day cap. The cap is not binding. If two-thirds, leave pay is $256.40, and the employer is entitled to a credit subject to a $200-per-employee-per-day cap. The cap is binding. For weeks three through 12, leave pay is two-thirds ($256.40) of normal pay. The $200 cap is binding. The employer is totally compensated for sick leave pay only if the employee is engaged in self-care. Otherwise, for other leave pay, the employer bears part of the burden.
| Sick Leave | Sick Leave | Family Leave |
|---|---|---|---|
1st Possibility: | 2nd Possibility: | Either Self-Care or Family Care | |
Employee Characteristics: | |||
Annual pay | $100,000 | $100,000 | $100,000 |
Weekly pay (52 weeks) | $1,923 | $1,923 | $1,923 |
Daily pay | $385 | $385 | $385 |
Nontax Portions of H.R. 6201: | |||
Leave pay fraction (minimum) | 100% | 66.7% | 66.7% |
Leave pay (daily) | $384.6 | $256.4 | $256.4 |
Total possible weeks | 2 | 2 | 10 |
Tax Credits: | |||
Tax credit rate | 100% | 100% | 100% |
Daily credit (wage) cap in H.R. 6201 | $511 | $200 | $200 |
Tax credit (daily) | $384.6 | $200 | $200 |
Total possible credit | $3,846.2 | $2,000 | $10,000 |
Limit applies? | not limited | limited | limited |
Unsubsidized required pay (daily) | $0 | $56.4 | $56.4 |
Total possible unsubsidized required leave pay | $0 | $564.1 | $2,820.5 |
Table 3 shows calculations of sick and family leave pay and corresponding employer tax credits for an employee with $150,000 of annual wages. During the first two weeks of leave, the employee may be eligible for leave pay equal to 100 percent or two-thirds of normal wages. If 100 percent, leave pay is $576.90. The employer is entitled to a credit subject to a $511-per-employee-per-day cap. The cap is binding. If two-thirds, leave pay is $384.60, and the employer is entitled to a credit subject to a $200-per-employee-per-day cap. The cap is binding. For weeks three through 12, leave pay is two-thirds ($256.40) of normal pay. The $200 cap is binding. The employer is only partially compensated for all forms of paid leave under the bill.
| Sick Leave | Sick Leave | Family Leave |
|---|---|---|---|
1st Possibility: | 2nd Possibility: | Either Self-Care or Family-Care | |
Employee Characteristics: | |||
Annual pay | $150,000 | $150,000 | $150,000 |
Weekly pay (52 weeks) | $2,885 | $2,885 | $2,885 |
Daily pay | $577 | $577 | $577 |
Nontax Portions of H.R. 6201: | |||
Leave pay fraction (minimum) | 100% | 66.7% | 66.7% |
Leave pay (daily) | $576.9 | $384.6 | $384.6 |
Total possible weeks | 2 | 2 | 10 |
Tax Credits: | |||
Tax credit rate | 100% | 100% | 100% |
Daily credit (wage) cap in H.R. 6201 | $511 | $200 | $200 |
Tax credit (daily) | $511 | $200 | $200 |
Total possible credit | $5,110 | $2,000 | $10,000 |
Limit applies? | limited | limited | limited |
Unsubsidized required pay (daily) | $65.9 | $184.6 | $184.6 |
Total possible unsubsidized required leave pay | $659.2 | $1,846.2 | $9,230.8 |
Spreadsheet Available
Readers are invited to examine different scenarios in addition to those in Tables 1, 2, and 3, by downloading a spreadsheet.