Coronavirus Response Act Q&A 3-24-20

In follow up to the Miller Johnson Q&A session on the FFCRA this morning, here are the key items we took away from the discussion.  Before I dive into specifics it is important to note that everyone from Washington to Lansing to businesses are making this up as they go, and so it is important to keep the big picture in mind.  With regards to the FFCRA the primary objectives of the act are to keep employees on payrolls and covered by group health insurance for as long as possible.  The President and others have stated that the goal is to get through this as quickly as possible and to return to “normal” with the least disruption possible. As you work through your implementation of the act, keep this in mind and it is our expectation that a lot of grace will be extended to those who are trying to do the right thing. 

  • First, there are many questions that remain unanswered which will come into focus more clearly when the DOL releases their guidance.  They have announced they plan to release additional information, including an employee notice, on Wednesday.  We will keep you posted on this as we learn more, but in the meantime you can find some basic information on their website
  • Importantly, in the view of Miller Johnson, employees who are unable to work as a result of the Governors executive order are not eligible for either the sick leave or FMLA expansion.  The justification for this is that the Governors order is not technically a quarantine or call for isolation as defined by the CDC and used in the Act.  That said, refer to my initial point in this email and don’t be surprised to see DOL guidance or additional statements by the Governor change this.  If things don’t change, the only option these employees will have is unemployment.  Keep in mind that the Governors executive order last week frees an employer from any unemployment liability as a result of other action she has or will take (see point 6 in the order) 
  • While the Act is not retroactive, don’t be surprised if you see an effort by the DOL (or future legislation) make it so.  
  • Even though the Act goes into effect on 4/2, it is possible for employers to stop depositing all employer and employee FICA and FUTA withholding now in an effort to free up cashflow for the benefits.  Even though the credit from the government is only for those who qualify, an employee can stop depositing withholding for all employees.  Employees are still subject to taxes leading up to and during the leave, but again the employer does not have to deposit the amount withheld from the employee.  There is a 30 day good faith clause in the Act that allows employers leeway in calculating how much credit they are due. 
  • There are caps on the benefit an employer must provider under the Act, so an employer is not required to pay an employee in excess of the cap.  If an employer elects to do so, they will not be reimbursed for any payments in excess of the cap. 
  • An employer will also be reimbursed for the prorated cost of providing health insurance to an employee during their leave. 
  • The 80 hours of sick leave is in addition to the 40 hour benefit from the sate of Michigan. 
  • While it remains unclear the logic behind excluding employers with 500 or more employees, at this time these employers have no obligations under the Act.  If an employer with 500 employees or more elects to follow part or all of the Act, there will be no reimbursement to these employers. 

These are some of the highlights that we took away from the hour long session today.  You will be able to find a recording of it here within the next few hours if you would like to review the whole session.  On a related note, we are seeing many insurers (stop-loss, health, dental, etc.) making announcements that they will still cover employees who are temporarily off of work as a result of this crisis.  This is even if the business does not have a formal leave of absence policy in place.  Finally, it looks as though we will see movement on the third stimulus bill today with a quick passage and signature by the President.  We anticipate this will change things further and will offer our thoughts as soon as possible. 
Please don’t hesitate to reach out if you have any questions or if there is anything that we can do to help.