COVID-19 - Emergency Paid Sick Leave Act

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This article provides information on the Emergency Paid Sick Leave Act, as understood by myPay Solutions.

Sick leave mandates

The federal government recently passed a bill that requires up to two weeks of paid leave for employees specifically in relation to COVID-19. The provisions of the Emergency Paid Sick Leave Act call for up to two weeks of paid leave which must be provided as a separate benefit from any other voluntary or state mandated leave amounts the employee is eligible for. Employers are not allowed to require employees to first use other paid leave provided by the employer before using paid sick leave under the Act.

You may be required to provide state mandated sick leave in addition to the sick leave mandated by the Emergency Paid Sick Leave Act. These mandates vary by state. Please review the applicable state laws to ensure your business is compliant.

Emergency Paid Sick Leave Act (Federal)

Effective April 2 through December 31, 2020, private employers with fewer than 500 employees and all government employers must provide up to two weeks of paid sick leave to their employees (including part-time employees).

Sick pay was extended through June 30, 2021 on a voluntary basis.

Eligibility

The leave must be provided in instances where an employee:

  1. Is subject to a federal, state, or local quarantine or isolation order related to COVID-19.
  2. Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
  3. Is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  4. Is caring for an individual who is subject to a quarantine order or has been advised to self-quarantine.
  5. Is caring for a son or daughter and the child’s school or place of care has been closed, or the child care provider is unavailable due to COVID-19 precautions.
  6. Is experiencing any other substantially similar condition.

Compensation

The rate of pay that an employee is entitled to under this act is dependent on the reason the leave is needed.

If the sick is taken under reasons 1-3 above, the required compensation must be the greater of the following:

  • The employee's regular rate of pay
  • The federal minimum wage rate
  • The state or local minimum wage rate applicable to the employee

If the sick is taken under reason 4-6 above, the required compensation is 2/3, or roughly 66%, of the required amount as outlined above.

Limits

  • $511.00 per day/$5,110.00 total if used under reasons 1-3 above.
  • $200.00 per day/$2,000.00 total if used for reason 4-6 above.

Exemptions/Additional regulations

The Secretary of Labor shall have the authority to issue regulations for good cause under sections 553(b)(B) and 553(d)(A) of title 5, United States Code

  1. To exclude certain health care providers and emergency responders from the definition of employee under section 5110(1) including by allowing the employer of such health care providers and emergency responders to opt out;
  2. Small businesses with fewer than 50 employees from the requirements of section 5102(a)(5) (care of son/daughter if school or place of care has been closed or childcare provider is unavailable) when the imposition of such requirements would jeopardize the viability of the business as a going concern; and
  3. as necessary, to carry out the purposes of this Act, including to ensure consistency between this Act and Division C and Division G of the Families First Coronavirus Response Act.

Tax credit

  1. Employers will be provided with a refundable tax credit. The tax credit is allowed as an offset against the employer's portion of Social Security Taxes.
  2. We are waiting for additional guidance from the government with the details of how the credit will be reported.

Please click here to view the bill then scroll down to the applicable section titled DIVISION E-EMERGENCY PAID SICK LEAVE ACT.

The key details of the bill have also been outlined in this article published by the American Payroll Association.

myPay Solutions can provide factual details surrounding the Emergency Paid Sick Leave Act, but is the client's responsibility to determine whether or not an employee is eligible and for what reason. They must also enter or report the hours to be paid under the Act and setup or provide the applicable rates of pay. Please do not advise clients on how to handle any of these details. Instead, direct clients to the online resources or their accountant for further advice. This is also a great time to recommend Mammoth HR services to clients. myPay Solutions clients get a significant discount due to our partnership.

Clients who are required to pay this Emergency Sick Leave

  1. Contact your Payroll Specialist and request a new wage item to track and pay the Emergency Paid Sick hours/wages. The additional wage item will be titled COVID-19. A separate wage item is required for tracking purposes as employers will be able to claim a tax credit on the amounts paid in association with the Emergency Paid Sick Leave bill. We are waiting on additional details from the government relating to the business tax credits and will make the necessary updates as needed.

    The associated payroll item will be setup as a regular/fully taxable wage item, and it must be setup with consistent formatting for all clients. The Description and Report Description will be COVID-19 (all caps, with a dash, no spaces).

    Box 14 – Covid items will be coded:

    • Covid-19 self = EPSLA 511
    • Covid-19 other = EPSLA 200
    • Covid-19 extended care = EFMLEA
  2. Once the COVID-19 pay item has been setup by your Payroll Specialist, you will need to activate the item for the applicable employee(s) and load in the appropriate rates.
  3. If you'd like to track and keep a running total of the available COVID-19 hours, please contact your Payroll Specialist for additional details.

    If clients want to track the available COVID-19 hours as accruable benefit items (optional), please setup the additional accruable benefit items (one for Full Time and one for Part Time) as follows:

    Full Time Accruable Benefit Tracking Item

    COVID-19 Full Time

    Part Time Accruable Benefit Tracking Item

    COVID-19 Part Time

    Two different accruable benefit tracking items (one for full-time and one for part time) may need to be setup dependent on each individual client. The Emergency Paid Sick Leave Act requires 80 hours of Emergency Paid Sick Leave for full-time employees and for part time employees, the number of hours equal to the number of hours each employee works, on average, over a 2-week period.

    The client will need to provide direction or activate the applicable accruable benefit item for each full time and part time employee in myPay Solutions Direct. Once the tracking items are activated, the full-time employees will be granted 80 hours, effective April 2nd. Clients will be responsible for calculating the available balances for part time employees. The balances for part time employees will need to be loaded in manually on an employee by employee basis since the amounts will vary. Clients can load these balances in myPay Solutions Direct or reach out to us for assistance.

    Please be diligent in providing clients with clear instructions on how to enter these wages and hours for tracking purposes. They need to enter the hours under the COVID-19 wage description item and in the COVID-19 accruable benefit tracking item. Walk them through this via phone, send them written instructions (screenshot provided), or refer them to our online tutorial video (currently in the works). Show me.

    COVID-19 Data Entry

    Please be sure to inform clients that the system will give them a pop-up warning if they enter COVID-19 hours that exceed the employee's available balance, but it will not stop them from saving or paying those hours. If they get a warning that the hours entered exceed the available balance for the employee. They need to adjust the hours or remove the hours accordingly in time entry.

    This bill is in effect from 04/02/2020 through 12/31/2020. Provided no changes are enacted, the corresponding accruable benefit tracking items will need to be deactivated in January of 2021.

Understanding COVID-19 payroll items within myPay Solutions Direct

Below are some examples of the COVID-19 pay item limits and tax calculations in myPay Solutions Direct along with detailed explanations of how the COVID-19 items will impact the corresponding tax payments and payroll reports.

EXAMPLE 1: COVID-19 SELF CARE

In this example, the employee is home sick with COVID-19 and has not exceeded the allowable hours.

  • She is using the COVID-19 SELF CARE pay item, which:
    • Uses the full pay rate
    • Is limited to 80 hours
    • Is capped at $63.875 per hour
  • Show Me The Math!
  • Standard pay rate is $10.00 per hour.
  • She is paid biweekly – 80 hours per two weeks.
  • Her normal check calculation would be:
    • Regular Gross wages $800 ($10.00/hour x 80 hours)
    • FICA-SS $49.60
    • FICA-MED $11.60
    • FIT $32.31
    • ERFICA-SS $49.60
    • ERFICA-MED $11.60
  • Her COVID-19 SELF CARE check calculation would be:

    COVID Pay Items Ex 1

    • COVID-19 SELF CARE Gross wages $800 ($10.00/hour x 80 hours)
    • FICA-SS $49.60
    • FICA-MED $11.60
    • FIT $32.31
    • ERFICA-SS $0.00 *COVID-19 wages are not subject to ERFICA-SS
    • ERFICA-MED $11.60
    • COVID-19 FIT credit $800 *This is the gross wages entered as COVID-19 SELF CARE
  • What is the tax liability that will be impounded from my business bank account?
    • Federal Unemployment (FUTA), State Unemployment (SUTA), State Withholding (SIT) and applicable local taxes, will be impounded as normal.
    • 941 tax liabilities may be reduced to $0. We can continue with the example above:
      • If the overall 941 payroll liability is $1,000 and the COVID-19 FIT credit is $800, $200 will be impounded and the entire credit will have been taken ($1,000 - $800).
      • If the overall 941 payroll liability is $400 and the COVID-19 FIT credit is $800, $0 will be impounded and an additional credit is carried forward of $400($400 - $800 = -$400).
      • If the overall 941 payroll liability is $800 and the COVID-19 FIT credit is $800, $0 will be impounded and the entire credit will have been taken ($800 - $800).
  • How will this be reflected on my payroll reports?
    • The COVID-19 wages are exempt from the employer portion of the SS Tax; your standard payroll reports will reflect the reduction of your ER SS Tax.
      • The gross COVID-19 wages ($800.00 in the example above) can be applied as a credit against the federal 941 tax liability. This credit will be applied through payroll to reduce the taxes myPay Solutions collects and pays on your behalf. Currently, the tax credit or reduction to the 941 taxes will not be reflected on your standard payroll reports. Our Development Team is working to update this.
      • If the positive 941 tax liability is higher than the COVID-19 941 tax credit ($800 in the example above), the actual tax impound from your company bank account will equal the Payroll Memorandum Taxes amount minus the COVID-19 tax credit ($800).
      • If the COVID-19 tax credit exceeds the 941 tax liability for the period, the excess tax credit amount will be reflected on the Tax Deposit report as a negative amount.

EXAMPLE 2: COVID-19 SELF CARE – EMPLOYEE HAS EXCEEDED THE ALLOWABLE HOURS

In this example, the employee is home sick with COVID-19 and has exceeded the allowable hours.

  • She is using the COVID-19 SELF CARE pay item, which:
    • Uses the full pay rate
    • Is limited to 80 hours
    • Is capped at $63.875 per hour
  • Show Me The Math!
    • Standard pay rate is $10.00 per hour.
    • She is paid biweekly – 80 hours per two weeks.
      • She has already used 40 hours of COVID-19 SELF CARE
      • She is trying to use 45 hours of COVID-19 SELF CARE and 35 hours or regular wages
    • Her normal check calculation would be:
      • Regular Gross wages $800 ($10.00/hour x 80 hours)
      • FICA-SS $49.60
      • FICA-MED $11.60
      • FIT $32.31
      • ERFICA-SS $49.60
      • ERFICA-MED $11.60
    • Her COVID-19 SELF CARE check calculation would be:

      COVID Pay Items Ex 2

      • myPay Solutions Direct will automatically cap the COVID-19 SELF CARE hours at 40. The additional 5 hours would need to be manually added to regular wages.
      • COVID-19 SELF CARE Gross wages $400 ($10.00/ hour x 40 hours)
      • Regular Gross Wages $400 ($10.00/ hour x 40 hours)
      • FICA-SS $49.60
      • FICA-MED $11.60
      • FIT $32.31
      • ERFICA-SS $24.80 *COVID-19 wages are not subject to ERFICA-SS
      • ERFICA-MED $11.60
      • COVID-19 FIT credit $400 *This is the gross wages entered as COVID-19 SELF CARE
  • What is the tax liability that will be impounded from my business bank account?
    • Federal Unemployment (FUTA), State Unemployment (SUTA), State Withholding (SIT) and applicable local taxes, will be impounded as normal.
    • 941 tax liabilities may be reduced to $0. We can continue with the example above:
      • If the overall 941 payroll liability is $600 and the COVID-19 FIT credit is $400, $200 will be impounded and the entire credit will have been taken ($600 - $800).
      • If the overall 941 payroll liability is $300 and the COVID-19 FIT credit is $400, $0 will be impounded and an additional credit is carried forward of $100($300 - $400 = -$100).
      • If the overall 941 payroll liability is $400 and the COVID-19 FIT credit is $400, $0 will be impounded and the entire credit will have been taken ($400 - $400).
  • How will this be reflected on my payroll reports?
    • The COVID-19 wages are exempt from the employer portion of the SS Tax; your standard payroll reports will reflect the reduction of your ER SS Tax.
      • The gross COVID-19 wages ($400.00 in the example above) can be applied as a credit against the federal 941 tax liability. This credit will be applied through payroll to reduce the taxes myPay Solutions collects and pays on your behalf. Currently, the tax credit or reduction to the 941 taxes will not be reflected on your standard payroll reports. Our Development Team is working to update this.
      • If the positive 941 tax liability is higher than the COVID-19 941 tax credit ($400 in the example above), the actual tax impound from your company bank account will equal the Payroll Memorandum Taxes amount minus the COVID-19 tax credit ($400).
      • If the COVID-19 tax credit exceeds the 941 tax liability for the period, the excess tax credit amount will be reflected on the Tax Deposit report as a negative amount.

EXAMPLE 3: COVID-19 OTHER CARE

In this example, the employee is home caring for someone sick with COVID-19 and has not exceeded the allowable hours.

  • She is using the COVID-19 OTHER CARE pay item, which:
    • Uses 2/3 the full pay rate
    • Is limited to 80 hours
    • Is capped at $25.00 per hour
  • Show Me The Math!
    • Standard pay rate is $10.00 per hour.
    • She is paid biweekly – 80 hours per two weeks.
    • Her normal check calculation would be:
      • Regular Gross wages $800 ($10.00/hour x 80 hours)
      • FICA-SS $49.60
      • FICA-MED $11.60
      • FIT $32.31
      • ERFICA-SS $49.60
      • ERFICA-MED $11.60
    • Her COVID-19 OTHER CARE check calculation would be:

      COVID Pay Items Ex 3

      • COVID-19 OTHER CARE Gross wages $533.34 ($6.6667/hour x 80 hours)

        Note: When activating this payroll item on the employee, you would enter the regular rate of pay ($10/hour in this example).

      • FICA-SS $33.07
      • FICA-MED $7.73
      • FIT $5.64
      • ERFICA-SS $0.00 *COVID-19 wages are not subject to ERFICA-SS
      • ERFICA-MED $7.73
      • COVID-19 FIT credit $533.34 *This is the gross wages entered as COVID-19 SELF CARE
  • What is the tax liability that will be impounded from my business bank account?
    • Federal Unemployment (FUTA), State Unemployment (SUTA), State Withholding (SIT) and applicable local taxes, will be impounded as normal.
    • 941 tax liabilities may be reduced to $0. We can continue with the example above:
      • If the overall 941 payroll liability is $600 and the COVID-19 FIT credit is $533.34, $66.66 will be impounded and the entire credit will have been taken ($600 - $533.34).
      • If the overall 941 payroll liability is $300 and the COVID-19 FIT credit is $533.34, $0 will be impounded and an additional credit is carried forward of $233.34($300 - $533.34 = -$233.34).
      • If the overall 941 payroll liability is $533.34 and the COVID-19 FIT credit is $533.34, $0 will be impounded and the entire credit will have been taken ($533.34 - $533.34).
  • How will this be reflected on my payroll reports?
    • The COVID-19 wages are exempt from the employer portion of the SS Tax; your standard payroll reports will reflect the reduction of your ER SS Tax.
      • The gross COVID-19 wages ($533.34 in the example above) can be applied as a credit against the federal 941 tax liability. This credit will be applied through payroll to reduce the taxes myPay Solutions collects and pays on your behalf. Currently, the tax credit or reduction to the 941 taxes will not be reflected on your standard payroll reports. Our Development Team is working to update this.
      • If the positive 941 tax liability is higher than the COVID-19 941 tax credit ($533.34 in the example above), the actual tax impound from your company bank account will equal the Payroll Memorandum Taxes amount minus the COVID-19 tax credit ($533.34).
      • If the COVID-19 tax credit exceeds the 941 tax liability for the period, the excess tax credit amount will be reflected on the Tax Deposit report as a negative amount.

EXAMPLE 4: COVID-19 OTHER CARE HAS EXCEEDED THE ALLOWABLE RATE OF PAY

In this example, the employee is home caring for someone sick with COVID-19 and has not exceeded the allowable hours.

  • She is using the COVID-19 OTHER CARE pay item, which:
    • Uses 2/3 the full pay rate
    • Is limited to 80 hours
    • Is capped at $25.00 per hour
  • Show Me The Math!
    • Standard pay rate is $40.00 per hour.
    • She is paid biweekly – 80 hours per two weeks.
    • Her normal check calculation would be:
      • Regular Gross wages $3,200 ($40.00/hour x 80 hours)
      • FICA-SS $198.40
      • FICA-MED $46.40
      • FIT $437.15
      • ERFICA-SS $198.40
      • ERFICA-MED $46.40
    • Her COVID-19 OTHER CARE check calculation would be:

      COVID Pay Items Ex 4

      • COVID-19 OTHER CARE Gross wages $2,000 ($25.00/hour x 80 hours)

        Note: When activating this payroll item on the employee, you would enter the regular rate of pay ($40/hour in this example). The rate of pay will automatically be limited to $25.00/hour instead of $26.67/hour ($40.00 x 2/3).

      • FICA-SS $124.00
      • FICA-MED $29.00
      • FIT $175.17
      • ERFICA-SS $0.00 *COVID-19 wages are not subject to ERFICA-SS
      • ERFICA-MED $29.00
      • COVID-19 FIT credit $2,000.00 *This is the gross wages entered as COVID-19 SELF CARE
  • What is the tax liability that will be impounded from my business bank account?
    • Federal Unemployment (FUTA), State Unemployment (SUTA), State Withholding (SIT) and applicable local taxes, will be impounded as normal.
    • 941 tax liabilities may be reduced to $0. We can continue with the example above:
      • If the overall 941 payroll liability is $3,000 and the COVID-19 FIT credit is $2,000, $1,000 will be impounded and the entire credit will have been taken ($3,000 - $2,000).
      • If the overall 941 payroll liability is $800 and the COVID-19 FIT credit is $2,000, $0 will be impounded and an additional credit is carried forward of $1,200($800 - $2,000 = -$1,200).
      • If the overall 941 payroll liability is $2,000 and the COVID-19 FIT credit is $2,000, $0 will be impounded and the entire credit will have been taken ($2,000 - $2,000).
  • How will this be reflected on my payroll reports?
    • The COVID-19 wages are exempt from the employer portion of the SS Tax; your standard payroll reports will reflect the reduction of your ER SS Tax.
      • The gross COVID-19 wages ($2,000.00 in the example above) can be applied as a credit against the federal 941 tax liability. This credit will be applied through payroll to reduce the taxes myPay Solutions collects and pays on your behalf. Currently, the tax credit or reduction to the 941 taxes will not be reflected on your standard payroll reports. Our Development Team is working to update this.
      • If the positive 941 tax liability is higher than the COVID-19 941 tax credit ($2,000.00 in the example above), the actual tax impound from your company bank account will equal the Payroll Memorandum Taxes amount minus the COVID-19 tax credit ($2,000.00).
      • If the COVID-19 tax credit exceeds the 941 tax liability for the period, the excess tax credit amount will be reflected on the Tax Deposit report as a negative amount.

EXAMPLE 5: COVID-19 EXTENDED CHILD CARE

In this example, the employee is unable to work because they are caring for a child whose school/care provider is unavailable due to reasons associated with COVID-19.

  • She is using the COVID-19 EXTENDED CHILD CARE pay item, which:
    • Uses 2/3 the full pay rate
    • Is limited to 400 hours
    • Is capped at $25.00 per hour
  • Show Me The Math!
    • Standard pay rate is $10.00 per hour.
    • She is paid biweekly – 80 hours per two weeks.
    • Her normal check calculation would be:
      • Regular Gross wages $800 ($10.00/hour x 80 hours)
      • FICA-SS $49.60
      • FICA-MED $11.60
      • FIT $32.31
      • ERFICA-SS $49.60
      • ERFICA-MED $11.60
    • Her COVID-19 EXTENDED CHILD CARE check calculation would be:

      COVID Pay Items Ex 5

      • COVID-19 EXTENDED CHILD CARE Gross wages $533.34 ($6.6667/hour x 80 hours)

        Note: When activating this payroll item on the employee, you would enter the regular rate of pay ($10/hour in this example).

      • FICA-SS $33.07
      • FICA-MED $7.73
      • FIT $5.64
      • ERFICA-SS $0.00 *COVID-19 wages are not subject to ERFICA-SS
      • ERFICA-MED $33.07
      • COVID-19 FIT credit $533.34 *This is the gross wages entered as COVID-19 SELF CARE
  • What is the tax liability that will be impounded from my business bank account?
    • Federal Unemployment (FUTA), State Unemployment (SUTA), State Withholding (SIT) and applicable local taxes, will be impounded as normal.
    • 941 tax liabilities may be reduced to $0. We can continue with the example above:
      • If the overall 941 payroll liability is $600 and the COVID-19 FIT credit is $533.34, $66.66 will be impounded and the entire credit will have been taken ($600 - $533.34).
      • If the overall 941 payroll liability is $300 and the COVID-19 FIT credit is $533.34, $0 will be impounded and an additional credit is carried forward of $233.34($300 - $533.34 = -$233.34).
      • If the overall 941 payroll liability is $533.34 and the COVID-19 FIT credit is $533.34, $0 will be impounded and the entire credit will have been taken ($533.34 - $533.34).
  • How will this be reflected on my payroll reports?
    • The COVID-19 wages are exempt from the employer portion of the SS Tax; your standard payroll reports will reflect the reduction of your ER SS Tax.
      • The gross COVID-19 wages ($533.34 in the example above) can be applied as a credit against the federal 941 tax liability. This credit will be applied through payroll to reduce the taxes myPay Solutions collects and pays on your behalf. Currently, the tax credit or reduction to the 941 taxes will not be reflected on your standard payroll reports. Our Development Team is working to update this.
      • If the positive 941 tax liability is higher than the COVID-19 941 tax credit ($533.34 in the example above), the actual tax impound from your company bank account will equal the Payroll Memorandum Taxes amount minus the COVID-19 tax credit ($533.34).
      • If the COVID-19 tax credit exceeds the 941 tax liability for the period, the excess tax credit amount will be reflected on the Tax Deposit report as a negative amount.

Emergency Paid Sick Leave Act FAQs

Will hours and wages paid under this Emergency Paid Sick Leave Act take the place of the sick hours I pay voluntarily as part of my office’s sick leave policy or the sick hours I’m required to pay as part of a state mandated sick leave plan?

No. These Emergency Paid Sick Leave hours must be paid to employees who qualify as a separate benefit. An employer may not require an employee to use other paid leave (vacation or sick) provided by the employer to the employee before the employee uses the available hours under this Emergency Paid Sick Leave Act.

How do I enter Emergency Paid Sick Leave for a salaried employee?

If necessary, prorate the amount to be paid as regular salary and the amount to be paid as COVID-19 wages. Enter the applicable amounts under each line item separately in Time Entry. Please reach out to your Payroll Specialist with questions.

How will I request or receive the Business Tax Credit on the amounts I pay under the Emergency Sick Leave?

We are waiting for additional guidance from the government with the details of how the credit will be reported.

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