The U.S. House of Representatives pass H.R. 6201 in the early morning hours of March 14. The Families First Coronavirus Response Act, expected to be passed by the Senate on Monday, and includes free testing for coronavirus, increased funding for unemployment assistance, food aid, and Medicaid. It also suspends work requirements for supplemental nutrition assistance program (SNAP). Read a full summary.
Nonprofit sector advocates, including Independent Sector, signed a letter to ensure that nonprofits were included in the stimulus package in the following provisions. Summaries from the National Council on Nonprofits:
Emergency Paid Sick Leave (Section 5102): The bill requires employers to provide employees two weeks of paid sick leave, paid at the employee’s regular rate, to quarantine or seek a diagnosis or preventive care for the coronavirus. It also requires payment at two-thirds the employee’s regular rate to care for a family member for those purposes or to care for a child whose school has closed, or child care provider is unavailable, due to the coronavirus. Section 7001 provides to employers a refundable tax credit equal to 100 percent of qualified paid sick leave wages paid by an employer. The tax credit is allowed against the employer portion of payroll taxes and any paid leave costs that exceed the amount of payroll taxes owed will be refundable to the employer at the end of each quarter.
Emergency Family and Medical Leave Expansion (Section 3102): The bill also expands the number of workers who can take up to 12 weeks of leave under the Family and Medical Leave Act. After the two weeks of paid leave, employees will receive a benefit from their employers that will be no less than two-thirds of the employee’s usual pay. The qualifying reasons for the emergency leave are a current diagnosis of COVID-19, self-quarantine, caring for another person with the disease or who is under quarantine, or caring for a child due to COVID-19 related closing of school, or other care facility. Section 7003 of the bill provides a refundable tax credit equal to 100 percent of qualified family leave wages paid by an employer for each calendar quarter, allowed against the employer portion of payroll taxes.
Importance of the Refundable Payroll Tax Credit: The application of the credit to nonprofits is a significant development. Typically, Congress enacts income tax credits for employers, which are incentives that tax-exempt employers are not able to redeem since they don’t pay income taxes. The new provision in the bill on the House floor Saturday morning will ensure that all types of employers (with 500 or fewer employees) are able to recoup the costs of these paid leave mandates. The emergency paid leave benefit (Section 5102) and of the credits (Sections 7001 and 7003) expire on December 31, 2020.
