Families First Coronavirus Response Act: Three Questions that Could Impact Your Tribal Casino

This article is meant to address three questions in relation to how the Families First Coronavirus Response Act (FFCRA) applies to Native American Tribes.  We will address these questions based on the guidance we have received but please know that clarification from the government may be forthcoming.

Question 1:  Is the 500 employee threshold based on total employees under the Tribe and its enterprises or the total number of employees under each entity or enterprise separately?

Answer:  The number of employees is based on the total number of employees for the Tribe and all its enterprises.

Question 2:  Are Tribal governments required to provide sick leave as outlined below under the Emergency Paid Sick Leave Act?

Answer:  Ultimately, the IRS office of Indian Tribal Governments will need to provide guidance on this. Initially, it was our understanding that Tribe’s with fewer than 500 employees would need to provide paid leave; however, there is some question that Tribes may not be eligible for the tax credit as they may be considered “entities that are not private.” It is our recommendation that all Tribes keep a close eye on this topic.

Question 3:  Does the Emergency Family and Medical Leave Expansion Act apply to Native American Tribes?

Answer:  This will apply to Tribal employers taking the position that FMLA applies and who have less than 500 employees.

In addition, below is an overview of the FFCRA:

On Wednesday, March 18, 2020, the Senate passed the Families First Coronavirus Response Act (the FFCRA) into law.  In short, the FFCRA: 1) Provides a new paid sick leave entitlement for work absences related to the coronavirus (COVID-19); 2) extends and expands FMLA protections for similar absences; 3) provides tax credits for employers to help address related employer costs of these benefits; and 4) requires group health plans to cover COVID-19 related tests, services, and other items without employee cost-sharing. Generally, the first three provisions apply to employers with fewer than 500 employees and would be in effect through 2020 (the fourth would apply to any group health plan and would not have an expiration date). All four provisions would take effect 15 days after enactment (signature by the president). Below is a description of these FFCRA provisions, as passed by the House.

Emergency Paid Sick Leave Act: 

This provision, which applies to every private sector employer with fewer than 500 employees, requires employers to provide paid sick time for individuals who are:

• Diagnosed with COVID-19, to self-isolate (or to obtain a diagnosis or care for symptoms of COVID-19)

• Under quarantine to comply with an official order or recommendation because of COVID-19 exposure or symptoms
• Providing care to a COVID-19-diagnosed individual or an individual seeking a diagnosis or care for symptoms of COVID-19
• Caring for an individual affected by a school or other care facility closing

Unlike the FMLA expansion (described below), this would apply to an employer with fewer than 25 employees and to employees who have been employed for only a few days. Full-time employees could use up to 80 hours of sick time, while part-time employees could use proportionally less time, based on the average number of hours the employee works over a two-week period. An employee could not carry sick time over into the next year, nor would an employee be entitled to payment of unused sick time upon separation from employment.

During sick leave taken for an employee’s own condition, employers would be obligated to pay employees their regular rate of pay or the applicable minimum wage, whichever is higher. However, if the sick leave is taken to care for a family member, the rate of pay would be reduced to two-thirds of the employee’s regular rate of pay. This would be in addition to an employer’s existing sick leave policies and employers cannot scale back their existing leave policies.

As written, employers would need to post a notice regarding the requirements of the Emergency Paid Sick Leave Act (the Department of Labor will publish a model notice within 7 days of enactment) in their workplaces.

To help employers shoulder the financial burden of paying for these additional benefits, employers would have the ability to claim a tax credit equal to 100% of qualified sick leave wages paid to employees. These credits, however, would be limited to $200 to $511 per day, depending on the qualifying leave event. The credits would be fully available for employees earning up to $132,860 in income (and partially available for higher earners).

The Emergency Family and Medical Leave Expansion Act:

This provision would modify the Family and Medical Leave Act (FMLA) by expanding the circumstances under which an employee is entitled to take leave. Individuals would be able to use unpaid leave if they are diagnosed with COVID-19, caring for a family member, or caring for a child whose day care has closed because of a public health emergency. The first 14 days of COVID-19-related FMLA leave is unpaid, but employers would be obligated to pay employees at the rate of two-thirds of the employee’s regular pay rate for each day of FMLA leave taken thereafter.

Importantly, all employers with fewer than 500 employees would have to offer COVID-19-related FMLA leave to their workforce (a change to the 50-employee threshold that currently applies under FMLA). Additionally, any employee who has been employed for at least 30 calendar days would be eligible for this new type of FMLA leave. Finally, the job protection requirements of the FMLA would also apply to COVID-19-related leaves, but only for employers with 25 to 499 employees (if certain conditions are met).

On tax credits relating to these changes to FMLA, employers with fewer than 500 employees would be able to claim a tax credit of 100% of qualified FMLA wages paid to employees, capped at $200 per day and $10,000 per quarter per employee. The FMLA tax credit is designed to help employers recover up to $30,000 or $40,000 in wages (depending on the enactment date) for employees earning up to $52,000 per year (and a portion of wages for those earning more).