The Families First Coronavirus Response Act (the "Families First Act" or the "Act") requires covered employers to provide employees two weeks of paid sick leave and additional benefits for family leave due to the COVID-19 outbreak, and offers covered employers payroll tax credits to defray the cost of providing this leave. Despite the April 1 effective date, the Department of Labor (DOL) announced a non-enforcement policy for violations occurring through today—April 17, 2020—if a covered employer has made reasonable and good faith efforts to comply and promptly remedies any violations.

On April 1, the DOL issued temporary rules implementing the Families First Act that expanded upon a previously published series of Q&As. In an April 1 letter to the Secretary of Labor, Democratic members of Congress took issue with the guidance, but the temporary rules remain in effect. Compounding the controversy, New York State filed a lawsuit against the DOL on April 14, arguing that the rules codify unauthorized eligibility exclusions and impose new burdens on employers.


The Families First Act covers employers with fewer than 500 full- and part-time employees located in the U.S. and U.S. territories. Employees include those on leave, temporary employees who are jointly employed by another employer, and day laborers supplied by a temporary agency. Parent companies and their subsidiaries will aggregate employees if they are considered "joint employers" under the Fair Labor Standards Act;1 and entities will be forced to aggregate employees if they satisfy the "integrated employer test" under the Family and Medical Leave Act (FMLA).2

Paid Sick Leave and Expanded FMLA Leave

The following table summarizes the Families First Act benefits.3




Subject to a quarantine or isolation order; advised by a health care provider to self-quarantine; or experiencing COVID-19 symptoms and seeking a medical diagnosis

Paid Sick Leave:

Full-time employees: up to 80 hours at full pay; or

Part-time employees: up to the average number of hours worked over a two-week period at 100% of regular pay4

$511 daily and $5,110 total

Caring for an individual with whom there is a personal relationship (such as an immediate family member, roommate or similar person where there is an expectation that the employee would care for that individual) if that individual is subject to a quarantine order or self-quarantined

Paid Sick Leave:

Full-time employees: up to 80 hours at 2/3 of regular pay; or

Part-time employees: up to the average number of hours worked over a two-week period at 2/3 of regular pay

$200 daily and $2,000 total

Caring for a child whose school or place of care is closed (or child care provider is unavailable) for COVID-19-related reasons ("Childcare Benefits")5

Paid Sick Leave:

Full-time employees: up to 80 hours at 2/3 of regular pay; or

Part-time employees: up to the average number of hours worked over a two-week period at 2/3 of regular pay

$200 daily and $2,000 total

Unpaid FMLA Leave:

Up to an additional two workweeks without pay (which may be taken concurrently with the two weeks of Paid Sick Leave)


Paid FMLA Leave:

Up to an additional 10 workweeks at 2/3 of regular pay

$200 daily and $10,000 total

Experiencing any other substantially-similar condition specified by the U.S. Dept. of Health and Human Services

Paid Sick Leave:

Full-time employees: up to 80 hours at 2/3 of regular pay; or

Part-time employees: up to the average number of hours worked over a two-week period at 2/3 of regular pay

$200 daily and $2,000 total

Paid Sick Leave

Covered employers may not require employees to use accrued sick leave or other preexisting leave entitlements (such as vacation or other paid time off) prior to taking the paid sick leave afforded by the Families First Act. An employer and employee can agree, however, to use preexisting leave entitlements to supplement the amounts the employee receives on a paid sick leave, so that the employee can be compensated up to the employee's normal earnings level. The employer would not receive any tax credit under the Act for the supplemental amounts paid. Employees may not carry over unused leave provided by the Families First Act to subsequent years.

Expanded Family and Medical Leave (the "FMLA Benefit")

The expanded FMLA Benefit has two parts: (1) first, up to two weeks without pay, and (2) second, up to 10 weeks at two-thirds of regular pay. An employee may not commence the additional 10 weeks of the paid FMLA Benefit until he or she has taken the two weeks of unpaid leave; however, an employee can choose to take the two weeks of paid sick leave under the Act (or other available paid leave) concurrently with the two weeks of unpaid leave. Accordingly, an employee must decide between taking 12 weeks of paid leave or 14 weeks of leave with the first two weeks unpaid and the paid sick leave constituting the last two weeks.

Based on the DOL guidance, employees may elect to use, and covered employers may require employees to use, the enhanced FMLA Benefit concurrently with any other leave offered under the employer's policies that would generally be available for childcare purposes, such as vacation time, personal leave or paid-time-off. This is more limited than current FMLA parameters, as current FMLA leave is also available to an employee seeking time off to attend to his or her own medical needs. The DOL's regulations also provide that employers and employees may agree, where permitted by state and Federal law, to use previously accrued paid leave as a supplement to the ten weeks of two-thirds pay available pursuant to the FMLA Benefit, so that the employee may continue to receive the full amount of his or her normal pay during an absence.

Unlike the paid sick leave, FMLA Benefits are only available to full- and part-time employees who (1) have been employed for at least 30 calendar days or (2) had worked for the employer for at least 30 of the 60 prior calendar days, were laid off by that employer on or after March 1 and were subsequently rehired or otherwise reemployed by that employer. Employers are not, however, mandated to rehire or otherwise reemploy terminated individuals in order to provide them with these benefits.

The enhanced FMLA Benefits also count against the total 12 weeks of leave currently permitted under the FMLA, and would therefore be reduced by the length of any FMLA leave an employee used earlier in the year for an unrelated reason. The two weeks of paid Childcare Benefits that constitute "Paid Sick Leave," however, are not reduced by any prior FMLA leave.

Job Preservation Requirements

The FMLA requires that employees who take FMLA leave be restored to their position upon their return to work, and this same requirement applies to the Families First Act. However, neither the FMLA nor the Act protect an employee from job eliminations, such as layoffs, that would have affected the employee regardless of whether the leave was taken. In those instances, the employer will be required to demonstrate that the employee would have been laid off even if he or she had been continuously employed.

This return to work protection will also not apply to an employee who received Childcare Benefits (which includes both paid sick leave and FMLA leave) if the employer has fewer than 25 employees and:

  1. the employee's position no longer exists due to economic or operating conditions that affect employment and are caused by a public health crisis;
  2. the employer made reasonable efforts to restore the employee to the same or an equivalent position; and
  3. if the reasonable efforts to restore the employee fail, the employer makes reasonable efforts to contact the employee if an equivalent position becomes available during the one-year period beginning on the earlier of (x) the date the qualifying need related to the emergency concludes or (y) the date that is 12-weeks after the leave commences.

Intermittent Leave

An employer and employee can agree that paid sick or family leave under the Act will be taken intermittently, and there are no restrictions on whether an employee can take paid sick and/or family leave intermittently if the employee teleworks. Conversely, employees who continue to report to the employer's worksite may only take intermittent leave for Childcare Benefits. The DOL has explained that if intermittent leave was allowed for such non-remote employees under any other leave provisions of the Act, including leave pursuant to a quarantine or isolation order, there would be too great a risk that the employee might spread COVID-19.

As an example of intermittent leave, an employee may take leave on Monday, Wednesday and Friday, but work as normal on Tuesday and Thursday. Two working parents with children home due to school closures would likely find this flexibility helpful, and the DOL is encouraging employees and employers to collaborate on these types of voluntary arrangements. To ensure that employees are able to use the full leave entitlements afforded by the Act, the Act also clarifies that only the amount of leave actually taken may be counted towards the employee's leave entitlements. Thus, intermittent leave would be measured by the number of days taken rather than by the number of weeks that those days stretch across.


When the Employer Does Not Have Work

The DOL guidance provides that an employee may not take paid sick leave as a result of a quarantine or isolation order where the employer does not have work for the employee. The DOL discusses, by way of example, a coffee shop that has closed (temporarily or indefinitely) due to a downturn in business related to COVID-19. An employee of the coffee shop, even if unable to work due to a stay-at-home order, would not be able to collect benefits under the Families First Act because that employee would not have work regardless of the stay-at-home order.

In their letter to the DOL, the Democratic members of Congress objected to this position, stating that it creates a loophole whereby an employer can avoid paying sick leave by simply deciding to furlough the employee or refusing to assign the employee work for a given day.


In general, the DOL's regulations provide that an employee may not take paid sick leave under the Families First Act as a result of a governmental quarantine or isolation order, a self-quarantine order or where an employee is experiencing COVID-19 symptoms and seeking a medical diagnosis, if the employee is able to telework. However, if an employee is unable to telework and is awaiting results of a COVID-19 test, he or she may receive paid sick leave while awaiting the test results, regardless of the severity of the symptoms. And if an employee tests positive for COVID-19, he or she may take paid sick leave under the Act regardless of the severity of their symptoms, provided that a health care provider advises the employee to self-quarantine.

Under the Act, "telework" means that an employer has work for the employee; the employer permits or allows the employee to perform the work while the employee is at home or at a location other than the employee's normal workplace; and there are no extenuating circumstances, such as serious COVID-19 symptoms, that prevent the employee from performing the work.

Payroll Tax Credits

Under the Families First Act, employers receive refundable payroll tax credits for the full amount of all qualified sick and family leave wages paid to employees, plus the amount of allocable qualified health plan expenses and the employer's share of Medicare tax imposed on those wages (collectively, "Qualified Wages and Expenses").[6] Note that Qualified Wages and Expenses do not include the employer portion of social security tax, as qualified benefits are not subject to this tax. On April 1, the Internal Revenue Service (IRS) released a series of FAQs expounding on these refundable tax credits.

Typically, employers are required to deposit funds with the IRS to cover the cost of federal employment taxes owed. Any late deposits result in a penalty for the employer. However, under the Act, employers may retain these funds without penalty (including withholdings for employee taxes and all portions of employer payroll taxes), in lieu of depositing the funds with the IRS, up to the full amount of the Qualified Wages and Expenses. The employer would later account for the reduced deposit when it files Form 941, its quarterly federal tax return. If the funds available for retention do not account for the total amount of the Qualified Wages and Expenses, the employer may file a request for an advance credit from the IRS on Form 7200.

The IRS has provided the following example: an eligible employer paid $5,000 in Qualified Wages and Expenses and is otherwise required to deposit $8,000 in federal employment taxes, including taxes withheld from its employees, during that same quarter. The employer may keep $5,000 of the $8,000 that the employer would otherwise deposit with the IRS, instead depositing only $3,000, and will not owe a penalty for retaining the $5,000. The employer will later indicate on its Form 941, Employer's Quarterly Federal Tax Return, for the quarter that it paid $5,000 in Qualified Wages and Expenses.

See our client publication "IRS Provides Guidance Permitting Employers To Immediately Receive COVID-19-Related Tax Credits" for additional information.

Notice Requirements

The Families First Act requires each covered employer to post a notice of the Act's requirements by April 1, 2020. On March 25, 2020, the DOL published a model notice, as well as related guidance for employers. As so many are currently teleworking, an employer may satisfy this notice requirement by emailing or directly mailing the notice to employees, or posting the notice on an employee information or external website.

Our Take

Reflecting the magnitude of the toll that COVID-19 has taken on businesses and their employees, the Families First Act represents the first time the federal government has mandated paid sick leave. Notwithstanding the controversy surrounding these rules, all employers should become familiar with these new requirements to ensure compliance, as well as take advantage of related tax relief.


1 Pursuant to a final rule issued in January 2020, joint employer status arises when: (1) an employee has an employer that suffers, permits or otherwise employs the employee to work, but another individual or entity simultaneously benefits from that work or (2) one employer employs an employee for one set of hours in a workweek, and another employer employs the same employee for a separate set of hours in the same workweek, but the jobs and the hours worked for each employer are separate and the employers are sufficiently associated with respect to the employment of the employee. The employers will generally be sufficiently associated if there is an arrangement between them to share the employee's services, the employer is acting directly or indirectly in the interest of the other employer in relation to the employee, or they share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.

[2] While no one factor is dispositive, factors considered in determining whether two or more entities meet the "integrated employer test" include: (1) common management; (2) interrelation between operations; (3) centralized control of labor relations; and (4) degree of common ownership/financial control.

3 Employers may exclude employees who are health care providers or emergency responders from the leave requirements of the Families First Act. This includes anyone employed by an entity that provides medical services, produces medical products or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles or treatments.

4 Part-time employees are entitled to leave for their average number of hours worked over a two-week period, and, if applicable, the additional ten-week period. If the normal hours scheduled are unknown, or if the hours vary, then the employer may use a six-month average. If the employee has been employed for less than six months, the employer should use the number of hours agreed to at hiring or, absent such an agreement, the appropriate number of hours should be calculated based on the average hours per day the employee was scheduled to work over the entire term of his or her employment.

5 Covers children under 18, or those older who are incapable of self-care due to a mental or physical disability.

6 Qualified sick and family leave wages paid to employees are not subject to the employer's portion of social security tax. From the employee perspective, wages received pursuant to sick and family leave under the Families First Act are generally included as taxable income and subject to regular social security and Medicare taxes.


Special thanks to associate Sonia Khandekar for her contributions to this client publication.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.