The Families First Act took effect April 1 and does cover household employers.
However, the Department of Labor has the discretion to exempt businesses with under 50 employees if the business can demonstrate that the new requirements would jeopardize its viability.
Two parts of the Families First Act impact household employers:
- the paid sick leave and paid family leave for employees that are affected by COVID-19; and
- the refundable payroll tax credits designed to reimburse employers dollar for dollar for the cost of providing Coronavirus-related leave.
This could result in thousands of dollars in tax credits.
We’ve answered common questions below to help you navigate this new Act.
How much paid sick time may my caregiver receive?
Your nanny or caregiver is eligible to take up to 80 hours of paid sick time if they work full-time for you. If your household employee works part-time, their paid sick time will be the average weekly hours they typically work in a two-week period. Sick time is available to be taken immediately, regardless of how long your employee has worked for you, but it will not roll over to 2021 if it is not used.
How much expanded FMLA (paid family leave) can my caregiver receive?
If your caregiver needs to take paid family leave to care for their children because their school or daycare is closed, they are eligible to take a total of 12 weeks, but the first two weeks can be unpaid time off. The remaining 10 weeks would need to be paid if your employee needs them.
If my employee has another job and just works with us periodically, am I required to provide paid sick time/paid leave benefits?
Yes, the Families First Act does provide part-time employees with paid sick time and expanded FMLA (paid sick leave) benefits. However, the amount of benefits are calculated based on the average number of weekly hours your employee works in a two week period so you’ll need to do these calculations to determine your requirements.
When would it be appropriate for my nanny or caregiver to use their paid sick time?
Your caregiver may use their paid sick time for any of the following reasons:
- They are subject to a federal, state or local quarantine order related to the coronavirus.
- They are experiencing COVID-19 symptoms and need to be diagnosed by a medical official.
- They have been advised by a health care provider to self-quarantine because of the coronavirus.
- They are caring for a family member who has symptoms of the coronavirus or has to self-isolate due to a doctor’s order.
- They have to care for their child because their school or daycare has closed due to the coronavirus, or if their personal child care provider is not available.
When would it be appropriate for my employee to use expanded FMLA (paid family leave)?
Your employee is eligible to use paid family leave if they cannot work due to their child’s school or daycare being closed – or if their normal caregiver cannot take care of their children. Unlike paid sick time, expanded FMLA is not tied to your employee’s child being ill.
I already offer paid sick time and paid time off to my caregiver in their contract. Would I need to provide this additional leave?
Yes, if your household employee meets the qualifications we just listed, they would be given this new mandated paid sick time and expanded FMLA benefit in addition to what you already offer. Additionally, your caregiver would have to use the newly mandated paid sick time hours before any other paid sick time you offer can kick in. However, your employee may use paid vacation days or other paid time off that you offer during the two weeks where family leave is unpaid.
How much would I have to pay my caregiver if they cannot work?
This will depend on the type of leave your employee needs to use.
- If your nanny or caregiver goes to the doctor to be diagnosed for COVID-19, be treated for the illness or must miss work due to contracting COVID-19, they would earn paid sick time at their normal hourly rate, up to $511 per day.
- If your caregiver has to miss work to care for a family member with COVID-19 or care for their child because their school or daycare is closed due to the coronavirus, they would also earn paid sick leave, but only at 2/3rds of their normal hourly rate, up to $200 per day. You would be welcome to pay your caregiver their full hourly rate, but the additional amount would not apply to a tax credit that we will outline later.
- If your employee is unable to work because they have to care for a child under the age of 18 whose school or place of care has been closed, they may earn expanded FMLA (paid family leave) benefits at 2/3rds of their normal hourly rate, up to $200 per day. Again, you would be free to pay your employee their full hourly rate instead, but this additional amount will not count toward a tax credit.
Would the Families First Act give me a tax credit for this additional required paid time off?
Yes, employers not exempt from this law will be entitled to a tax credit equal to the sick leave and/or expanded FMLA wages paid to your employee while they are out of work.
- If your nanny or caregiver had to self-isolate because of the coronavirus, 100% of the sick time you paid to them will be refunded to you, up to $511 per day for up to 10 days. This applies for each employee you have.
- If your nanny or caregiver used sick time to care for a family member or child, they’ll receive 2/3rds of their regular wages and your credit will be capped at $200 per day for up to 10 days. Again, this applies for each employee you have.
- If your nanny or caregiver had to take expanded FMLA (paid family leave), they are paid 2/3rds of their hourly rate and your credit will be capped at $200 per day and $10,000 total.
The credit is refundable to families, which means if you paid more money for sick time and/or expanded FMLA benefits than you owed in Social Security and Medicare taxes, you would be refunded the difference.
What if I had to temporarily lay my employee off due to COVID-19 concerns?
Under the Families First Act, your nanny or caregiver may be able to file for unemployment benefits if they have their hours reduced or are let go because of the effects of the coronavirus. Your state’s department of labor (or agency that handles unemployment claims) would make the determination of whether your caregiver could receive financial assistance while they are out of work.
If my employee does not qualify as an essential worker and cannot come to work, am I required to continue paying them?
No, you are not required to continue paying your employee, but you are welcome to do so. If you do not continue to pay your employee, they should qualify for unemployment benefits from the state while they are out of work.
If my employee qualifies as an essential worker, do I have to pay them if they still elect to stay home? If so, what are rules for doing this?
If your employee is able to work, but chooses not to do so, you’re not required to pay them. You are only required to pay out paid sick leave and/or expanded FMLA benefits if your employee is able to work, but physically cannot do so because they are sick, caring for a family member that is sick, or caring for their child because their school or daycare is closed due to COVID-19.
Child care workers are considered to be essential workers and are allowed to work in a family’s home. See the state of Massachusetts’ website for more information.
In-home child care is considered an essential service, so caregivers can continue working in a family’s home. Visit the state of New York’s website for more information.
I need to cut my full-time nanny’s hours back to part-time during this crisis? Can they qualify for unemployment benefits?
This varies by state, but generally speaking, your employee can qualify for benefits if their hours are reduced by 40-60%.
If I reduced my employee’s hours, can they receive partial unemployment benefits AND paid leave benefits because they have to miss additional days to care for their own kids?
Generally, employees cannot receive unemployment benefits if they are already receiving benefits from their employer.
Can I let my employee go if they choose not to work for my family due to health concerns?
Yes, you can let your employee go if they are unwilling to work for your family due to concerns about the coronavirus. You’re welcome to re-hire them at a later date if you choose to do so.
I just hired my caregiver in January and need to furlough them. Will they qualify for benefits?
This decision will vary by state. Your employee can file for unemployment benefits and the state will make a determination based on the standards they have.
How does the CARES Act impact me and my caregiver?
Expanded unemployment insurance benefits
According to the CARES Act, if your employee has to be let go from their job due to COVID-19 concerns, they may qualify for expanded unemployment benefits through the state. Specifically, the CARES Act allows employees to collect $600 per week, on top of the financial assistance the state provides, for up to four months.
Additionally, the CARES Act extends the maximum amount of time your nanny or caregiver can receive unemployment benefits by 13 weeks. The current maximum varies by state, but most states already allow for approximately 26 weeks of unemployment benefits, which will now increase to approximately 39 weeks. If your nanny or caregiver is being paid on the books, they should be able to access these benefits if they need them.
Stimulus payments for individuals
To help workers make ends meet, the CARES Act also provides a one-time payment of up to $1,200 ($2,400 for married couples filing jointly), plus an additional $500 for each child. You may have heard this referred to as a “stimulus check” or an “economic impact payment.” There are a few qualifications your nanny or caregiver must meet to receive this payment:
- Your employee must earn less than $99,000 annually in adjusted gross income ($198,000 if married).
- For every $100 above $75,000 ($150,00 if married) your employee earns, their payment will be reduced from $1,200 in $5 increments. This is the reason for the $99,000 earnings cap.
- Your employee must have a Social Security number.
- Your nanny or caregiver must have filed a 2018 or 2019 income tax return so the IRS knows what their adjusted gross income is.