Matt Crumpton, Esq.
The Families First Coronavirus Response Act Passed. What Does that Mean for Small Businesses?
I previously posted about the initial House bill 6201 after it passed the House last Saturday. Since then, there have been some material changes made in the House (which were called “technical corrections”) and the bill was passed by the Senate and signed in to law by President Trump.
The core purpose of the Families First Coronavirus Response Act (FFCRA) is to make sure that employees have access to paid leave related to the Coronavirus. I am focusing on provisions of the law that specifically affect small employers.
Here is my high-level summary of the final law for employers:
Who Must Pay?
All employers with less than 500 employees.
Under 50 Employee Exemption: However, employers with less than 50 employees may apply for an exemption from the Secretary of Labor if the paid sick leave or paid FMLA leave would “jeopardize the viability of the business as a going concern.” In other words, if the paid sick leave law would put you out of business, you can apply to not have to follow it.
What Must Be Paid?
Emergency Paid Sick Leave Act (Expires December 31, 2020)
Applies to all employees, regardless of how many days they have worked for the company.
How Much Paid Leave? Full time employees get 80 hours at their full rate. Part time employees get a pro-rata amount of hours at their full rate. Look to last 6 months average to determine part time hours.
What Triggers Paid Leave? Must provide up to fourteen days of paid sick leave to any employee who:
Is subject to a Covid-19 isolation order from government,
Has been advised by a health care professional to self-quarantine due to Covid-19,
Is experiencing symptoms of Covid-19 and is seeking a medical diagnosis,
Is caring for someone who has been advised by a doctor or required by the government to self-quarantine due to Covid-19, or
Employee is caring for their son or daughter under age 18 if school or daycare is closed due to Covid-19.
Family and Medical Leave Act Paid Leave (Expires December 31, 2020)
Applies to employees who have worked for the company for at least 30 days.
Available for employees who are caring for their son or daughter who is under age 18 due to school or daycare being closed.
After the required two weeks of paid sick leave time above has been exhausted, the employee is eligible for another 10 weeks of paid leave at a rate that is 2/3 the employee’s normal payrate.
Employer Reimbursement Through Payroll Tax Credit
All employers who make payments under the Emergency Paid Sick Leave Act or the FFCRA updates to FMLA will receive the full amount of payments as tax credits on the next quarterly payroll tax bill.
If the credit exceeds what the employer owes for quarterly payroll tax, the IRS will issue a refund to the employer for the difference.
So, the bottom line for small employers is that if you have any employees who are either sick from Coronavirus or must stay home to care for their kids due to school or daycare being closed, then you must pay the employee up to fourteen days of paid leave. The good news is that the payments will be refunded with tax credits and can be avoided altogether if you are smaller than 50 employees.
A key question that has yet to be resolved is what exactly the standard will be for the Department of Labor to provide exemptions to businesses with less than 50 employees.
The FFCRA does not cover lost wages to employees due to the business being closed or the business having seriously diminished staffing needs. Employees must look to state unemployment to cover those needs. In Ohio, information on unemployment due to coronavirus is available here.