These are unprecedented times.
From a global virus to social distancing to limited travel to unfolding economic conditions, we’ve never experienced anything like this in our lifetimes.
As a small business owner, you have a lot to process. Not only are you nervous about the viability of your company, you’re also concerned about monitoring mandated health guidelines and the emotional impact this is having on both you and your employees.
Due to the extraordinary events unfolding during the COVID-19 pandemic, the U.S. government has taken steps to help citizens and business owners alike manage the impact. And while these new measures add more responsibilities to your plate, you need to be aware of and prepared for the implementation of the laws.
Here’s What You Need to Know
On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (FFCRA), which went into effect on April 1, 2020, and will remain in effect until December 31, 2020.
Prior to the COVID-19 outbreak, U.S. federal law did not
require private employers to provide paid leave
for employees. The key words being “paid leave.”
Under the pre-existing Family and Medical Leave Act (FMLA), only employers with 50 or more employees within 75 miles of the company’s work site were required to provide unpaid leave
to their employees based on specific guidelines.
That has now changed.
The FFCRA requires all
private employers with fewer than 500 employees, and most public employers, to provide paid leave to all eligible employees. Under the new law, you are required to provide 80 hours of paid leave for eligible full-time employees who are:
- Subject to a federal, state or local quarantine or isolation order related to COVID-19
- Advised by a health care provider to self-quarantine due to COVID-19 concerns
- Experiencing COVID-19 symptoms and seeking medical diagnosis
- Caring for an individual subject to a federal, state or local quarantine or isolation
order or advised by a health care provider to self-quarantine due to COVID-19 concerns
- Caring for the employee’s child if the child’s school or place of care is closed due to COVID-19 related reasons
- Experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and the Secretary of Labor
The FFCRA also allows up to an additional 10 weeks of expanded family and medical leave to employees who are unable to work in order to care for a child whose school or place of care closed during the national emergency. To be eligible for this provision, an employee must be employed by your company for at least 30 calendar days (rather than the typical 12-month employment period/1,250 hours required for FMLA coverage).
Under the new FFCRA guidelines, all eligible employees are entitled to the following:
- Two weeks (up to 80 hours) of paid leave at the employee’s regular rate of pay (or the applicable minimum wage, whichever is higher) where the employee is unable to work because the employee is quarantined (because of a federal, state or local government order or advice of a healthcare provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
- Two weeks (up to 80 hours) of paid leave at two-thirds the employee’s regular rate of pay (or the applicable minimum wage, whichever is higher) because the employee is unable to work because of a need to care for an individual subject to quarantine (because of a federal, state or local government order or advice of a healthcare provider), or to care for a child (under 18 years) whose school or childcare provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as prescribed by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor; and
- Up to an additional 10 weeks of expanded family and medical leave at two-thirds the employee’s regular rate of pay (or the applicable minimum wage, whichever is higher) where an employee, who has been employed for at least 30 calendar days, is unable to work due to a need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
The Department of Labor (DOL) will observe a temporary period of non-enforcement for the first 30 days after the FFCRA takes effect, as long as you act reasonably and in good faith to comply with its provisions. Businesses failing to comply after the grace period will be subject to enforcement provisions of the FMLA and/or the Fair Labor Standards Act.
There Is an Exception
If your business has fewer than 50 employees, you may be exempt from providing emergency paid leave.
According to the DOL, exemption is admissible “when the imposition of such requirements would jeopardize the viability of the business as an ongoing concern.” In order to qualify, you must demonstrate at least one of the following:
- Complying with the new laws would lead expenses to exceed revenue, effectively causing your business to cease operation.
- Absence of an employee would create a substantial risk to the financial or operational abilities of your business due to the employee’s specialized skills and knowledge of your business or responsibilities.
- There are insufficient workers available who are willing and qualified to perform in place of the employee or employees requesting paid sick leave or expanded family and medical leave, where these services or skills are required for your company to operate at minimal capacity.
Tax Credits Provide a Silver Lining
The FFCRA provides businesses with tax credits to cover certain costs of providing employees with required paid sick leave and expanded family and medical leave for reasons related to COVID-19, from April 1, 2020, through December 31, 2020.
Qualifying wages are those paid to an employee who takes leave under FFCRA for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage. For clarity on the tax credits, it’s wise to consult your tax attorney or visit the U.S. Department of the Treasury website
for more information.