The current pandemic has caused a flurry of legislation. For most business owners, the most important, immediate law to pass is The Families First Coronavirus Response Act. Below is information on FFCRA and links to a few useful websites, including an SBA website for small business grants and website by the California Realtors Association.
Exemptions for Small Businesses
We have received inquiries about one provision of that law. Small businesses can be exempt for hardship by the Federal Department of Labor for certain provisions of the law. How to apply for an exemption has not been published yet. The latest guidance from the DOL is:
If providing child care-related paid sick leave and expanded family and medical leave at my business with fewer than 50 employees would jeopardize the viability of my business as a going concern, how do I take advantage of the small business exemption?
To elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations.
You should not send any materials to the Department of Labor when seeking a small business exemption for paid sick leave and expanded family and medical leave.
If you believe you could qualify for this exemption, document in detail now. Further regulations will be made detailing how to apply.
Below is information on FFCRA and below are links to a few useful websites, including an SBA website for small business grants and website by the California Realtors Association.
The Families First Coronavirus Response Act
The Families First Coronavirus Response Act (FFCRA) includes provisions for free testing, paid sick leave and family leave, unemployment aid, and nutrition assistance. It will be in effect April 2 through December 31, 2020. FFCRA amends several laws, especially those relating to employees and the tax code. Some major provisions are summarized below.
FFCRA expands upon the Family and Medical Leave Act (FMLA) for businesses with fewer than 500 employees. Employees employed for at least 30 calendar days can take up to 12 weeks of protected leave to care for a child under the age of 18 when the child’s school or daycare is closed due to a public health emergency related to COVID-19. Additional stipulations include the following:
The first 10 days may be unpaid, but employees can use accrued paid leave (vacation or sick days, for example)
After the initial 10 days, pay for each workday is based on the employee’s normal hours calculated at a rate of 2/3 the employee’s regular pay, not to exceed $200 per day or $10,000 for the duration of the family leave
Businesses with 24 or fewer employees are exempt from providing job protection under certain conditions; for example, if the employer is forced to eliminate the employee’s position due to economic conditions or other factors that impact the business due to the public health emergency
If requirements under the Act would jeopardize the business, the U.S. Secretary of Labor could exempt businesses with fewer than 50 employees.
Employers can claim a tax credit equal to 100 percent of qualified family-leave payments made by the employer under FFCRA. The tax credit is first used to offset the employer’s portion of Social Security taxes and can be claimed quarterly. If the tax credit exceeds the employer’s portion of Social Security taxes, the excess credit is refundable to the employer.
FFCRA also includes provisions for allowable sick leave under the Emergency Paid Sick Leave Act. In businesses with fewer than 500 employees, employers are required to provide paid sick leave to any worker who is:
Sick with or quarantined due to COVID-19
Experiencing symptoms of COVID-19 and seeking medical attention
Caring for a child due to a school closure or unavailable childcare
Under the sick leave provision FFCRA, all workers, regardless of how long they have been employed, are covered by the following sick leave provisions:
Full-time employees — entitled to 80 hours of sick leave. Part-time employees — entitled to sick leave equal to the average number of hours they work over a two-week period. The employer may not terminate an employee who takes paid sick leave. The employer may not require employees (as a condition of receiving paid sick leave) to search for or find a replacement to cover for them
Pay and payment caps for sick leave differ depending on whether the leave is used for the employee’s own illness or quarantine or to care for a family member:
If the employee is sick or quarantined or is experiencing symptoms of COVID-19 and seeking medical diagnosis, the pay rate is based on the employee’s regular pay rate or the federal, state, or local minimum wage (whichever is greater) and the number of hours the employee would have been scheduled to work. Total payment is capped at $511 per day or $5,110 total.
When sick leave is used to care for a child whose daycare or school or is closed due to COVID-19, or for a family member, the rate is two-thirds of the employee’s regular pay rate. Total payment is capped at $200 per day or $2,000 total.
Employers can claim a tax credit equal to 100% of qualified sick leave payments made by the employer under FFCRA. The tax credit is first used to offset the employer’s portion of Social Security taxes and can be claimed quarterly. If the tax credit exceeds the employer’s portion of Social Security taxes, the excess credit is refundable to the employer. The following limitations apply:
$511 per day per employee if the sick leave was taken due to employee’s own illness or quarantine due to COVID-19
10 days of leave per qualifying employee
Available only for the second through the fourth quarters of 2020
Note that businesses with 49 employees or fewer are exempt from the paid sick leave requirement if it threatens the viability of the business. Also, any sick leave provided under the Families First Coronavirus Response Act expires on December 31,2020 and does not carry over.
Benefits for the Self-Employed
If you are self-employed, the Families First Coronavirus Response Act allows you to claim a tax credit against your regular income taxes for sick or family leave, but the following limitations apply:
Daily amount is limited to the lesser of your daily self-employment income or $511 per day (for sick leave) or $200 per day (for caring for a child).
You can claim tax credits for up to 10 days of sick leave and 50 days of family leave.
Legal Resources Online
The following websites have useful information for business owners.
Department of Labor information about Families First Coronavirus Response Act
Please stay safe and do send an email or call if you have any legal concerns.
– Eric D. Morton, Attorney