March 18th, 2020: President Trump Signs H.R. 6201, the Families First Coronavirus Response Act into law. 

 

The past week has been a challenging time for small businesses and workers alike.  On March 18th, 2020 a new law was enacted providing expanded paid leave coverage to employees impacted by the Coronavirus pandemic.  Here's what your business needs to know. 

There are two paid leave provisions of the Act: 

  1. The Emergency Family and Medical Leave Expansion Act; and
  2. The Emergency Paid Sick Leave Act

Both provisions impact employers with fewer than 500 employees. There may be exemptions for small businesses with fewer than 50 employees if complying would "jeopardize the viability of the business as a going concern," although there is no guidance yet on how those exemptions will be determined. 

The new law takes effect on April, 2nd 2020 and will remain in effect until December 31st, 2020.

The Emergency Family and Medical Leave Expansion Act

The new law provides employees up to 12 weeks of job-protected leave under the Family and Medical Leave Act (FMLA), to care for an employee's child whose school or care provider is closed due to Covid-19.  

Here are some key points that small business employers should know: 

  • Eligibility: An employee who has been employed for a minimum of 30 days, and is unable to work (including telework), due to a need to care for minor children due to school or care provider closings related to Covid-19. 
     
  • Benefits: The employee can take up to 12 weeks of leave.  The initial 10 days of leave are unpaid, but the employee may use paid sick leave or vacation time during the 10 day period.  After the initial period, the employee is entitled to payment of two-thirds of normal wages, for the number of hours the employee would be regularly scheduled to work. The maximum benefit is $200 per day, and $10,000 in total. 
     
  • Job Protection: As with traditional FMLA, the leave is protected and the employer must return the employee to the same or equivalent position when the employee returns from leave.  The bill provides an exception for employers with fewer than 25 employees if the position no longer exists due to changes in economic and operating conditions of the business, and the employer has made reasonable efforts to restore the employee's position.  If the employee's position is not restored, the employer must make reasonable efforts for at least a year to contact the employee if an equivalent position becomes available again. 
     
  • Notice: The employee must provide the employer notice when "such notice of leave is practicable." 
Emergency Paid Sick Leave

This provision provides employees up to 2 weeks (80 hours) of paid sick leave for reasons related to Covid-19. 

  • Eligibility: All employees, regardless of length of employment, who are unable to work (including telework) due to: 
      
    • A local quarantine or isolation order related to Covid-19. 
       
    • A self-quarantine order from a health-care provider related to Covid-19.
       
    • Time off to seek a medical diagnosis for symptoms related to Covid-19. 
       
    • Time off to care for an individual who is subject to a quarantine or self-isolation order due to symptoms related to Covid-19. 
       
    • Time off to care for a minor child whose school or care provider is closed due to Covid-19.  
  • Benefits:  Full time employees are eligible for up to 2 weeks (80 hours) of paid sick leave. Part-time employees are entitled to the paid leave based on the average number of hours they work in a 2 week period.  Compensation is based on the reason for leave: 
     
    •  If the leave is related to a quarantine order or the employee is seeking a medical diagnosis, the compensation is paid at the employee's regular rate of pay, but capped at $511/day and $5,110 in aggregate.
       
    • If the leave is related to providing care for an individual or child the compensation is paid at two-thirds of the employee's regular rate of pay, but capped at $200 per day, and $2,000 in aggregate. 

An employer can not require an employee to utilize other paid leave before accessing emergency paid leave. 

  • Notice: Employees are not required to provide advance notice prior to the first workday for leave under this act is taken.  Employers can require reasonable notice in order to continue receiving paid sick leave after the first work day. 
     
  • Employer Posting Requirement: Employers are required to post a notice advising employee's of their rights under this act.  Notice guidance will be provided by the Secretary of Labor by March 25th, 2020. 
Tax Credits to Offset Small Business Employer Costs

Businesses will be able to take advantage of tax credits on a quarterly basis to offset the costs associated with paid emergency leave. 

  • Credits for paid sick time can be claimed on a quarterly basis with the employer's quarterly payroll tax filings. Paid sick time credits will equal 100% of the sick leave wages paid and will be refundable if it exceeds the amount the employer owes in payroll taxes. 
     
  • There will be a separate payroll tax provision for tax credits related to family leave payments. The provision also allows for 100% credit, and will be refundable if it exceeds the amount the employer owes in payroll tax.