What SMBs Need to Know About The Families First Coronavirus Response Act

Trump signed an emergency coronavirus bill expanding FMLA and granting paid leave. Here’s what it means for your SMB.

What SMBs Need to Know About The Families First Coronavirus Response Act

In response to the coronavirus pandemic, President Trump signed HR 6201 — aka The Families First Coronavirus Response Act — into law on March 18.

The legislation will authorize more than $100 billion in aid and address paid sick leave, assistance for families, free coronavirus testing, and expanded unemployment benefits.

The law will take effect April 1 and will expire December 31, 2020.

The bill’s provisions include 2 significant sections that will have a direct impact on businesses with less than 500 employees.

They include:

  • The Emergency Family and Medical Leave Expansion Act (EFMLEA)
  • The Emergency Paid Sick Leave Act (EPSLA)

Let’s break down how this legislation will impact your organization.

The Emergency Family and Medical Leave Expansion Act

Beginning April 1 through December 31, 2020, the Federal Family and Medical Leave Act has been amended to include several changes.

These changes expand the reasons employees can take leave during the COVID-19 outbreak, include job protections, and more.

The EFMLEA expands the language of the Federal Medical Leave Act (FMLA) for the duration of the crisis.

Here are the new definitions:

Qualifying events

The FMLA has been broadened to include employee rights to leave of absence in response to COVID-19.

All employees of businesses with less than 500 workers will be eligible to take leave under the EFMLEA for a “qualifying need related to a public health emergency.”

Employee eligibility widened

In the past, employees must have completed 12 months and 1,250 hours with the company to be eligible for FMLA.

The EFMLA includes leave rights and protections for workers who meet the following criteria:

  • Employed for at least 30 calendar days AND
  • Is unable to work (or telework) due to a need to care for a minor or disabled child for whom they have parental responsibilities (includes adopted, foster, stepchild, legal ward and other in loco parentis) because of either (A) school or place of care closure, or (B) the child care provider is unavailable due to a COVID-19 related public health emergency declared by a federal, state or local government authority.

What benefits are employees entitled to?

The EFMLA requires business pay workers for sick time they need to take under these conditions:

  • The first 10 days of requested leave may be unpaid
  • Employees may elect to use any accumulated sick, vacation, or personal time during this leave
  • After 10 days employers must pay eligible workers no less than two-thirds their regular rate of pay for hours they would have normally worked
  • Pay is up to a maximum of $200 per day or $10,000 total

Those who are unable to work because their child’s school or day care providers are closed due to COVID-19 can receive up to 10 additional weeks of paid family leave at two-thirds rate of pay, capped at $200 per day or $10,000 total.

Employer threshold

The EFMLEA applies to businesses that have employed 50 or more staff members. To meet the required threshold, 50 or more staffers must have put in a working day “during each of 20 or more calendar workweeks in the current or preceding calendar year.”

Job protection reduced

Unlike the FMLA, which requires employers restore workers to their original or a similarly situated position upon their return from leave, the EFMLEA exempts some small businesses from job protection during or after the leave.

Employers with less than 25 staff members don’t have to provide job protection if all the following are met:

  • The employee’s position no longer exists because of the COVID-19 pandemic
  • The employer made reasonable efforts to restore the employee to an equivalent position and terms
  • If an equivalent position does not exist, the employer makes reasonable efforts to contact the employee if an equivalent position becomes available within a 1 year period

EFMLEA Exclusions may apply

The EFMLEA authorizes the Secretary of Labor to waive the rules “for good cause.”

The legislation currently states the secretary may “exempt small businesses with fewer than 50 employees from the requirements of section 102(a)(1)(F) when the imposition of such requirements would jeopardize the viability of the business as a going concern.”

It’s unclear at this time how a small business can request an exemption and for which guidelines under the legislation the exemption will apply.

Emergency Paid Sick Leave Act Paid Leave Requirements

The Emergency Paid Sick Leave Act (EPSLA) mandates employers will have to provide paid leave for eligible employees through the end of 2020.

Leave requests and payments can begin as soon as the bill becomes law (April 1) and after a short waiting period.

Who is eligible for ESPL?

This expansion means employees, regardless of length of employment, are immediately eligible to take job-protected leave in the event:

  • The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19
  • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
  • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  • The employee is caring for an individual who is subject to an order to quarantine or self-isolate or has been advised by a health care provider to self-quarantine due to COVID-19
  • The employee is caring for their son or daughter because of school or place of care closure or the child care provider is unavailable due to COVID-19
  • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor

What benefits are employees entitled to?

Full-time workers are entitled to 80 hours (2 weeks), and part-time employees are entitled to the number of hours equal to the average number of hours they work in a typical 2-week period. Paid sick leave is capped at 80 hours.

Paid leave is calculated depending on the reason outline above.

An employee who is subject to quarantine or experiences symptoms of COVID-19 is entitled to their regular rate of pay, but no higher than $511 per day, ($5,110 total, or 10 days).

An employee who takes ESPL to care for a child because of school or childcare closures due to COVID-19 is entitled to be paid two-thirds of their regular pay rate or two-thirds of the applicable minimum wage, up to a maximum of $200 per day and $12,000 over a 12-week period (2 weeks of ESPL, plus up to 10 weeks of EFMLA).

An employee who takes ESPL to care for an individual subjected to quarantine or for a condition specified by the Secretary of Health and Human Services is entitled to be paid two-thirds of their regular pay rate or two-thirds of the applicable minimum wage, up to a maximum of $200 per day ($2,000 total, over a 2-week period).

Required paid leave must be:

  • No less than the applicable minimum wage where the staff member is employed
  • No more than the employee’s regular rate of pay

Limitations

The FFCRA states companies with less than 50 employees can opt out of leave payroll payments, if they would jeopardize business viability. But again, it’s unclear at this time how a small business can request the right to opt out.

Some Relief for SMBs

Tax Credits for EPSLA payments

The cost of providing paid sick leave will likely be challenging for SMBs, but the FFCRA has offered some relief. Businesses can expect to be fully reimbursed by the federal government for leave pay they issue to employees through refundable tax credits.

For the self-employed

Self-employed individuals receive tax credits. Under the FFCRA, self-employed workers receive reimbursement in the form of tax credits if they calculate their “average daily self-employment income” and provide themselves with EPSLA payments during their leave.

Self-employed workers should calculate their net earnings for the taxable year, then divide by 260. This amount, subject to the limitations of $511 per day/10 days maximum or $200 per day/10 weeks maximum, should be fully refundable in the form of annual or quarterly tax payments.

Posting requirements

Employers will need to post the guidelines of the FFCRA prominently for all employees to see. Expect the Secretary of Labor to make a model notice available within 7 days after the FFCRA is in effect.

Editor’s Note: Neither Workest nor Zenefits is affiliated with the Small Business Administration (SBA) or a lending organization. This article is intended for informational purposes only.

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