What Small businesses need to know about the “Families First Coronavirus Response Act”

by | Mar 17, 2020 | News

3/19/20 Update:

Yesterday, President Trump signed the Families First Coronavirus Response Act into law.

The majority of this law has remained the same as detailed in our first update, with a few key changes.

  • This law is effective as of April 2, 2020, and will expire on December 31, 2020.
  • Eligible employees are entitled to take up to 12 weeks of FMLA leave for “a qualifying need related to a public health emergency.” This includes staying home to care for a minor child.
  • The new law offers employers to be reimbursed for sick leave or emergency FMLA via tax credits in certain situations.

While we all understand the desire of the federal government to act, this bill severely impacts small businesses. Small businesses are worried about continued operations, affording payroll and ultimate closure as a result of the requirements of this law. While the bill does call for tax credits for employers who are implicated by this new law, the details of those tax credits remain abstract. 

At this point, small businesses should prepare by doing a few things:

  1. Reviewing their current leave policies to determine how they interact with the new law.
  2. Reviewing revising or creating a teleworking policy, to the extent that they can, that will allow employees to work from home.
  3. Exploring, in more detail, flexible work arrangements which may be utilized instead of full leave.

At this stage, small businesses are waiting for the Secretary of Labor to weigh in with some regulations regarding the exemption. Determining whether to seek to apply for the limited exemption or comply with the new law is a choice that small business owners are making all over the country right now. To many, it is disappointing that larger businesses, who economically are in a better position to handle these provisions, are excluded from compliance.

Find the act in full here.

This weekend, amid growing concern over the COVID-19 virus, the U.S. House of Representatives passed the “Families First Coronavirus Response Act,” (H.R. 6201) with a majority vote of 363-40. This act is a response to address the impacts of the coronavirus on Americans’ personal and financial security and can have a major impact on small businesses. The act will now move to the Senate and is expected to be voted on early this week. 

Specifically important for small businesses are the sections of the act that affect paid family medical leave, and paid sick leave. Currently, these provisions only apply to employers with less than 500 employees. Employers with less than 50 employees can apply for an exemption to exclude them from the payment requirements detailed below. 

“It is important that employers monitor these developments and become familiar with the requirements. Upon passage, they will have a significant impact on employers and employees alike. Judging from the sentiment in and around Washington, this bill is likely to pass with some form close to the current provisions below” says Michelle. 

Paid Family Medical Leave

  • Provision for 12-weeks of job-protected paid Family and Medical Leave Act (FMLA) leave. The first 14 days of this leave may be unpaid for businesses with less than 500 employees. 
  • Paid FMLA leave is only available for the sole purpose of caring for children who are home due to school/daycare closures.
  • Employees may use accrued paid time off (PTO) during the first 14 days but employers may not require employees to do so. 
  • Covered employees must have been employed with the business for 30 calendar days. 
  • Payment is capped at $200 per day per employee and $10,000 in the aggregate.
  • Though these terms are undefined, employers who are health care providers or emergency responders do not have to comply.

Paid Sick Leave

  • Employers are required to provide employees with two weeks worth of paid sick leave for employees impacted by COVID-19. 
  • Full-time employees would receive 80 hours of leave, and part-time employees would receive the equivalent hours worked during a two week period. 
  • This pay is capped at $511 per day per employee, or $5,110 in the aggregate, for full-time employees to take personal sick leave. Payment is capped at $200 per day per employee and $2,000 in the aggregate for people leaving work to care for a family member.
  • Employers are required to notify their employees. 
  • Though these terms are undefined, employers who are health care providers or emergency responders do not have to comply.

If this bill is enacted, both sections described above will go into effect after 15 days and would expire on December 31, 2020. Concerned about how this may affect your business? Contact us today if you need assistance understanding, navigating or implementing these policies. We will consult with you via phone or video conference!