Wednesday evening, March 18, 2020, President Trump signed the Families First Coronavirus Response Act (“FFCRA”), an emergency legislative measure in response to the spread of the coronavirus, which takes effect April 2, 2020. Under the FFCRA, businesses who employ fewer than 500 individuals will be required to provide up to 80 hours of paid leave to employees forced to miss work because of the COVID-19 outbreak. Details regarding eligible employees are included further below.
The FFCRA also notes that the cost of the benefits will be paid by employers and then reimbursed by the government through refundable payroll tax credits. However, this is raising cash flow concerns from small business owners because the credits will not be recognized for a few months and cash inflows for many organizations have slowed significantly in the past week.
One current solution is to take advantage of low-interest loans being offered by the Small Business Administration (SBA) in certain states significantly impacted by COVID-19.
On its face, FFCRA applies more broadly than the federal Family and Medical Leave Act (“FMLA”), as FMLA leave is not generally available to smaller businesses with fewer than 50 employees. There may eventually be exemptions to the FFCRA for small businesses with fewer than 50 employees if paying for these benefits would “jeopardize the viability of the business as a going concern,” although we are currently awaiting for more guidance from the Secretary of Labor.
If any business is required to close (either temporarily or otherwise) due to COVID-19, the employees will generally be eligible for unemployment benefits offered and paid by the state government. Note that unemployment benefits vary by state and many are proposing legislative changes due to COVID-19. We recommend consulting your legal advisors on unemployment legislature on a state by state basis.
EMPLOYEE ELIGIBILITY FOR NEW SICK LEAVE
Employers are to provide 80 hours of paid sick leave for full-time employees (or pro-rata for part-time employees) that are unable to work, or telework, if the employee:
1. Is subject to a government mandated quarantine or isolation order;
2. Has been advised by a healthcare provider to self-quarantine;
3. Is experiencing symptoms of COVID-19;
4. Is caring for an individual subject to a government mandated quarantine or isolation order or advised by a healthcare provider to self-quarantine;
5. Is caring for a child whose school or place of care has been closed due to COVID-19; or
6. Is experiencing any other substantially similar condition related to COVID-19.
Sick leave must be paid at the employee’s regular rate of pay if taken for the employees own self-isolation (items 1 – 3 above) and only two-thirds the employee’s regular rate of pay if taken for the care of another (items 4 – 6 above). Employers will also be required to pay for 10 weeks of family and medical leave for employees who are unable to work to care for the employee’s child if the child’s school or place of care is closed due to COVID-19 at a rate of two-thirds of regular pay.
If you would like to discuss your specific financial and tax situation with us, please reach out to your Siegfried Advisory team member today to set up a time. We will continue to closely monitor the implications and changes that arise as a result of the COVID-19 situation. Please do not hesitate to reach out to us if you have any questions or concerns.