The U.S. Government has put measures in place to help protect citizens whose financial and physical well-being are affected by the coronavirus pandemic. Congress passed the Families First Coronavirus Response Act, or HR 6201, which provides Americans with free coronavirus testing and expanded access to food assistance, unemployment and medical benefits. The act also requires many employers to provide paid sick, family and medical leave.
As a business owner, what does this mean for you?
Your Business’s Obligations
Paid Sick Leave
According to the U.S. Department of Labor, if you have less than 500 employees but more than 50, the Families First Coronavirus Response Act requires you to provide all employees with two weeks of sick leave. Full-time employees (who have been employed by you for at least 30 days) will receive full pay for two weeks, while part-time employees are eligible for pay equal to their average hours over a two-week period.
Fully paid sick leave applies if the employee is:
- Unable to do their work because they are under quarantine
- Experiencing COVID-19 symptoms and awaiting a diagnosis
Employees will receive two-thirds of their full pay for two weeks if they are caring for:
- A child whose school or daycare is closed due to COVID-19
- An individual under quarantine
Expanded Family and Medical Leave
After the initial two weeks, you must also provide up to an additional 10 weeks of paid leave at two-thirds of your employee’s regular pay if they need to care for a child whose school or daycare has closed due to COVID-19.
This emergency paid sick leave is in addition to any existing sick leave or paid time off that you already offer to your employees as a benefit.
In addition, if your business has more than 25 employees, you’re required to reinstate an employee to their position after they return from leave.
If your small businesses has fewer than 50 employees, you may be exempt. If the Families First Coronavirus Response Act might “jeopardize the viability” of your business, you aren’t required to provide leave due to school or daycare closings.
To help compensate for costs associated with the act, the U.S. government is providing quarterly tax credits to businesses that adhere to the new regulations. Employers will qualify for a dollar-for-dollar match reimbursement for all wages paid under the Families First Coronavirus Response Act. Tax credits will also cover the amount a business may need to pay to maintain an employee’s health insurance coverage.
If the tax credits don’t cover employee payouts, the Treasury Department is authorized to help cover the rest with cash payouts. In addition, the Treasury will waive penalties for businesses that don’t submit payroll taxes because they’re waiting for a refund under this new law.
Take These Steps Now
The president signed the Families First Coronavirus Response Act on March 18, 2020, and HR 6201 went into effect on April 1, 2020. It remains in effect until Dec. 31, 2020. If the act pertains to your business, you should determine the aspects relevant to you and work with your affected employees. If your employees can work remotely, make sure you provide them the tools they need to do their jobs. If they will need to claim benefits through the Families First Coronavirus Response Act provisions, make sure you are keeping proper documentation to file for your own tax credit benefits.
With so many business affected, it may take time to receive your tax credits. In the interim, you may consider getting a short-term business loan to cover the gap. Options are available from the Small Business Administration as well as through private lenders. By maintaining good financial records and a healthy cash flow you can help your business survive the crisis and emerge intact.