Families First Coronavirus Response Act: Exemptions Available for Small Employers

The United States government signed the Families First Coronavirus Response Act requiring some employers to provide sick and family leave wages during this time due to being quarantined and/or having school and daycare closures.

The Secretary of Labor is tasked with providing additional guidance, so much of the following may change as additional guidance is provided.

Families First Coronavirus Response Act - The Biggest Takeaways

The government doesn’t want you to lay off employees and they also want you to stay in business during this time.

There are 3 big takeaways: 

1. You may be exempt from the family and medical leave portion (not the paid sick leave)  IF you have under 50 employees AND complying with this will jeopardize your ability to stay in business.

2. You will be Reimbursed

   • Qualifying wages paid to employees based on this new law will be reimbursed back to you by the government in the form of payroll tax credits. Meaning you will need the cashflow to pay your employees, but based on the law, 100% of the qualifying wages will be reimbursed back to you.

3. Layoffs or Furloughs
   If you layoff or furlough your workers since they aren't able to work, then you don't have to comply with this law.  They will no longer be employed for you to provide this option.  

When does it start?

The Families First Coronavirus Response Act goes into effect no later than 15 days after the bill was signed - which is April 2, 2020.

What businesses have to provide Paid Sick and Paid Medical & Family Leave to their employees under the new Act?

1. Employers with under 500 employees.

2. Exemption:  You may be exempt from the Paid Medical and Family Leave (Doesn't Exempt you from the Paid Sick Leave) If

3. • Employers with under 50 employees

   • If you have less than 50 employees AND paying wages will jeopardize your business viability, there is an exemption to providing these benefits.  This doesn’t mean that you can’t still provide these acts.   

Which employees qualify under this act?

The following employees will be eligible for sick and family leave:

1. Employees are caring for themselves or anyone else due to Covid-19.

   • a) The employee is required to quarantine based on government order.

   • b) The employee is required to quarantine based on doctors’ orders.

   • c) The employee is experiencing symptoms and is seeking a diagnosis.

   • d) The employee is caring for someone else because of a or b.

2. Your employee is not able to work or (Work from Home) due to schools being closed.

If your employee has children at home due to school closure, but they can still work from home then they may not qualify. But let’s be realistic here, have you ever tried to work while your kids are home? Good luck with that! I can barely answer an email before Luna wants my attention. OK, she is only 6 months old, but you get it.

How much do you have to pay to your employees during Covid-19?

Just to reiterate, the following will be reimbursed via refundable payroll tax credits. Meaning if your payroll taxes are less than the total benefit, they will pay you in excess of your savings.

1. Paid Sick Leave

   • 80 Hours (Typically 2 weeks) of Paid Family and Sick Leave

     • Caring for yourself or someone else -- 100% of pay -- 80 hours (100% of pay---subject to caps)

     • School or Daycare Closed - 2/3rds of pay (Limit is $200 per day - $10,000 total)

2. Expanded Paid Family Leave (May be Exempt)

   • 12 Weeks of protected job-related paid sick and Family Leave to employees.

     • First 10 days are unpaid----however the employee has the option for the first 10 days to

       • Go unpaid

       • Use existing Sick or PTO (if they have any)

       •  Use the Paid Sick Leave above

     • Remaining 10 Weeks

       1.  School or Daycare Closed due to Covid-19 -- 2/3rds of pay (limit is $200 per day up to $10,000)

Full-Time or Part-Time Employees

Full-time would get their full time pay up to the limits. 

Part-time would average out the number of hours they worked in the last 2 weeks to get their rate of pay. 

How does the Payroll Tax Credits work?

Per the law you will be 100% reimbursed for any wages paid that is attributed to the Sick leave or Family Medical leave in this act. 

How will you pay for all of this is your business has suffered?

The government is offering tax credits for abiding by the laws above. So, you need the cashflow to be able to pay your employees during this time. The government is going to pay you back for qualified wages paid through payroll tax credits. These credits are refundable credits meaning if your payroll taxes are less than the wages paid then you will get a refund. 

The key with all of these benefits is to document, document, document.

Have your employees provide you necessary documentation for the qualification they are claiming above. Be specific with dates, printed orders, school/daycare closures, etc.  

You may not have to provide these, but you should definitely have it all on file in case you ever do need to provide the documentation.

If you need help with your payroll, accounting, tax, or cashflow, reach out to us and we can help.

We will get through this together.