Last week, we posted an update for small business owners regarding the new Families First Coronavirus Response Act (FFCRA). Remember, this mandatory law will go into effect on April 2, 2020 and will apply to small business owners who were previously exempt from FMLA.On Friday, March 20th, the US Department of Labor along with the US Treasury and the IRS announced plans to help small business owners implement the FFCRA. Since the law’s passage on Wednesday, many small business owners have expressed concern about the inability to bear the financial burden that could be imposed under the FFCRA. For small business owners, the financial strain of covering the costs of emergency paid leave could jeopardize the businesses’ ability to stay open. This is especially true in an economy strained under the impact of the novel coronavirus.
Many of our small business owner clients want to protect their employees, both by working to prevent the spread of COVID-19 and by making sure their employees still have jobs to return to despite the slowdown in our economy.
These small business owners should be relieved to know that the federal government is working to ease these burdens on employers. The full announcement from the IRS can be found here, but below are the key points for small business owners to know:
Payroll Tax Credit
As a reminder, under the FFCRA employers are given an immediate dollar-for-dollar tax offset against payroll taxes.
If the payroll tax credit is not sufficient to cover the cost of paid leave under the Act, businesses can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released this week.
There will be a 30-day non-enforcement period for good faith compliance efforts.
For small businesses (fewer than 50 employees) the Department of Labor will release “simple and clear” guidelines for obtaining an exemption from the leave provisions related to school and childcare closures.
We are in unprecedented times, and our laws are changing rapidly. We are committed to keeping our small business owners up to date as new information becomes available. If you have more questions about how to comply with the FFCRA and how to apply for relief, we’re here to help. Contact us for more information. We know times are challenging, and staying informed about all of the resources available to your business and your employees is key. We will continue to keep you updated.
For our small business owners, staying up with changes in the law is critical during these rapidly changing times. If you own a business with fewer than 500 employees, a key piece of legislation recently passed will affect you and your employees during this pandemic. The Families First Coronavirus Response Act passed the Senate and was signed into law on Wednesday. While you can read the full version of the law for more information, below is a summary of the key provisions affecting oklahoma small business owners.
When will it take effect?
The new law takes effect on April 2, 2020 and will remain
effective until December 31, 2020.
Who does the law affect?
All small businesses with less than 500 employees are subject to the law. If you own a small business and have one employee, it applies to you. Larger companies are exempt. A small retail store with 3 employees is subject to the new law, but companies such as Apple or Google are not.
What does the law entail?
As applied to Oklahoma small businesses, the law has two main provisions: 1) Emergency Paid Sick Leave; and 2) expansion of the Family and Medical Leave Act (FMLA).
Part I. What is part of the Emergency Paid Sick Leave?
All employees—regardless of the
length of their employment with the company—are eligible for paid sick leave
under the Emergency Paid Sick Leave Act. Whether you hired an employee 5 days
or 5 years ago, all of your employees are eligible for Emergency Paid Sick
Under Emergency Paid Sick Leave, there are three main components to know: 1) the length of paid leave; 2) the qualifying reasons for paid leave; and 3) the amount of pay during leave.
How many days does emergency paid leave cover?
Full-time employees receive up to 80 hours of paid sick leave.
Part-time employees receive up to the equivalent of the number of hours they would work during a standard two-week period.
What are the qualifying reasons for emergency paid leave?
Under the law, employees may take emergency paid sick leave if the employee is unable to work because:
The employee is subject to a federal, state, or local quarantine or isolation due to COVID-19;
A health care provider advised the employee to self-quarantine due 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 quarantine (federal, state, or local) or has been advised to self-quarantine due to concerns related to COVID-19;
The employee is caring for his or her child whose school or place of care is closed due to COVID-19 precautions; or
The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services (to be later defined).
How much pay is available
to the employee during leave?
If the employee is taking leave for Qualifying Reasons 1, 2, or 3 above (i.e. because of an ordered quarantine due to COVID-19 or while seeking treatment for suspected COVID-19 symptoms) the employee receives paid sick leave at his or her regular rate, not to exceed $511.00 per day.
Example: If your employee is unable to work because he or she is ordered into two weeks of quarantine by a doctor or a governing authority due to COVID-19, you are required to pay the employee at his or her regular rate for the full two weeks.
If the employee is taking leave for Qualifying Reasons 4, 5, or 6 above (to care for another individual in quarantine or to care for a child whose school is closed due to COVID-19), the employee receives paid sick leave at two-thirds of his or her regular rate, not to exceed $200.00 per day.
Example: If your employee is unable to work because he or she is required to stay home with a child under the age of 18 who is unable to attend school or care due to COVID-19, you are required to pay the employee at a reduced rate (2/3 of normal pay) for up to two full weeks.
Key Take Away Points of
Emergency Paid Sick Leave
This paid leave is mandatory. This means employers are required by law to pay eligible employees up to two weeks of sick leave in accordance with the law.
This paid leave is in addition to an
employer’s existing paid leave policies. For example, if your business
currently offers two weeks of paid sick leave, your business must also offer
the additional two weeks of emergency paid sick leave. You cannot alter your
existing paid leave policies in response to the Emergency Paid Sick Leave.
The Secretary of Labor is required to issue
guidelines to assist business owners in calculating leave benefits by April 2.
Employers are required to post notice of the law
to all employees advising them of their rights under the Act.
Part II. Expansion of
Family and Medical Leave
The new law also includes an
expansion of FMLA. Under the expansion, eligible employees whose child’s school
or place of care has closed due to COVID-19 are also entitled to paid leave.
What are the requirements
under traditional FMLA?
Usually, the Family and Medical
Leave Act applies only to businesses with 50 or more employees, and only
applies to employees who have worked for at least 12 months and at least 1,250
hours during the preceding 12 months. The FMLA provides unpaid leave to
employees for certain reasons. If you have less than 50 employees (like most
small business owners) the FMLA traditionally does not apply to you.
Does the new FMLA expansion apply to my small
Yes. Under the new law, the
Emergency FMLA Expansion amends the FMLA on a temporary basis and creates a new
leave policy. This now applies to all businesses with fewer than 500
employees. If you have 1 employee or 499 employees, the new FMLA expansion now
applies to you.
What does the Emergency
FMLA Expansion entail?
First, the expansion applies to all employees
who have worked for the employer for at least 30 days. This is a departure from
the usual requirements of working a minimum of 1,250 hours for the last 12
Second, the expansion applies to all businesses
(employers) who have less than 500 employees. Previously, if you had less than
50 employees you were exempt from FMLA.
What are the Qualifying
Reasons for taking expanded FMLA leave?
Eligible employees may take up to 12 weeks of leave if he or she is unable to work because the employee must care for his or her child who is under 18 years of age and whose school or place of care has closed due to COVID-19.
How is employee pay calculated during expanded FMLA Leave?
The initial 10 days of leave are unpaid, but the employee can elect to use accrued paid sick or vacation days during the 10-day period. After the initial 10-day period, an employee is entitled to received 2/3 of his or her normal wages, up to $10,000.00 in total. If the necessity for leave is foreseeable, the employee must provide the employer with “such notice of leave as is practicable.”
Part III. What else do I need to know as a small business owner?
Remember, this law is mandatory. Even if you were previously exempt from FMLA and did not offer paid sick leave, you are subject to the emergency paid sick leave and expanded FMLA provisions that go into effect on April 2, 2020.
How will small businesses offset these extra costs?
The law provides employer tax credits to offset the costs associated with the paid emergency leave and sick leave. The tax credit is allowed against the employer’s portion of Social Security tax on payroll wages. If an employer’s cost for paid emergency leave or sick leave exceed the taxes the employer owes, the employer will be reimbursed for the difference.
Are there any exemptions?
Yes. The Secretary of Labor is authorized to exclude certain small businesses with fewer than 50 employees if providing the leave would jeopardize the viability of the business as a going concern. The Act also allows exclusion of certain health care providers and emergency responders. At this time, it is unclear how these exclusions will be applied.
If you have further questions about making sure your small business complies with the new law, contact us and we can help you during this transition.