Small businesses must clear several hurdles to ensure compliance with myriad state and federal laws on a daily basis. Now, in response to the spread of coronavirus around the world, small businesses have been presented with another: the Families First Coronavirus Response Act.
Effective April 1, 2020 through the end of 2020, the law requires most businesses with fewer than 500 employees to provide paid leave to their employees. If an employee requires leave for one of the three reasons below, the employer must provide that employee with 100% paid leave (up to $511 daily):
The employee is subject to a federal, state, or local quarantine or isolation order;
The employee was advised by a health care provider to self-quarantine; or
Is experiencing COVID-19 symptoms and is seeking diagnosis.
Alternatively, if an employee requires leave for one of the following reasons, the employer must provide that employee with paid leave at 2/3rds of their salary (up to $200 daily):
The employee is caring for an individual subject to an order to self-quarantine (reasons one and two above); or
Is experiencing any other substantially-similar condition specified by Health and Human Services.
Further, the law requires leave for up to 12 weeks (again, at 2/3rds of the employee’s pay up to $200 per day) for employees who must miss work to care for their children because their school or care provider is closed due to COVID-19.
Are there exemptions? Yes. Businesses with fewer than 50 employees may qualify for an exemption, but the Department of Labor will not release guidance on that exemption until after April 1. An employer will likely have to show that compliance with the Families First Act will jeopardize the viability of their business.
The government will reimburse small businesses for any expenses incurred under the Families First Act through an immediate, dollar-for-dollar tax offset against payroll taxes. Further, if a business is owed more money than they are able to recoup in tax credits, the IRS will refund the difference.
Is this easy for small businesses? No. But the law is designed to help your employees in a time of need, while also providing small businesses with offsetting payroll tax relief. Further, when we are able to get back to work, the Act will encourage employees to take time off if they need it, which will prevent the spread of COVID-19 in the workplace.
