The Families First Coronavirus Response Act (FFCRA) has been passed and goes into effect on April 2, 2020. They will be in effect until December 31, 2020, unless there are extensions to the deadline. Here is an overview of how it will impact SMB’s.
The FFCRA includes two provisions. The Emergency Family and Medical Leave Expansion Act (EFMLEA) and the Emergency Paid Sick Leave Act (EPSLA).
Here is the significant information from each new section.
Emergency Family and Medical Leave Expansion Act
The EFMLEA expands the reasons employees can take leave during the Covid-19 outbreak according to Forbes. These include staying home from work because of the Coronavirus, caring for a loved one or child due to the Coronavirus (quarantine/shelter at home), or caring for a child or minor because schools have closed down.
Businesses with 25 – 500 employees must give their employees up to 10 weeks paid leave. The first two weeks are unpaid, unless the employee has PTO available, in which case they may use those days to get paid, which is entirely up to them. Another major amendment to the Family Medical Leave Act (FMLA), is that the EFMLEA changes the amount of time an employee has to work in order to receive the benefit from 12 months or 1,250 hours to 30 calendar days.
The bill also amends the definition of “covered employer” to “fewer than 500 employees” instead of “50 or more employees”.
SMB’s will be required to pay employees as stated below:
- at a rate not less than two-thirds (2/3) of the employee’s “regular rate of pay” (as defined under the federal Fair Labor Standards Act (“FLSA”)), based on the number of hours the employee would otherwise be normally scheduled to work, and
- if the employee’s schedule varies from week to week, benefits under the Bill will be calculated based on the following: (1) the average number of hours that the employee was scheduled per day over the six-month period ending on the date on which the leave begins (including hours for which the employee took leave of any type), or (2) if the employee did not work over that period, the reasonable expected schedule, as established at the time of hiring.
Another notable change to FMLA is the amount of job protection is reduced. For businesses with 25 employees or less, the employer does not have to provide job protection ”if the position no longer exists due to economic breakdown or no longer exists due to other circumstances caused by a public health emergency during the EFMLEA period.”
Businesses with less than 50 employees can opt-out of leave payroll payments if it would “jeopardize the viability of the business.” Although it is not clear at this time how an employer can request an exemption according to Zenifits.
Emergency Paid Sick Leave Act
This act mandates businesses with fewer than 500 employees to provide paid sick leave to its eligible employees for the duration of the year.
An employee may request leave for any of these reasons:
- The employee must self-isolate because they have been diagnosed with the Coronavirus.
- The employee needs to go to the doctor because they are experiencing symptoms of the Coronavirus.
- The employee is ordered to stay home by a doctor or government official on the basis that the employee would jeopardize the health of others.
For any of the above reasons, an employer must pay the employee their normal rate of pay for the time they are off.
- The employee needs to care for family members experiencing symptoms or who are self-isolating.
- The employee needs to care for family members who have been ordered to stay home by a doctor or government official.
- The employee needs to stay home to care for a child because schools and day care centers are closed due to the Coronavirus.
For the above reasons, an employer must pay the employee two-thirds of their regular rate of pay.
Employers must grant 80 hours or two weeks of sick leave under the EPSLA to full-time employees. Part-time employees will be limited to the average number of hours they work within a two week period.
Employees are not required to use any of their accrued PTO days during this time.
Payments are calculated at two-thirds the employee’s regular rate of pay, but not to exceed $511 per day, if the employee is diagnosed with Covid-19, or self-isolating due to symptoms or public health or government official order to stay home. Payment is $200 per day if the employee is caring for a family member. According to EBG Law
Will businesses get reimbursed? Yes, they will eventually receive tax credits to fully reimburse these payments to employees during the specified time period.
Obviously, these mandated payments and time off to employees under the FFCRA, will heavily burden SMB’s during this already financially devastating time. Especially since the reimbursement is not going to come until it’s all said and done. In the meantime, how will businesses survive?
One possibility is a small business loan. There are newly created SBL’s specifically for this pandemic created through the federal government, in which all small business owners can and are encouraged to apply.
During this time, employers should be thinking about how they can pivot their business focus. What goods and services are needed right now that the business can create or provide? How can your business reach out to the community in a meaningful and impactful way during this daunting and unsure time? Timeliness is the key factor with this! Moves need to be made NOW! Use your resources, bounce ideas off colleagues, ask for help, brainstorm! These are unprecedented times….no one knows what they’re doing. Now is not the time to let ego and pride get in the way.
The situation is changing daily, and we do not know exactly what to expect. This is challenging, but being a few steps ahead is the best bet. Do your homework. Having about 3 or 4 contingency plans is essential in preparing for the unknown.