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Family First Coronavirus Response Act

The Family First Coronavirus Response Act was signed into law on Wednesday and it may impact some small businesses.

The act applies to all small private sector employers with less than 500 employees that don’t obtain an exemption from the Department of Labor, which may exempt certain employers with fewer than 50 employees from providing paid sick leave or family leave if the requirements would jeopardize the viability of the employer. The law is a short-term law and the provisions that are most likely to impact borrowers take effect on April 2, 2020 and expire on December 31, 2020.

These provisions are as follows:

Emergency sick leave:

  • Employers will need to provide paid sick leave to all employees who cannot work due to the Coronavirus

  • Employees who aren’t in one of the five categories listed, aren’t entitled to take paid sick leave

  • Full time employees are to receive 80 hours of sick leave

  • Part time workers are to receive paid leave equivalent to their average hours worked in a two week period

  • Leave must be used in 2020 and doesn’t carry over to 2021

  • Leave is at the worker’s normal hourly rate

  • If the employee uses leave because they are sick, showing symptoms and/or quarantined, the sick leave is capped at $511 per day and $5,110 in the aggregate.

  • If the employee uses leave to care for someone who is sick, or a child whose school or daycare is closed, the sick leave is capped at $200 per day and $2,000 in the aggregate

  • Employers can’t force employees to use up their vacation or other paid leave before using the sick leave

  • Employers can’t fire someone for using sick leave

  • Employers must post a notice, which has yet to be created, informing employees of the law

Emergency family leave:

  • Requires employers to provide up to 12 weeks of FMLA leave for employees who have been off the job for at least 30 days to care for a child whose school or daycare is closed due to coronavirus.

  • The first 10 days of leave can be unpaid, although a worker could opt to use accrued vacation days or other available paid leave for those days.

  • For subsequent days of leave, workers will receive a benefit from their employers equal to at least two-thirds of their normal pay rate.

  • The paid leave is capped at $200 per day and $10,000 in the aggregate.

  • If employers have more than 25 employees, they must restore the employee to their former position

  • If employers have less than 25 employees, they don’t need to restore the employee if economic conditions prevent it and you have made “reasonable efforts” to restore the employee to an equivalent position.

  • Leave must be used in 2020 and doesn’t carry over to 2021

Tax provisions:

  • The payments that employers make under the sick leave and emergency family leave provisions are not subject to the 6.2 percent social security payroll tax

  • Employers will receive a payroll tax credit for sick leave payments made for up to 10 days per quarter per employee

  • Tax credits for sick leave payments are capped at $511 per day while the employee is receiving paid sick leave to care for himself or herself, or $200 if caring for a family member or child whose school has closed

  • Tax credits for family leave credit for each employee are capped at $200 per employee per day, and $10,000 in the aggregate, which means that the full amount of the family leave is then credited back to employer.

  • There are other tax related provisions and you should consult with your accountants about the Act and how it impacts you from a tax perspective.

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