How does COVID-19 Government Regulations Impact your Small Business and Employees…. Making sense of it all!
March 23, 2020
In light of the current COVID-19 virus, both the State and Federal Government have passed extensive legislation to help Small Businesses and their employees manage the economic impact resulting from this health crisis. While containment and slowing the spread of this virus is the paramount priority at this time, the long term financial implications of this pandemic will be felt by everyone for months, even years, long after the health crisis has passed.
In an attempt to mitigate the immediate financial strain on small business and employees, regulations are being passed and updated daily to alleviate some immediate concerns and assist with long term financial sustainability planning. During this time it’s important to understand the legal implications of these regulations on your small business and your employees. That why at ZM Law Group we continue to be committed to providing guidance and assistance to all Small Businesses and their employees. We understand there are many questions and the ZM Law Group team are here to help you make sense of the various ways the regulations can help and hurt your bottom line. Having knowledgeable and committed small business lawyers to answer your questions and assist you with making the best decisions for your Business and employees is essential at this time. This is when you need us most.
Although Governor Hogan has closed all non-essential businesses, Lawyers are exempt from this executive Order, so we can assist and serve clients to take the best actions right for them. We are therefore working and available for you at all times. Please read the updated regulations below and click on the link attached to apply for small business loans and assistance. We will continue to educate you and keep you updated with any new developments.
Families First Coronavirus Response Act Summary
BACKGROUND: On March 18, 2020, the Senate voted 90-8 passing H.R. 6201, the Families First Coronavirus Response Act (FFCRA), a comprehensive legislative package offering support to individuals affected by coronavirus (COVID-19). The legislation, which passed the House on Saturday, March 14th, is headed to President Trump’s desk, and he is expected to sign the legislation into law. The FFCRA contains new employer mandates to offer emergency paid leave to employees if they are impacted by COVID-19 and meet specific criteria. Below outlines two important paid leave programs established under the FFCRA.
EMERGENCY FAMILY LEAVE: The FFCRA amends the Family and Medical Leave Act (FMLA) on government entities and private sector employers with fewer than 500 employees so long as they have been employed for 30 days. If an employee requests emergency family leave due to COVID-19, the following standards must be met by an employer:
Employers must provide 12 weeks of job-protected leave under FMLA to employees who are unable to work or telework because they must care for a child younger than 18 whose school or daycare is closed due to COVID-19.
The first 10 days of leave will be unpaid, though an employee may choose to use accrued vacation days, personal leave, or any other available paid leave for unpaid time off .
Following the 10 days of unpaid leave, employers must pay employees at least two-thirds of their regular pay rate Leave assistance is capped at $200 per day or $10,000 total per employee
EMERGENCY SICK LEAVE: The FFCRA requires government entities and private sector employers with fewer than 500 employees to offer emergency sick leave to employees who are unable to work or telework with immediate paid sick time off if they are affected by COVID-19 under the following circumstances:
-Ordered to comply with a federal, state, or local quarantine or isolation order
-Self-quarantine per a health care provider’s advice
-Diagnosed with COVID-19 by a health care provider
-Caring for an individual who is in quarantine or a child whose school or daycare has been closed due to COVID-19 Full-time employees who are requesting emergency sick leave due to COVID-19 and meet one of the following circumstances above are entitled to receive 80 hours of paid sick leave: (i) Medical Diagnosis of COVID-19 (paid at regular rate) (ii) Advised by a health care provider to self-quarantine due to COVID-19 (paid at regular rate) (iii) Adhering to a federal, state, or local quarantine or isolation order (paid at regular rate) (iv) Caring for an individual who is in quarantine or a child whose school or daycare has closed due to COVID-19 (paid at two-thirds rate)
Employers are also required to adhere to the following emergency sick leave provisions: (i)Part-time employees must be offered time off equivalent to their scheduled or normal work hours in a two-week period). (ii) Leave assistance is capped at $5,110 for a worker’s diagnosis or quarantine due to COVID-19 and at $2,000 to provide care for an individual or child. (iii) An employer cannot require an employee to use any other available paid leave before using this emergency sick leave. (iv) An employer may be subject to civil penalties if found to be in violation of these paid sick leave requirements
EMPLOYERS WITH 50 OR FEWER EMPLOYEES: Per the FFCRA, the Secretary of the Department of Labor has the authority to issue regulations to exempt small businesses with fewer than 50 employees from the emergency family leave and emergency sick leave provisions outlined above if it jeopardizes the viability of the business.
SMALL BUSINESS ADMINISTRATION DISASTER ASSISTANCE LOANS: Earlier this month, Congress passed, and President Trump signed, the Coronavirus Preparedness and Response Supplemental Appropriations Act to make $1 billion available to the Small Business Administration (SBA) to subsidize disaster relief loans to small businesses that have suffered substantial economic injury from the COVID-19 pandemic.
Upon a request received from a state’s governor, SBA will issue an Economic Injury Disaster Loan declaration. Following the declaration, SBA is making available loans statewide. These loans may be used to pay fixed debts, payroll, accounts payable, and other bills that cannot be paid because of the disaster’s impact. Below are key provisions of the SBA Disaster Assistance Loans:
(i) The interest rate is 3.75% for small businesses and 2.75% for non-profits (ii) Affected businesses may apply for up to $2 million in loans (iii) SBA is offering loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years (iv) Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay
Contact your local SBA District office to determine loan eligibility and assistance on what benefits may be available to you due to COVID-19 EMPLOYER TAX CREDITS: The FFCRA provides refundable tax credits to employers to cover wages paid to employees while they are exercising the new emergency paid leave programs and will be put towards an employers’ payroll or railroad retirement tax payments. The tax credit breakdown is as follows: Emergency Sick Leave
• Employers will receive as much a $511 tax credit per day for each employee utilizing emergency sick leave, they are sick with COVID-19 or under quarantine
• Employers will receive as much as a $200 tax credit per day for each employee utilizing emergency sick leave to care for someone quarantined or a child due to a school or daycare closure. The limit would be the excess of 10 days over the aggregate number of days taken into account for all preceding calendar quarters. Emergency Family Leave
• Employers will receive as much as $200 per day for each employee utilizing paid leave, or an aggregate of $10,000 NOTE: Wages paid under the paid leave and family leave programs would not be subject to the employer payroll tax or railroad retirement tax.
The credits would also be increased to cover employers’ 1.45 percent Medicare tax. Additional Summary and FAQs The “Families First Coronavirus Response Act” (H.R. 6201) has passed the Senate and been signed by President Donald Trump. This article discusses the paid Family and Medical Leave Act (FMLA) and paid sick leave provisions of the Act. The Act was revised slightly from the bill passed by the House of Representatives on March 14, 2020. Employers and Employees Covered Both the paid FMLA and paid sick leave provisions apply only to private employers with fewer than 500 employees and certain public employers.
Both provisions allow an employer of an employee who is a healthcare provider or an emergency responder to elect to exclude the employee from the application of these two provisions. In addition, they both allow subsequent U.S. Department of Labor regulations to exempt small businesses with fewer than 50 employees when the provision would jeopardize the viability of the business as a going concern.
FMLA Expansion for COVID-19: The Act amends the FMLA to allow an employee who is unable to work (or telework) to take leave due to a need to care for the employee’s son or daughter (under 18 years of age) if the child’s elementary or secondary school or place of care has been closed, or the childcare provider is unavailable, due to a “public health emergency.” A public health emergency means an emergency with respect to COVID-19 declared by a federal, state, or local authority.
Unlike the original bill, the closure of the child’s school or childcare is the only reason allowed under the added FMLA provisions, and the only reason allowed for paid leave under the FMLA.
Paid Sick Leave for COVID-19 The Act also adds a paid sick leave obligation. Employers with fewer than 500 employees must immediately make available 80 hours of paid sick leave for full-time employees (or the equivalent of the average number of hours over two weeks for part time employees) for the following reasons (which are slightly different than in the original bill): 1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19. 2. The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19. 3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis. 4. The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2). 5. The employee is caring for their son or daughter if the school or place of care of the son or daughter has been closed, or the childcare provider of the son or daughter is unavailable, due to COVID-19 precautions. 6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor.
Amount of Pay Under the FMLA provisions, when leave is needed due to a school or day care closure, the employer can provide the first 10 days of leave unpaid, then subsequent absences for this reason must be paid at 2/3 the employee’s regular rate of pay. The Act includes a cap of $200 a day and $10,000 in aggregate. If the first 10 days are unpaid, an employee may elect to substitute any accrued vacation leave, personal leave, or medical/sick leave for the unpaid leave. Paid sick leave is paid at the employee’s regular rate for a use described in paragraph (1), (2), or (3); and two-thirds of an employee’s regular rate for a use described in paragraph (4), (5), or (6). Paid sick leave also is capped: $511 per day and $5,110 in the aggregate for a use described in paragraph (1), (2), or (3); and $200 per day and $2,000 in the aggregate for a use described in paragraph (4), (5), or (6).
Effective Date Both the proposed FMLA changes and the proposed paid sick leave take effect not later than 15 days after enactment and would remain in place until the end of 2020. Is leave job protected? Yes, the Act offers job protection. However, the FMLA’s requirement that an employee be restored to the same or equivalent position after leave does not apply to an employer with fewer than 25 employees if the employee’s position no longer exists due to economic conditions or other changes in the employer’s operations that affect employment and are caused by the public health crisis during the period of leave. The employer must make reasonable efforts to restore the employee to the same or an equivalent position, and if the reasonable efforts fail, the employer must make efforts to contact the employee and reinstate the employee if an equivalent position becomes available within a one-year period beginning on the earlier of (a) the date on which the qualifying need related to a public health emergency concludes, or (b) the date that is 12 weeks after the date the employee’s leave started.
1. Who pays for the sick time or leave? Employers must pay the benefits, but they will receive a tax credit for doing so.
2. Is the paid sick leave in addition to current leave provided by the employer? Congress removed a provision in the original bill that would have prevented employers from changing their current policies and benefits in response to the Act. But an employer may not require an employee to use other paid leave provided by the employer before the employee uses the paid sick leave available under the Act.
3. At what rate is the paid sick leave accrued? The entire 80 hours of paid sick leave is available immediately. There is no accrual rate or period.
4. Which employees are eligible for these benefits? The new FMLA provisions would apply to employees who have been employed for at least 30 calendar days. The usual FMLA requirements that the employee has been employed for a year, worked for at least 1,250 hours, and works in a location where there are 50 employees within a 75-mile radius would not apply. The paid sick leave requirements would apply to all employees under covered employers. 5. What notice must an employee provide for leave? The FMLA provisions require employees to provide the employer with “notice of leave as is practicable.” The paid sick leave provisions state that after the first workday (or portion thereof) that an employee receives paid sick leave, an employer may require the employee to follow reasonable notice procedures in order to continue receiving the paid sick leave.
6. Does the 500-employee requirement refer to a location or company-wide? The company (not just the location) must have fewer than 500 employees.
7. What about employees who work under multi-employer bargaining agreements? Both the FMLA provisions and the paid sick leave provisions state that an employer who is a signatory to a multi-employer collective bargaining agreement may fulfill its obligations (consistent with bargaining obligations and the collective bargaining agreement) by making contributions to a multi-employer fund, plan, or program based on what paid leave each of its employees is entitled to while working under the agreement. The fund, plan, or program must enable employees to receive pay for the FMLA leave.
8. Is carryover required for unused emergency paid sick leave? The paid sick provisions state that unused paid sick leave does not carry over from one year to the next.
10. Can an employee who takes emergency paid sick leave be required to find a replacement worker? The paid sick leave provisions state that an employer may not require an employee to find a replacement worker when the employee takes such leave.
11. Must an employer pay out unused emergency paid sick leave if the employee separates from its employment? An employer is not required to pay unused paid sick leave if an employee separates from employment.
12. Are employers with 500 or more employees obligated to provide paid sick or leave benefits? They have no such obligation under this bill. However, they still must comply with obligations under state or local paid sick leave or paid family and medical leave laws and administer sick or paid time off or paid leave provided under company policies or collective bargaining agreements.
Many employers are actively assessing whether their existing paid sick and leave benefits adequately support employee needs in this unprecedented public health crisis and adjusting benefits as appropriate for their business and potential coverage under the proposed Families First Coronavirus Response Act.
For More information for Small Businesses and applying for available loans and assistance click on the link for additional information and loan application. Contact the Small Business attorney at ZM Law Group, Owings Mill, With any questions.
For a list of essential business employees, please click here!
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