Small Businesses and the Families First Coronavirus Response Act
By Adrian Karborani and Christopher Anderson, Robert Allen Law
On April 1, 2020 the Families First Coronavirus Response Act (“FFCRA”) went into effect to provide American workers with paid sick leave, free virus testing, and expanded unemployment benefits until December 31, 2020. The law expanded the existing Family and Medical Leave Act (“FMLA”) to reach virtually all small businesses with fewer than 500 employees and requires covered employers to provide emergency sick leave and FMLA leave to employees affected by COVID-19 (“Coronavirus”), although there are some exemptions for businesses with fewer than 50 employees (as explained below). Employers who pay qualifying sick leave are eligible for a dollar-for-dollar tax credit for all qualifying wages paid.
Qualifying Reasons for Emergency Sick Leave
The FFCRA requires employers to provide emergency sick leave to all employees (even if they have only worked for one day) where an employee is unable to work because the employee:
- is subject to a federal, state, or local quarantine or isolation order related to Coronavirus;
- has been advised by a health care provider to self-quarantine due to concerns related to Coronavirus;
- is experiencing symptoms of Coronavirus and seeking a medical diagnosis;
- is caring for an individual who is subject to an order as described above or has been advised by a healthcare provider as described above;
- is caring for a son or daughter if the child’s school or daycare has been closed or the child’s care provider is unavailable due to Coronavirus precautions; or
- 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.
Covered employers must provide to eligible employees:
- For Reasons 1–3: Two weeks (up to 80 hours) at the employee’s regular rate of pay, capped at $511 daily and $5,110 in total.
- For Reasons 4–6: Two weeks (up to 80 hours) at two-thirds the employee’s regular rate of pay, capped at $200 daily and $2,000 in total.
- For Reason 5: Up to an additional 10 weeks at two-thirds the employee’s regular rate of pay, capped at $200 daily and $10,000 in total if the employee has been employed for at least 30 days. The first 10 days of leave may be unpaid, and an employee may elect to use accumulated sick or personal days and vacation time. An employer may not force an employee to use these days.
Requirements for Taking Leave
Employers may require employees to provide reasonable notice (no later than two days) where the need for leave is foreseeable, but employers may not require an employee to find another employee to cover the employee’s shift or work.
When an employee takes leave, employers are required to keep records that include: (a) the name of the employee requesting leave; (b) the date(s) for which leave is requested; (c) the reason for the leave; and (d) a statement from the employee that he or she is unable to work because of the reason. If an employee is taking leave to care for a child, an employer must also document: (i) the name of the child being cared for; (ii) the name of the school, place of care, or child care provider that has closed or become unavailable; and (iii) a statement from the employee that no other suitable person is available to care for the child.
Employers subject to the FFCRA will qualify for a dollar-for-dollar reimbursement through tax credits for all qualifying wages paid between April 1, 2020 and December 31, 2020. Employers will be able to retain an amount of payroll taxes (federal income tax, social security, and Medicare) equal to the amount of qualifying sick leave that they paid to employees instead of depositing those taxes with the IRS. If there are not enough payroll taxes to cover the cost of sick leave, employers will be able to request payment from the IRS for the remaining amount.
Small Business Exemption
Businesses are exempt from providing leave to an otherwise qualifying employee if: (a) the business has fewer than 50 employees; (b) the employee’s leave is to care for a child whose school or place of care is closed (i.e. reason number 5 above); and (c) providing the employee with leave would jeopardize the viability of the business.
Contrary to early reporting, there will be no application process to qualify for the exemption. Small businesses must independently determine if the exemption applies, and will be exempt if they conclude that any of the following apply:
- Providing leave would result in expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- The employee’s absence would entail a substantial risk to the financial health or operational capabilities of the business because of the employee’s specialized skills, knowledge of the business, or responsibilities; or
- There are insufficient employees able, willing, and qualified at the time and place needed to perform labor or services provided by the employee seeking leave, and these labor or services are needed for the business to operate at a minimal capacity.
Notice to Employees
The Department of Labor has released a new poster that all covered employers are required to post in a conspicuous place at the workplace or circulate electronically if employees are teleworking. The poster is available here.
- Does a “stay at home” order qualify an employee for sick leave? No. An employee must be unable to work for one of the six qualifying reasons listed above that prevents an employee from performing their work either (a) under normal circumstances at the normal worksite, or (b) by means of telework. If an employer agrees that an employee will work the normal number of hours, but outside of their normally scheduled hours (for instance early in the morning or late at night), then the employee is able to work and leave is not necessary unless a qualifying reason prevents the employee from working the modified schedule.
- If a business closes before an employee goes on leave, does the business still have to provide sick leave? No. This is true whether the workplace is closed for lack of business or because the business was required to close pursuant to a federal, state, or local order.
- If a business closes while an employee is on leave, does the business still have to provide sick leave? Employers are required to pay any sick leave used prior to the business closing but will not be obligated to pay sick leave after the business closes. This is true whether the workplace is closed for lack of business or because the business was required to close pursuant to a federal, state, or local order.
- Does a business have to pay employees who are furloughed after April 1, 2020? No. Employees who are furloughed because of a downturn in business are not entitled to sick leave. This is true even if an employer indicates that the business will reopen at some time in the future.
- If a business reduces an employee’s hours, can the employee use paid sick leave for the hours they are no longer scheduled to work? No. This is because the employee is not prevented from working due a qualifying reason. However, an employee may be able take sick leave on an intermittent basis when teleworking if approved by the employer.
If you have questions about the FFCRA or how it applies to your business, Robert Allen Law remains fully operational and its attorneys are available to meet your needs during this difficult time.
Adrian Karborani and Christopher Anderson are attorneys at Robert Allen Law.
* This article is provided for informational purposes only and does not constitute legal advice. Please contact an attorney to discuss the specifics of your circumstance.