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As a business owner or entrepreneur, you may be wondering how the new Families First Coronavirus Response Act, or FFCRA, will impact you. The world is in a period of great uncertainty, and many people are worried about both their health and their economic stability. The U.S. government has recently passed the FFCRA and it has become law. Although many additional bills are expected to help Americans deal with the fallout from the coronavirus, this was the first major bill signed into law.
In this guide, we'll go over the most important and relevant provisions of the FFCRA for business owners and entrepreneurs. There are several important items in the new law that will help employers and self-employed individuals, like freelancers, take the time they need for themselves and their families while continuing to earn money with the help of the government.
Please be advised that nothing in this guide should be construed as legal advice. Instead, it should be taken as informational only.
The FFCRA is primarily meant to help small businesses give their employees much-needed sick or family leave because of the coronavirus pandemic. It also has a few specific provisions geared towards those that are self-employed that may need to take leave themselves, either for their own health or to care for their family.
There are some additional items in the FFCRA that won't be relevant to most Americans directly, but will help the government provide better assistance. For example, the bill sets aside more money for emergency funds to several existing government programs, like nutrition assistance. It also provides for money to allow the government and healthcare workers to give free coronavirus tests to the public.
Final takeaway: The FFCRA was passed by the government to help small employers and those that work for themselves.
Before using the helpful leave provisions of the FFCRA, it is important to assess whether they apply to you. The FFCRA does not apply to everyone in the United States. For employers, it only applies to private employers with less than 500 employees and all public employers (although there are certain exemptions). It also applies to those that are self-employed, as mentioned above.
Importantly, the FFCRA does not apply to large employers who have more than 500 employees. The reasoning behind this limitation is that most large businesses already have sick leave and family leave programs that will help their employees during this difficult time. Large businesses also usually have the money to cover these costs, so they won't need as much help from the government.
Small businesses and self-employed individuals are likely to be hardest hit by the economic recession we are facing. Small businesses may also be the least likely able to independently afford to provide paid sick and family leave to their employees. Self-employed individuals, especially, usually can't afford to take time off from work unless they have money coming in from another source.
Final takeaway: The FFCRA applies to people who are self-employed, private employers with less than 500 employees, and most public employers, with some exemptions.
The "effective date" of this new law means the date when it officially goes into effect, or the date people can officially take advantage of the government assistance. The effective date of the FFCRA was April 1, 2020. It expires on December 31, 2020.
Final takeaway: The public can utilize government assistance under this law starting on April 1, 2020.
The emergency paid sick leave provisions of the FFCRA were created to help employees who may need to take time off due to the coronavirus. They can take time off for several reasons: to care for their own health, care for a family member's health, or care for a child that they are in charge of. Please keep in mind these provisions cover situations specifically related to the coronavirus, and are not meant to be general leave provisions.
Specifically, the law applies to employees who cannot work because they:
(i) are subject to a quarantine or isolation order;
(ii) have been told by their doctor they should self-quarantine;
(iii) are experiencing symptoms of coronavirus and are attempting to get tested or otherwise find a diagnosis;
(iv) are caring for a family member who is subject to a quarantine or isolation order, or has been told by their doctor that they should self-quarantine;
(v) have to care for a child who has had their school closed or whose normal caretaker is not available due to the coronavirus; or
(vi) are experiencing anything similar to any of the above, as determined by the Department of Health and Human Services, in conjunction with the Secretary of Labor and Secretary of the Treasury.
Employees who fall into one of the categories listed above can take up to two weeks of paid sick leave. While only certain employers are covered, there is no eligibility requirement for the employees; in other words, they do not have to have been employed for a certain amount of time or accrued a certain number of days or hours of leave. Employees who are considered "full-time" can receive 80 hours of sick leave. Employees who are considered "part-time" will receive leave equal to the average number of hours they usually work in a two-week period. Employees can make their normal wage or salary for the time they take off, but no more than $511 per day and $5110 total.
One thing employers need to be aware of is that they are not allowed to require their employees to use any other kind of leave before using the FFCRA leave. In other words, employers can't force employees to take all their company-paid sick leave before tapping into the FFCRA leave. They also can't require employees take unpaid leave before tapping into the FFCRA leave.
Employers are also prohibited from requiring employees to find a replacement to cover their work during the time of their leave.
In the U.S., employers are prohibited from retaliating against their employees for certain behavior, such as whistleblowing. The FFCRA also makes it illegal to retaliate against an employee who either takes leave or files a complaint related to the employer not providing leave.
Finally, since the effective date of the FFCRA was April 1, employees can't use it to retroactively get paid for leave they already took. Also, since the FFCRA expires at the end of 2020, this leave will not rollover.
Final takeaway: The paid sick leave provisions of the FFCRA give employees two weeks of paid time off under certain conditions related to the COVID-19 pandemic.
The FFCRA also allows for employees to take time off because they need to care for a child. The way it does this is to expand the coverage of another law, called the Family and Medical Leave Act, or FMLA. Under the FFCRA, employers who were previously not covered under the FMLA now will be.
Eligible employers must allow for 12 weeks of FMLA leave because the employee needs to care for a child who has been displaced from school or their childcare provider due to COVID-19. Unlike the paid sick leave provision, this provision is only applicable to employees who have been employed for at least 30 days.
The first 10 days that the worker is on leave could be unpaid if the employee wants it to be (though the employee may use accrued paid leave if it is available) and after that employees are to receive at least 2/3 of their normal wage or salary, up to $200 per day and $10,000 total, while they are out taking care of their child.
Ideally, the employer should allow employees to return to their previous position, but this may not apply if the employer has less than 25 employees and the employee's former position has been cut due to economic concerns caused by COVID-19, as long as the employer has made an effort to put the employee back in a similar role.
Final takeaway: The paid family leave provisions of the FFCRA give employees up to 12 weeks of paid time off under certain conditions related to the COVID-19 pandemic.
The Secretary of Labor is allowed to exclude certain health care workers or first responders from the FFCRA.
More importantly for small businesses, however, those with less than 50 employees can be exempt if providing leave would jeopardize the viability of the business. So far, there has not been a lot of guidance on exactly the exemption would work, i.e., whether employers can refuse to provide leave and then apply for the exemption later, or whether employers must apply for the exemption first.
Final takeaway: If providing leave would hurt the viability of your business, you may be able to receive an exemption from the government.
Eligible employers will receive tax credits for 100% of the amount they expended on their employees' leave during the applicable time period. This means that they can receive a one-to-one credit for the exact amount of money they spent.
Final takeaway: The government will pay for 100% of the leave amounts expended by employers through a tax credit.
Self-employed individuals can also claim a tax credit to help. In other words, those that are self-employed can ask for a refundable credit up to 100% of their total sick leave, but no more than the lesser of their average daily income or $511 per day (no more than $5110 total). If the self-employed person needs to care for a sick family member or child, they can receive up to $200 for ten days, or $2000 total. Finally, they are eligible to take up to 50 days of family leave, not to exceed the lesser of $200 per day or their average daily income, and not to exceed $10,000 total.
Final takeaway: Self-employed workers can get 100% of their leave paid for by the government, up to certain caps.
The FFCRA contains a lot of helpful provisions for employers and entrepreneurs. The point of the new law is to help Americans take the time they need, while still getting paid as much as they can. It's important to understand the details of this new law to get the most out of it. Hopefully, this guide has been helpful and informative. It's also a good idea to chat with a tax professional or accountant in your state to get more help, if needed.
About the Author: Anjali Nowakowski is a Legal Templates Programmer at Wonder.Legal and is based in the U.S.A.