Small Business Implications of FFCRA – Apex Benefits

Small Business Implications of FFCRA

March 19, 2020 Updates

The Families First Coronavirus Response Act (H.R. 1602) is a supplemental appropriations major piece of legislation that provides funding for a multitude of public and employee assistance programs like SNAP (food stamps) and the states’ unemployment insurance provisions.  It also provides free testing for COVID-19.

The following goes into effect April 1, 2020.

Particular to the employer-employee relationship, the Act also includes:

Emergency Paid Sick Leave:

  • Small businesses will be required to provide two weeks of paid sick leave to an employee that:
    • Has a current diagnosis of COVID–19, or is under quarantine at the instruction of a health care provider, employer, or a local, State, or Federal official.
    • Is engaged in caregiving for an individual who has a current diagnosis of COVID–19 or is under quarantine.
    • Is engaged in caregiving, because of the COVID–19-related closing of a school or other care facility or care program, for a child or other individual unable to provide self-care.
    • This does not apply to businesses with over 500 people [i]and small businesses with under 50 employees may avoid the requirements if they “would jeopardize the viability of the business as a going concern”.

Treasury will have to distribute guidance as to how these exemptions would be made.

  • These provisions would expire at the end of calendar year 2020.

Family Medical Leave:

  • The bill expands the Family and Medical Leave Act to include leave needed to care for an employee’s child whose school or care provider is closed due to COVID-19. This leave can be used by employees who have been employed by their current employer for at least 30 days. This applies to any private sector employers under 500 employees.
    • The first 10 days of FMLA leave may be unpaid — beyond that time employers must compensate employees for the remainder of FMLA-leave taken (up to 10 work weeks) at 2/3 of their regular rate of pay.
    • FMLA paid leave is capped at $200 per day and $10,000 per employee total.

Tax Credits for Paid Family and Medical Leave:

  • The Act has a refundable tax credit equal to 100% of paid family or medical leave wages paid by the small business each quarter. The credit can be used against the employer’s social security taxes and applies to amounts paid to employees who are sick or quarantined. A smaller credit applies to amounts paid to employees caring for a family member or for a child whose school or place of care has been closed. Individuals who are self-employed also qualify for refundable credits.

Emergency Unemployment Stabilization

  • Provides $1 billion for emergency grants to states for activities related to processing and paying unemployment insurance benefits.
  • $500 million would be used to provide immediate additional funding to all states for staffing, technology, systems, and other administrative costs, so long as they met basic requirements about ensuring access to earned benefits for eligible workers. Those requirements are:
    • Require employers to provide notification of potential unemployment insurance eligibility to laid-off workers.
    • Ensure that workers have at least two ways (for example, online and phone) to apply for benefits.
    • Notify applicants when an application is received and being processed and if the application cannot be processed, provide information to the applicant about how to ensure successful processing.
    • $500 million would be reserved for emergency grants to states which experienced at least a 10% increase in unemployment.
    • States that experience an increase of 10% or more in their unemployment rate (over the previous year) and comply with all the beneficiary access provisions will qualify for 100% funding for Extended Benefits.
    • Extended benefits are triggered when unemployment is high in a state and provide up to an additional 26 weeks after regular unemployment insurance benefits exhausted. This section also suspends the financial penalty for states that waive the usual one-week waiting period for benefits.

[i] Sources for this information include the H.R. 1602 bill text, U.S. Senate.gov, U.S. Chamber of Commerce, and various trade association web pages.


March 16, 2020 Updates

What Congress has passed to help small businesses:

Loan Subsidies: H.R. 6047— the first Coronavirus bill— allowed $1 billion in loan subsidies to be made available to help small businesses, small agricultural cooperatives, small aquaculture producers, and nonprofit organizations which have been impacted by financial losses as a result of the coronavirus outbreak. This funding could enable the Small Business Administration to provide an estimated $7 billion in loans to these entities. In addition, provides $20 million to administer these loans.

What Congress is working on:

Sick Leave: H.R. 6201— the second Coronavirus bill signed into law — includes a refundable payroll tax credit to reimburse—dollar-for-dollar—local businesses for paid sick leave and family and medical leave wages paid to employees that are affected by COVID-19. Click here for an explanation of who is eligible and for what amounts.

Cash Flow: H.R. 6201 provides significant relief to businesses that otherwise may not be able to afford the employee costs associated with coronavirus-related paid leave.  Treasury has broad regulatory authority to advance funds to employers to protect businesses concerned about cash flow.  In a March 14th press release, Treasury stated that “employers will be able to use cash deposited with the IRS to pay sick leave wages.  Additionally, for businesses that would not have sufficient taxes to draw from, Treasury will use its regulatory authority to make advances to small businesses to cover such costs.”

Paid Leave: The benefits under H.R. 6201 are not an expense for the business, rather it operates as a benefit to both the worker and the employer.  The legislation will ensure that every dollar of leave that an employer is required to pay is reimbursed—dollar-for-dollar—by the federal government.  It will allow workers to care for themselves and loved ones impacted by coronavirus.  Additionally, the credit will help businesses to stay up and running.  After all, workers who knowingly show up sick jeopardize the health of coworkers and business operations.

Nearly 90% of businesses with more than 500 employees offer paid sick leave to their full-time workers.  To facilitate more universal coverage of paid sick leave, H.R. 6201 provides temporary federal coverage for paid sick and family leave to all employers with fewer than 500 employees.

FMLA Exemption: H.R. 6201 as passed by the House permits the Secretary of Labor to exempt businesses with fewer than 50 employees from the longer-term mandate where it creates significant hardship.

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