Entrepreneurs often find it challenging to stay on top of the regulations that come down from the government, but that’s been especially true since the coronavirus emergency began impacting the country. Businesses are facing new challenges every day, and so are American families, many of whom are struggling to pay bills amid changing working conditions. Federal, state and local governments have been fast-tracking new regs, and today we’ve got the lowdown on how one of them will affect your business.
Background: On March 18, the president signed the Families First Coronavirus Response Act, which will have a significant effect on companies with fewer than 500 employees. The law will go into effect by April 2 and will stay active until the end of 2020.
Check out the following five ways this law will impact small- and medium-sized firms, as well as self-employed individuals.
1. Paid Sick Leave
Employees of firms with fewer than 500 staff members will have the option of taking two weeks of paid sick leave under the Act if their inability to work or telework involves any of the following reasons:
- A government quarantine related to the coronavirus
- Medical advice to self-quarantine due to COVID-19
- Caring for someone subject to quarantine
- Caring for children due to the public health emergency
- Seeking medical diagnosis following symptoms of the coronavirus
Under the Act, employers can access a payroll tax credit so they can be reimbursed for expenses related to leave paid to staff members who have been impacted by COVID-19.
There are some payment limits under the Act, depending on the situation and the local minimum wage laws. In general, however, employers should pay staff members at the higher number of the federal minimum wage, the local minimum wage or their regular pay rate, not to exceed $511 per day.
2. Paid Family and Medical Leave
Businesses with fewer than 500 employees are required to provide up to 12 weeks of paid family and medical leave as long as the staffer has been employed for at least 30 days and is on leave to care for children due to school or daycare closures occurring as a result of the public health emergency, leaving them unable to work or telework.
The benefit kicks in after 10 days on leave, at which point the employer should pay the staff members at two-thirds of their normal pay rate, at a maximum of $200 daily. When the employee returns to work, they are entitled to get back the same or equivalent position. Businesses with fewer than 25 employees have some latitude on returning the employee to an equivalent role if the public health emergency caused economic changes so drastic that it would be impossible to do so.
3. More Money for Unemployment Compensation
The bill provides new flexibility to states in determining whether to extend unemployment benefits beyond the standard 26-week period. In addition, the bill allows the federal government to provide $1 billion more for state unemployment programs, and allows states to eliminate the one-week waiting period before people can apply for unemployment.
4. Reimbursement for Businesses Via Quarterly Tax Payments
Small businesses that are impacted by the paid sick leave and family/medical leave provisions of the Act can get a credit against their quarterly taxes in “an amount equal to 100 percent of the qualified sick leave wages paid by such employer with respect to such calendar quarter,” the Act notes.
5. Credits for Self-Employed Individuals
You don’t have to work for someone else to benefit from the Act’s provisions. Eligible self-employed individuals can get a tax credit against their self-employment taxes if they are out for a qualified reason. If you would have been entitled to paid leave under the Act if you worked for an employer, then you are entitled to it as a self-employed individual, according to the regulations. The maximum benefit is the lower of $200 per day or the daily self-employment income for that tax year.