FMLA for small Businesses (under 500 Employees)
There are several basic different benefits under the provision of the Family First Coronavirus Response Act (FFCRA or Act) and are broken out down below:
General Guidelines:
- Employers will receive 100% reimbursement for paid leave pursuant to the Act.
- Employers will get paid for via Payroll tax credits.
- Businesses under 50 employees can request an exemption to provide the leave under this Act where the viability of the business is threatened.
- Items in this Act will most likely apply from a date in January that will be defined in the April 2nd completing of the rules.
- If a business developed a paid leave plan for COVID-19 in the past month, that policy must be exercised prior to using this Act’s provisions (unless overwritten in final instructions).
Paid Leave for Child Care:
If an employee cannot come to work because the employee’s child’s school or daycare is closed, that employee will be paid per the guidelines below:
- The employer is required to pay this benefit to the employee.
- The 1st two weeks may be unpaid, or the employer may allow the employee to take PTO, vacation or sick leave this employee has established in regard to the allotted amount outlined in the organization.
- Thereafter, the following 10 weeks will be paid by the organization at two-thirds of the regular wage, up to $200.00 per day for a total aggregate of $2,000.00.
- Under guidelines provided on April 2, 2020 the employer will be granted a credit from payroll taxes paid. If there are not sufficient taxes, accelerated payment from the IRS will be available.
- Details will be available on April 2nd explaining tax credits to maintain the employees benefits during this time.
- Employers are encouraged to set up a new paid leave code in the payroll system for keeping this expense separate for reporting reasons to get appropriate tax credits.
Paid Sick Leave:
- Paid Sick leave is permitted if an employee is unable to work because of COVID-19 concerns such as:
- Quarantine directed by a Doctor or isolation order.
- Self-quarantine advised by a healthcare advisor.
- Has symptoms and is seeking medical diagnosis.
- Caring for an individual with an isolation order or advised by a healthcare provider to self-isolate (max payment is $200.00 per day for caring for others).
- Employer must pay full wages for up to two weeks.
- Maximum payment is $511.00 per day.
- Under guidelines provided on April 2, 2020 the employer will be able to take a credit from payroll taxes paid. If there are not sufficient taxes, accelerated payment from the IRS will be available.
- Details will be available on April 2nd on tax credits to maintain employee benefits during this time.
- Once again, employers are encouraged to set up a new paid leave code in the payroll system for keeping this expense separate for reporting reasons to get appropriate tax credits.
Small Business loan:
- Not approved yet; however, the Senate has strong details on small business loans that both the House and Senate seem to be in agreement.
- Loans will automatically be approved as a Small Business Loan.
- If you keep 90% of your employees without Furloughs or Layoffs, the loan will be forgiven.
- Loan may be used to pay employees, employee benefits and leases for facilities.
- Amount is undetermined at this time, although one to two months of operating costs has been discussed.
If you must reduce staff:
What is the difference between laying a person off versus a furlough?
- Furloughs are where the employer agrees to continue to pay both the employee and employer benefits during a set period of time; for example: 2 weeks or even 2 months. Employees should receive a letter from the employer stating the terms and conditions of the furlough including the anticipated timeframe.
- A furlough timeframe can extend the furlough time. A new letter of terms should be prepared and sent out at that time.
- A Full Furlough is a complete stop of all work and employees, including exempt employees. Employees cannot do any work including answering email.
- A Partial Furlough is a reduced schedule. Some examples are working 25 hours a week, or the employee doesn’t come in for the next three days, or work M-W-F etc.
- For employees with partial furloughs, the employer will need to enter hours at the end of each week through the DOL site (based on the business’s state’s guidelines). The employer should set up an online account for the FID Entity.
- This data entry of hours work is how the DOL will pay the partial employees their Unemployment payments.
- Each state may have different guideline so we familiarity with those for each state in which businesses have employees is important.
- Reiterating that employers are highly encouraged to set up a new paid leave code in the payroll system for keeping this expense separate for reporting reasons to get appropriate tax credits.
- A Lay-Off not having an employee come back to work for the company. Consider the future months ahead and if that employee is worth bringing back to work. If not, in this case, you would lay the person off. You cut the cord in paying benefits, releasing them for any employee status with your company.
- Employers ought to set up a new paid leave code in the payroll system for keeping this expense separate for reporting reasons to get appropriate tax credits.
Follow Flex HR’s latest HR advice on the Coronavirus.
Written by Jim Cichanski, CEO, Flex HR, Inc.
* Statistics and government guidance are rapidly changing. This is the most updated information as of 3/23/20.
