COVID-19

A small business guide to paid sick leave and the FFCRA

The Families First Coronavirus Response Act (FFCRA) is a temporary rule that mandates certain employers to provide paid sick leave for employees affected by the coronavirus. Employers may be reimbursed for the required leave through tax credits and Social Security tax exemptions.

This rule applies to public and private businesses with fewer than 500 employees. Eligibility requirements and provisions may vary for small businesses with fewer than 50 employees.

The act was the first in a series of stimulus packages that address the economic effects of the coronavirus. The Department of Labor is enforcing the rule. Currently, the rule is effective from April 1, 2020, to December 31, 2020.

What employers must provide under the Families First Coronavirus Response Act

The DOL requires employers to display an FFCRA poster in an accessible part of the business. An employer may also satisfy this requirement by emailing or direct mailing this notice to employees or posting this notice on an employer’s intranet website. The FFCRA outlines two new paid sick leave provisions for employees.

The Emergency Paid Sick Leave Act (EPSLA) requires eligible employers to provide up to 80 hours of paid sick leave to full-time employees for COVID-19-related reasons. Generally, part-time employees are eligible to receive the average number of hours they work over two weeks. All employees are eligible for EPSLA leave regardless of how long they have worked for the business.

The Emergency Family and Medical Leave Expansion Act (EFMLEA) expands the current Family and Medical Leave Act (FMLA) temporarily for employees who have been with an eligible business for at least 30 days. This expands paid leave for employees caring for children whose schools have closed or whose child care providers are unavailable due to COVID-19. Eligible employees may receive 80 hours (or two weeks for part-time employees) of unpaid leave, followed by an additional 10 weeks of paid leave at two-thirds their regular rate of pay—up to $200 per day and $2,000 over two weeks.

5 qualifying reasons for employees to take EPSLA leave

Under the EPSLA, employers must provide paid sick leave to employees who are unable to work for five qualifying reasons related to COVID-19.

  1. The employee is subject to a quarantine or isolation order related to COVID-19.
  2. A health care provider has advised the employee to self-quarantine due to potential exposure to COVID-19.
  3. The employee is experiencing COVID-19 symptoms and seeking a medical diagnosis.
  4. The employee is caring for an individual who is under quarantine or was advised to self-quarantine by a healthcare provider.
  5. The employee is caring for their son or daughter whose school or place of care has closed or whose child care provider is unavailable due to COVID-19.

For qualifying reason numbers 1-3, employers must provide paid leave at the employee’s regular rate of pay—up to $511 per day and $5,110 over two weeks. For qualifying reason numbers 4-5, employers must provide paid leave at two-thirds their regular rate of pay—up to $200 per day and $2,000 over two weeks.

How the FFCRA expands the Family and Medical Leave Act

The Family and Medical Leave Act (FMLA) provides certain employees with up to 12 weeks of unpaid, job-protected leave. Employees can use this time to care for an immediate family member or themselves. The EFMLEA expands the FMLA so that employees can receive 80 hours of unpaid leave (or two weeks for part-time employees), followed by 10 weeks of paid leave. An employee may elect to use the EPSLA’s paid leave provision to cover the first two weeks, ensuring that the entire 12 weeks is paid. However, the only eligibility requirement for the EFMLEA leave is to care for a child whose school has closed or whose childcare provider is unavailable due to COVID-19.

If an employee is caring for a family member under quarantine or diagnosed with COVID-19, they can use the EPSLA’s paid leave provisions. If an employee’s family member requires long-term care, the employee may still be eligible for the FMLA’s 12 weeks of unpaid, job-protected leave. Additionally, the DOL advises business owners to refer to local and state medical leave laws to ensure compliance.

FFCRA exemptions for small businesses

Some small businesses with fewer than 50 employees may be exempt from paid sick leave for school or daycare closures and the extended FMLA coverage. Exemptions apply if an authorized officer of the business or the business owner determines

  • Paying for the leave would result in the business exceeding available revenue or ceasing minimal operations.
  • The absence of the employee for that time would pose a substantial risk to the business’s financial health or operational capabilities due to their responsibilities or skill sets.
  • There are not enough willing, able, and qualified employees available to cover the employee on leave and maintain business operations.

The DOL advises business owners to maintain records for why they meet the exemption criteria.

The FFCRA’s employer tax credit and tax exemption

Employers who provide paid sick leave under the FFCRA may be eligible for tax credits that reimburse paid leave and associated Medicare wages. Additionally, employers are not subject to Social Security tax imposed on sick leave payments, according to the IRS. Employers can use IRS form 7200 for advance payment of employer credits due to COVID-19.

To claim tax credits, the IRS instructs employers to keep records of

  • Employee names.
  • Leave dates requested.
  • The amount paid to the employee during their leave, including the cost of employer-provided health coverage.
  • A written statement, explaining the leave and verifying the COVID-19-related reason.

Employers should speak with a tax professional to ensure they’re following all applicable IRS guidelines.

The resources described above are made available to businesses within the United States of America.

COVID-19 relief programs are evolving regularly. Please visit SBA.gov for the most up to date information.


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