Under 500 employees? What you need to know about the “Families First Coronavirus Response Act”

While the first major piece of legislation aimed at lessening the financial impact of the coronavirus focuses on helping workers and families, it also has important implications for businesses with 500 or fewer employees.

The recently enacted Families First Coronavirus Response Act (H.R. 6201) affects how these companies handle paid sick leave and family leave, as well as expanding the ability for workers to get unemployment.

What businesses with 500 or fewer workers need to know:

Expanded Family Medical Leave

 Workers with a company for at least 30 days can take 12 weeks of paid family medical leave if they have to self-quarantine, care for an at-risk family member who is self-isolating or look after a child if care is unavailable due to coronavirus.

Employees taking leave must receive:

• Two weeks of fully paid leave (80 hours).
• No less than 2/3 of their regular pay for the remaining leave.
• Part-time workers are entitled to coverage for the normal number of hours they would work in a two-week period.

Compensating businesses: Employers can take a quarterly tax credit equal to 100 percent of their payroll tax share. The credit is limited to $200 per day, up to an aggregate total of $10,000.

Two weeks of Emergency Paid Sick Leave

The Act allows workers to take two weeks (80 hours) of paid sick leave under certain circumstances — and mandates employers provide either full or partial pay depending on the reason. Employees can take 10 days of emergency leave for approved coronavirus-related reasons every calendar quarter.

Guidelines for coronavirus-related emergency sick leave:

Employer required to provide 100 percent of regular pay if:

 The leave is required by a federal, state or local quarantine order.

• A healthcare provider tells the employee to self-quarantine.
• The employee has symptoms and is seeking a medical diagnosis.

Employer required to provide 67 percent of regular pay if:

• The employee is caring for someone who is self-quarantining.
• The employee is caring for their child due to school or childcare closures.
• The employee is experiencing another similar condition defined by the Secretary of Health and Human Services.

Compensating businesses: Employers can claim a credit on their quarterly payroll taxes of up to $511 a day if the worker is caring for themselves or $200 a day if they are caring for someone else.  

Note: The Act doesn’t address whether to take the credit against deposits or the actual payroll tax return. We advise maintaining cash flow by determining your credit and reducing your deposit, however, you should check with your tax professional.

Bottom line

Not all companies are the same and the CPAs and consultants at Boyer & Ritter are ready to help you understand how the Families First Coronavirus Response Act applies in your business situation. We will keep you informed of the latest developments; especially as federal lawmakers work to provide additional relief for businesses during this health emergency.