The Families First Coronavirus Response Act was signed into law by President Trump on 3/18.
As mentioned in my previous post, the law is made up of 2 parts: 1) Now called Emergency Paid Leave Act (EPLA) and 2) The Emergency Expansion of Family Medical Leave (EFMLA).
To qualify for the 1) EPLA, the employee must not be able to work at all (remotely or on-site) due to any of the following:
- The employee is subject to any federal, state, or local quarantine
- A health care provide advised the employee to self-quarantine
- The employee has symptoms of the virus
- The employee is caring for an individual who is subject to quarantine
- The employee is caring for his/her child whose school/daycare is closed due to COVID-19
Benefits: Employees receive 2 weeks paid sick leave at their regular rate. For reasons 1-3, the amount paid can not exceed $511 per day and $5,110 in total. For 4-5, amount paid cannot exceed $200 per day and $2,000 in total.
All eligible employees may apply for EPLA on April 2.
The Secretary of Labor is required to issue guidelines to assist employers in calculating leave benefits by April 2.
To qualify for 2) EFMLA, the employee must not be able to work at all because they are caring for his/her child under 18 whose school/daycare is closed due to COVID-19.
Benefits: Up to 12 weeks of leave. The initial 10 days are unpaid (but paid through EPLA above). After the 10 days, the employee is entitled to 2/3 of normal wages for the number of hours he/she would be expected to work, up to a maximum of $200 per day and $10,000 in total.
All eligible employees may apply for EFMLA on April 2.
Employers get 100% subsidized by the government through refundable tax credits against their employer portion of Social Security taxes to pay for the benefits above. See my 3/17 email regarding this.
Frequently Asked Questions:
Q: What if the business closes temporarily or permanently? Do they still have to pay?
A: If an employee qualifies for EPLA or EFMLA, then the employer must pay and get reimbursed through tax credits later, provided they are not exempt (see below).
But, if a business closure, whether voluntary or involuntary, is the only reason the employee is out of work, then he or she does not get these paid benefits.
The Act gives the US Dept. of Labor authority to exempt small employers with fewer than 50 employees if the paid leave would cause material financial burden. At this point, we don’t know what qualifies a business that is in a tough spot as being exempt.
Q: Are businesses that move to a remote workplace for the time being required to pay for employees who have kids?
A: If the employee works remotely but takes care of kids, there’s no paid benefits. Both EPLA and EFMLA are for employees who cannot work at all (remotely or on-site). One of the qualifying reasons to receive the benefits is the need to take care of kids because of school closing.
Q: What if a full-time worker has their hours cut to part-time because of the coronavirus? Do they still get paid leave?
A: The Act only provides paid benefits to people who are completely unable to work due to the effect of the virus. So an employee who is still working a portion of their hours wouldn’t qualify.
Q: What’s the benefit period for EPLA and EFMLA?
A: The benefits will be available for leave that occurs from January 19, 2020 through December 31, 2020.
Q: Are part-time and self-employed workers eligible?
Yes, as long as they qualify. Part-time workers will be paid the amount they typically earn in a 2-week period. Self-employed people should calculate their average daily self-employment income for the year, then claim the amount they take as a tax credit (they can reduce their estimated quarterly tax payments in the meantime), with the above caps on income in place.
SBA Loans
While somewhat unrelated to the Act above, SBA’s Economic injury Disaster Loans offer up to $2 million in assistance and provide vital economic support for small businesses.
Qualifications: You must have a need for the funds, you must be credit worthy, and there must be reasonable belief of repayment
Use: These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.
Terms: SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay. (This is NOT a line of credit)
IMPORTANT: Businesses with credit available elsewhere are not eligible. This means that if you currently have a line of credit, can get bank financing, or have a lot of equity in real estate or cash in the bank you will not be eligible.
The “credit elsewhere” requirement, means the borrower is unable to obtain some or all of the requested loan funds from non-SBA sources without causing undue hardship. This requirement is in place to ensure SBA-backed loans are used as a last resort.
If you want to apply: Call 1-800-659-2955, e-mail disastercustomerservice@sba.gov or visit: https://www.sba.gov/funding-programs/disaster-assistance
Families First Coronavirus Response Act HR 6201 and Impact on You
