Government Mandates Sick Leave Pay for Millions of Americans
On March 18, 2020, the U.S. Congress passed H.R. 6201, “Families First Coronavirus Response Act”. Many are not aware of how this act affects them and their families, especially those who own small businesses or are self-employed.
We are here to help explain this in simple terms.
The first thing to understand is that this act may provide up to $15,110 in pay to workers affected by COVID-19 for leave taken starting April 1, 2020.
But how does this work in your particular circumstance? This depends upon several factors:
- You must work for a business that employs less than 500 people.
- You must not be able to work or work remotely.
- At least one of the following must also apply to you:
- You have been ordered (not merely requested) by a Federal, State, or Local government to quarantine or isolate,
- You have a minor child (under the age of 18) who’s school is closed or child care is unavailable,
- You have been diagnosed with COVID-19, have been told to self-quarantine by a doctor, or have symptoms and are in the process of being diagnosed, or
- You are caring for someone else who has been ordered by a Federal, State, or Local government, or who has been told by a doctor, to quarantine or isolate.
There are two parts to this new relief: the “Emergency Paid Sick Leave Act” and the “Emergency Family and Medical Leave Expansion Act”. There are different requirements for each of these acts. Here’s what you need to know about that.
Emergency Paid Sick Leave Act
Any employee who meets the criteria listed above is eligible to receive at least two-thirds of their normal average daily pay for up to 10 days. If the employee is caring for someone else, they can be paid two-thirds of their normal wage up to $200 per day, $2,000 total, during these 10 days. If the employee has been diagnosed with COVID-19, has symptoms and is being diagnosed, or has been told to quarantine by a doctor, they can be paid 100% of their normal wage and the maximum increases to $511 per day, $5,110 total.
Emergency Family and Medical Leave Expansion Act
To qualify for this, an employee must have worked a minimum of 30 days with their current employer. Although there is a two week waiting period, the first 10 days of leave are using their own leave or the “Emergency Paid Sick Leave Act”.
This act applies to an employee who is unable to work (or work remotely) because they need to care for their minor child when the child’s school is closed and child care is unavailable. After the initial two-week waiting period, such an employee is eligible for up to 10 weeks of leave at two-thirds their normal pay, up to $200 per day or $10,000 total.
How will this work for employers?
If you’re an employer you must pay sick leave starting April 1. You may be exempted if you have less than 50 employees and if this requirement would jeopardize the business continuing to operate. Additionally, some health care providers and emergency response employers may choose to opt out.
The wages you pay in leave are reimbursed to you as credit of your federal payroll tax. If the amount of your credit exceeds the amount of payroll tax owed, the employer can request an accelerated payment, which the IRS says they will issue within two weeks of the request.
What are the next steps I need to take?
This article is a helpful overview, but no post can replace the insight of a qualified professional who understand the law, accounting, and how these impact your particular situation.
The issues around these acts and how they affect your business are complicated and unique to you. Perhaps you’re self-employed or work as an employee for your own business. How to protect your business and make the most of this situation for your employees, your family, and yourself requires careful consideration.
Please call us today at (208) 497-5955 or schedule a consultation here.
The material appearing in this communication is for informational purposes only and should not be construed as legal, accounting, tax, or investment advice or opinion provided by Alternative CPA & Consulting LLC. This information is not intended to create, and receipt does not constitute, a legal relationship, including, but not limited to, an accountant-client relationship. Although these materials have been prepared by professionals, the user should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Alternative CPA & Consulting LLC assumes no obligation to provide notification of changes in tax laws or other factors that could affect the information provided.
