Small businesses are a mainstay of the U.S. economy. According to the Small Business Administration (SBA), there are 30.2 million small businesses in the U.S. The coronavirus pandemic has left small businesses, both in the U.S. and around the world, reeling from the economic impact of adhering to social distancing guidelines and state-mandated stay-at-home orders. Congress has passed legislation to attempt to help both workers and small businesses, in the form of the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid Relief and Economic Security (CARES) Act.
Protecting Your Employees: The Small Business Owner’s Guide to COVID-19 Paid Sick Leave
Updated: October 25, 2023
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Help for Small Businesses and the People They Employ
The FFCRA was designed to help small business owners in the U.S. who are still operating during the pandemic by providing paid leave benefits to employees and tax credits to employers for making this paid leave available.
The CARES Act is the $2.2 trillion stimulus package that allows small and medium-sized businesses, unable to operate at this time, to receive federal loans — in some cases forgivable — to cover payroll and other expenses while extending unemployment benefits for workers impacted by the outbreak. Small business owners need to see where best they fit, between these pieces of legislation, and go from there accordingly.
If employers are still able to operate during the global crisis, the FFCRA helps them extend benefits to their employees. As Kansas City labor attorney and member of the Fisher Phillips COVID-19 Taskforce Samantha Moonsees explains: “This law is intended to protect employees. It’s going to help stop the spread of the virus, and people don’t have to feel scared that they’re going to lose their jobs if they stay home because they feel sick or because they have to take care of their child.”
Families First Coronavirus Response Act
The Families First Coronavirus Response Act is a key piece of legislation from the federal government to help provide relief for employers and employees. It incorporates the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act, which is an expansion of the Family and Medical Leave Act.
The FFCRA was passed on March 18, 2020, as one of the first pieces of legislation to be signed into law in the wake of the coronavirus pandemic. It requires certain employers to provide employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19.
Updates have been made to the legislation from when it was first passed in March, as the federal government continues to try to respond to developments around the pandemic and try to mitigate some of the economic impact it is having.
Qualifying employers are required to notify employees of their rights under this act by hanging a Department of Labor poster in the workplace. “There are posting requirements just like there are for other federal laws,” says Moonsees. “We've all seen those posters in the break room. The notice is similar to that. The challenge here is a lot of people aren’t in the break room right now, so we are encouraging our clients to put that in a location that employees can all see while telecommuting, for example, so that might be on an intranet or through a company communication app.”
Emergency Paid Sick Leave Act
This is one part of the FFCRA, and it generally operates in tandem with the Emergency Family and Medical Leave Act. Employers with less than 500 employees must provide full-time employees with 10 days or 80 hours of paid sick leave. Employers must also provide all part-time employees with paid sick leave equal to the average number of hours worked over a typical two-week period. Both are subject to federal eligibility requirements.
Paid Sick Leave
It’s essential for small business owners who employ both full- and part-time employees to understand which businesses are affected and what measures need to be taken to meet the requirements of the FFCRA.
Employer Requirements and Qualifications
Public agencies that employ one or more people and private sector employers with 500 employees or fewer, both part-time and full-time, are required to provide some measure of sick leave as designated by the FFCRA.
Employer Responsibilities
Qualifying employers are required to pay employees their regular wage for two workweeks (80 hours for full-time employees and the typical number of hours over two weeks for part-time employees), capped at a maximum daily rate of $511, and $5,110 in the aggregate per person.
You will need to do this if an employee is unable to work due to:
- Being subjected to a federal, state or local quarantine/isolation order.
- Being advised by a health care provider to self-quarantine (due to concerns related to COVID-19).
- Experiencing symptoms of COVID-19 and seeking a medical diagnosis.
Employers are not allowed to make employees use other leave, for example, accrued time off, first before extending this benefit to them.
Exemptions
Small businesses with fewer than 50 employees may qualify for an exemption if providing this leave would jeopardize the viability of the business to continue operating.
Employers whose employees are health care providers or emergency responders are also exempt from providing qualified sick leave.
To find out if you qualify, visit the Department of Labor’s FFCRA page.
Paid Family Leave
Students are expected to be out of school for the rest of the school year, and there’s no word yet on when child care centers will be permitted to reopen or when it will be safe to do so. That’s where paid family leave comes in.
Employer Requirements and Qualifications
Public agencies that employ one or more people and private sector employers with 500 employees or fewer, both part-time and full-time.
Employer Responsibilities
Qualifying employers are required to pay employees two-thirds of their regular wage, for two workweeks (80 hours for full-time employees and the typical number of hours over two weeks for part-time employees), at a maximum daily rate of $200 per day and $2,000 in the aggregate per person.
You will need to do this if an employee is unable to work due to:
- Caring for an individual who is subject to an order or self-quarantine.
- Caring for a son or daughter if school or child care is closed or unavailable.
- Experiencing any other substantially similar condition specified by the US Department of Health and Human Services.
Exemptions
Small businesses with fewer than 50 employees may qualify for an exemption if providing this leave would jeopardize the viability of the business to continue operating.
Employers whose employees are health care providers or emergency responders are also exempt from providing qualified family leave.
To find out if you qualify, visit the Department of Labor’s FFCRA page.
Emergency Family and Medical Leave Expansion Act
This expansion of the Family and Medical Leave Act (FMLA) depends on where you’re based and what paid leave benefits were in place before the coronavirus pandemic began. It provides for 12 weeks of paid leave to employees who need to care for a child during the coronavirus pandemic. “The most confusing thing is how the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act work in conjunction with each other,” says Moonsees. “The best thing to remember is Emergency Family and Medical Leave is only available for the reason of an employee needing to take care of their child because their school or daycare is closed due to a public health emergency, which in this case is COVID-19. And that’s only paid at two-thirds of their pay.”
FMLA Expansion
Before the coronavirus crisis, the FMLA provided for caregivers to take time off of work for specific family obligations. The expansion of the FMLA is designed to give relief to employees who must remain at home to care for children during the crisis. Some key differences are essential for small business owners to understand.
Employer Requirements and Qualifications
- The FMLA expansion applies to private-sector employers with fewer than 500 employees.
- Public employers, regardless of size, are also included.
Employer Responsibilities
Qualifying employers are required to provide 12 weeks of job-protected leave to any employee who has been employed for at least 30 days. The first 10 days or two weeks is unpaid, but an employee is able to use emergency paid sick leave or any accrued paid leave to cover this 10-day period.
This leave is to be provided if the employee is unable to work (or telework) because of the need for leave to care for a son or daughter under 18 years of age, due to:
- the school or place of care being closed, or
- the child care provider of an employee’s son or daughter being unavailable due to a public health emergency.
In this case, the public health emergency refers to the COVID-19 emergency declared by federal, state or local authority.
Employer Tax Credit
The FFCRA provides small and midsize employers refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing paid sick and family leave wages to their employees for leave related to COVID-19.
Certain self-employed individuals in similar circumstances are entitled to similar credits.
Employer Requirements and Qualifications
Public agencies that employ one or more people and private sector employers with 500 employees or fewer, both part-time and full-time, and are required under the FFCRA to pay sick and family leave wages.
Employer Responsibilities
A qualifying employer needs to receive a written request for the leave from the employee. “We recommend that employers get a self-certification from their employees, depending on what type of leave it is that is being requested, that says ‘I’m telling the truth, this is the reason I need to leave.’ That way, anyone found to be untruthful down the road will be subject to discipline under the employer’s policies,” says Moonsees. “There is guidance from the IRS and the Department of Labor about how to document the reason for leave. The IRS came out with fairly specific guidelines late last week about the types of documentation that an employer needs to get the tax credit. It is important to follow those.”
Exemptions
The FFCRA permits businesses with fewer than 50 employees to potentially claim an exemption from providing paid sick leave and expanded family and medical leave if providing these qualified leave wages would jeopardize the viability of their businesses to operate. Any employer who claims the exemption is not entitled to tax credits for any qualified leave wages that they are exempt from providing. This also applies to employers whose employees are health care providers or emergency responders, who may be exempt from providing this leave benefit too.
Paid Leave Steps to Take for Your Business and Employees
Moonsees has some steps employers can take as they navigate their way through the regulations and be eligible for the tax credits offered in return for providing the paid leave to employees.
“It’s a really difficult time, and there are some tough calls to make,” says Moonsees. “I have yet to find an employer who hasn’t thought really long and hard about the best way to protect their employees and how also to make sure that their business can survive. Everyone is really just trying to find the best situation during a really difficult time.” Employers who are required to provide paid leave should aim to follow these steps:
- Get more clarification if there’s anything that’s not crystal clear. Make sure you understand why an employee would be eligible for this type of paid leave.
- Keep everyone informed. Communicate employee rights by posting details of the legislation on the company’s intranet or online place of communication.
- Don’t hesitate to speak out. If complying with the leave is not going to be feasible, outline the reasons why.
- Create a universal form for every employee who requests the leave. Make sure no one takes any shortcuts and that they provide you with all the information you request. “You want to make sure you have all the necessary information to be able to claim your tax credit,” she says.
- Know that it’s okay to put projects on hold. If you have large projects that are non-essential — for example, a software upgrade or re-modeling a conference room — consider putting those on hold.
- Check with your benefits provider to see if there are any employee contributions that you have offered to your employees that can be put on hold, at least for the next two months. You want to make sure that’s permissible. Some documents govern each employer’s plan.
- Consider if there are any types of subscription services you use that you can perhaps shelve for now. “Perhaps you don’t need the janitor to come every day, seeing as everyone is working from home,” says Moonsees. “On the flip side, if you have an essential business, perhaps you could reallocate costs from a non-essential one to heighten janitorial services and make sure your company is as sanitary as possible and as safe as it can be for your employees.”
- Communicate with your vendors and landlords. “In the Midwest, we like to say, ‘you attract more flies with honey,’ and that is true here too,” says Moonsees. “Everybody is going through a tough time, but talk to your vendors. They may be getting a break and could pass those savings onto you. Same with your landlord. Keep the communication open, and perhaps you can come up with a payment plan.”
- Be transparent with your employees to the extent that you can. “If wages need to be cut so everyone can maintain their health benefits, let your employees know this. A lot of businesses rely on cash flow, and they don’t have cash reserves to float their businesses for a couple of months.”
Other Legislation and Assistance for Small Business
When an employer must shut down a business due to COVID-19, the CARES Act provides some measures of relief. Through the CARES Act, employers can apply for an Economic Injury Disaster Loan (EIDL) or enroll in a Paycheck Protection Program (PPP). The PPP provides loan forgiveness to employers for retaining employees by temporarily expanding the traditional SBA loan program.
Frequently Asked Questions About Employees and COVID-19
Along with keeping businesses afloat and dealing with their own issues during this time, business owners are faced with synthesizing a lot of information regarding their employees. Many have similar questions.
1
Are There Paid Time Off Requirements for Business Owners?
Yes, there are. In the past, business owners haven’t necessarily had to provide paid leave under the law. This has customarily varied from state to state, but now, under the FFCRA, a business owner with 500 employees or fewer is required to provide two categories of leave:
- Paid Sick Leave (up to 10 days): Employees are eligible for up to two weeks, or 10 days, of paid sick leave, capped at 80 hours for full-time employees.
- Expanded Family and Medical Leave (up to 10 weeks): After taking two weeks of paid sick leave, employees who have been employed for at least 30 days may be eligible for up to an additional 10 weeks of partially paid expanded family and medical leave if the employee is caring for a son or daughter because of school or daycare closures due to COVID-19.
This law is effective from April 1, 2020, until it expires on December 31, 2020.
2
What Should I Do If One of My Employees Has COVID-19?
Because of the severity of the pandemic, employers should take steps outlined by the CDC to ensure employees with COVID-19 symptoms are kept separate from other employees, to minimize exposure to the virus or to be sent home.
Under the Family and Medical Leave Act, employers were required to get documentation from the health care provider as to why an employee needed to take the leave. Now, Moonsees says, health care workers are too burdened with taking care of COVID-19 patients to provide this information.
The CDC has strongly encouraged employers not to require their employees who are sick or who need leave due to COVID-19 to provide a doctor’s note. “We have recommended that employers get a self-certification from their employees, depending on what type of leave it is, that says ‘I’m telling the truth, this is the reason I need to leave.’ That way, if they’re found to be untruthful down the road, they will be subject to discipline under the employer’s policies,” says Moonsees.
Moonsees says that under the law, these paid sick leave benefits are in addition to other paid leave benefits that were already available to the employee. “If you’re in a state where you’re required to provide paid sick leave on a state level, then that does not negate or subtract from the employee’s eligibility for that leave under the federal law,” she says. “And similarly, an employer cannot require the employee to use other sick leave before they use their FFCRA benefits.”
For employers who have employees in multiple states, they may not be able to use a consistent form for all and may have to modify their forms slightly for their specific jurisdiction.
3
What If an Employee Needs to Care for a Family Member Who Has Coronavirus?
In most cases, the employer is required to provide up to 12 weeks of paid leave to the employee under the Family and Medical Leave Act, provided the employee and family member meet the eligibility requirements. Employers must provide pay at least two-thirds of the employee’s salary during such a leave period. The first 10 days of this leave may be unpaid, but employees can elect to substitute accrued paid leave during this time, including up to two weeks of paid sick leave from the Emergency Paid Sick Leave Act.
A family member, for purposes of emergency paid sick leave, includes:
- An employee’s parent, spouse, and son or daughter (with no stated age limitation).
- Pregnant women.
- Senior citizens.
- Individuals with disabilities or access or functional needs who are also either the employee’s sibling, next of kin, grandparent or grandchild, or for whom the employee is their next of kin.
4
What Should I Do If an Employee Needs Time Off to Care for a Child?
The FFCRA allows employees time off to take care of a child under the age of 18 who is at home due to school or daycare closure because of the coronavirus pandemic.
The Emergency Family Medical and Leave Act, included in the FFCRA, gives expanded coverage, where employees are entitled to 10 additional weeks of family and medical leave. The first 10 days of the expanded family leave coverage is unpaid, but employees can substitute the time with their own accrued paid sick leave or the emergency paid sick leave under the FFCRA.
“The best thing to remember is that Emergency Family and Medical Leave is only available for the reason of needing to take care of your child because their school or daycare is closed due to a public health emergency. And that’s only paid at two-thirds pay,” says Moonsees.
“There’s also a benefit under the Emergency Paid Sick Leave Act for that same reason, and you can get up to 80 hours at two-thirds pay to take care of your son or daughter. It’s 12 weeks of job-protected leave, in total,” says Moonsees. For part-time employees who have an irregular schedule, that would be calculated on the average hours the employee worked over the past six months.
Expert Insight on Paid Sick Leave for Small Businesses
Samantha Monsees is an attorney in the Kansas City office of Fisher Phillips. She focuses her practice on defending employers across several industries, including automotive, retail, construction and manufacturing. She is a member of the firm’s COVID-19 Taskforce, a cross-disciplinary team of attorneys dedicated to advising employers on the many workplace law aspects of the global coronavirus pandemic. Additionally, Samantha is a member of the firm’s SBA Loan Team, dedicated to advising employers on the inner workings of the complex CARES Act loan process during the COVID-19 coronavirus pandemic.
Interview with Samantha Moonsees, Attorney
Samantha Monsees
What is the biggest concern among employers with regards to paid sick and family leave during COVID-19?
Samantha Monsees:
The biggest hurdle we are seeing is that there are thousands of employers now who are required to comply with the FFCRA that have and have never had to provide any type of paid benefit for sickness or any other reason. So they’re really grappling with how best to handle this.
We’ve received some inquiries where employees are trying to skirt the rules a little bit and maybe try to get paid leave when they don’t really need a qualifying reason.
Like any type of program, there are going to be people who take advantage of it, but this program is intended to help people. There are tax credits available to help employers with the burden of providing this sick leave, so I try to inform clients, ‘let’s not get too in the weeds of this,’ and just focus on following the law and making sure they have the proper documentation that they need on their end to certify the leave and to get the tax credit for the wages they pay, under the FFCRA.
What if an employee doesn’t have COVID-19 but is still being told to stay home because of a state mandated stay-at-home order — what are they entitled to?
Samantha Monsees:
The paid leave benefits only apply to companies that are still operating. If an employer is shut down, for example, if a nail salon or a gym is shut down, and there isn’t a qualifying reason for paid leave or sick leave, that would be addressed by unemployment insurance and the CARES Act. If the employees can’t work from home or telecommute, that would fall under the CARES Act.
The shutdown orders did get confusing. You may think, “Oh, I was told by the government to shelter in place,” but it’s not quite that simple. It really comes down to whether or not the employer is shut down during one of these orders. An essential employee is still meant to go to work.
Can an employee work for some hours and take some of their other hours as leave?
Samantha Monsees:
Some employers have asked if they can offer these benefits on an intermittent basis, say, work for 3 hours a day and then take emergency family leave. Perhaps the employee has a spouse or someone who can help with childcare. The Department of Labor strongly recommends employers work with employees to try to find a reasonable solution that works for everybody. The idea here is to try to prevent the spread of the virus and to help employees who have some of these issues so they won’t lose their jobs, and they won’t lose their pay.
While small businesses have been tasked with taking on a number of requirements to comply with the Families First Coronavirus Response Act, it’s important to remember that providing expanded benefits to workers so they can survive in these times should help your business in the long run. The ultimate goal is for everyone — individuals and businesses — to come out healthy, strong and ready to move forward when the coronavirus crisis passes.
Resources for Small Businesses Impacted by Coronavirus
These resources can help business owners navigate the complicated coronavirus landscape.
CDC: The Centers for Disease Control has published interim guidance for businesses and employers, and also provides regular updates for employers to stay informed.
Department of Labor: The department has created a list of FAQs, covering the details of each part of the FFCRA, and what the paid leave qualifications are.
Fisher Phillips: This law firm, like many others, has created a dedicated COVID-19 task force, with a comprehensive list of questions-and-answers for employers around the coronavirus pandemic.
IRS: The IRS is offering help for businesses affected by the coronavirus pandemic, particularly with regards to guidelines employers should follow to comply with the regulations and receive the tax credits for offering paid leave.
SBA: The Small Business Administration is offering guidance and loan resources for employers to navigate through the coronavirus relief options.
About Nadia Neophytou
Nadia Neophytou is a New York-based South African journalist covering topics ranging from entertainment and politics to business and finance. Her works have been published on Billboard, Deadline, Quartz, Forbes Africa and more.
Neophytou earned her Bachelor of Arts degree from the University of Cape Town.
sources
- CDC. "COVID-19." Accessed October 25, 2023.
- Department of Labor. "Families First Coronavirus Response Act: Questions and Answers.." Accessed April 9, 2020.
- Fisher Phillips. "Congress Finalizes COVID-19 Coronavirus Response Act: Prepare To Provide Paid Sick Leave And FMLA.." Accessed April 9, 2020.
- SBA. "COVID-19 Relief Options." Accessed October 21, 2023.