Emergency FMLA Expansion Act
The federal Emergency FMLA Expansion Act, included in the Families First Corona Virus Response Act, reimburses an employer’s payments to employees unable to work because of a need to care for children who would otherwise be in school or childcare but for the COVID-19 emergency. A parent who cannot work may claim benefits and can use accumulated paid time off (if any) for the first ten days of leave, and then receive two-thirds of his or her normal pay (but not more than $200 per day) for the next ten weeks of leave. The benefit is capped at $10,000. The employee is paid directly by the employer. The federal government reimburses the employer for payments made during the third through twelfth weeks of the employee’s leave through refundable payroll tax credits. Unless the government is satisfied that compliance with the new paid leave requirement will cause an employer to go out of business, compliance with the Emergency FMLA Expansion Act is mandatory.
Starting April 1, 2020, an employee who is unable to work because of COVID-19 childcare responsibilities may draw down accumulated paid time off (if any) for two weeks, and then will be paid at the two-thirds reduced rate for weeks 3 through 12. If the employee has no accumulated paid time off, the employer is not required to pay the first two weeks of the worker’s leave. If the employer chooses to do so, the government will not reimburse the employer’s cost under this program.
Paycheck Protection Program
The Paycheck Protection Program (PPP), administered through the Small Business Administration (SBA) and established by the Coronavirus Aid, Relief, and Economic Security Act, is a loan program that allows businesses with fewer than 500 employees negatively impacted by COVID-19 to keep employees on the payroll despite disruptions to revenue. The program is open to all types of business, including nonprofits, sole proprietorships, self-employed individuals, and independent contractors. The maximum loan amount is 2.5 times the employer’s average monthly payroll. The loan will be fully forgiven so long as the employer does not lay off employees, its total payroll does not dip by more than 25 percent as compared to the period prior to the COVID-19 crisis, and at least 75 percent of the loan is used directly for payroll expenses (up to maximum annualized compensation of $100,000 per employee). The PPP could be advantageous for any small business that can certify in good faith that the current economic uncertainty makes a loan request necessary to support the ongoing operations of the business.
If you have any questions or would like advice related to your specific situation, please contact (413) 737-1131