COVID-19 Legislation

New COVID-19 Policy Impacting Small Businesses:

Families First Coronavirus Response Law and New Department of Labor Guidance 

As of March 20, 2020

On March 18, President Trump signed the Families First Coronavirus Response Act into law.

The Department of Labor’s Wage and Hour Division is holding an open comment period on the Families First Coronavirus Response Act’s expanded paid leave requirements for employers with fewer than 500 employees. The comment period ends March 29, 2020. The expanded family and medical leave provisions are set to take effect April 1, 2020 and expire on December 31, 2020.

On March 24, the Wage and Hour Division announced a temporary non-enforcement period through April 17, 2020. While the paid leave provisions take effect on April 1, a business will not be penalized for violations through April 17, provided that the employer has made reasonable, good faith efforts to comply with the act.

According to a final ruling from the Department of Labor set to be published on Monday, April 6, small businesses with fewer than 50 employees are exempt from providing expanded paid sick and family leave if an employee cannot work due to a lack of childcare (the business is still required to provide paid sick leave in other circumstances). A business is only eligible for this exemption if:

1. leave would cause the small employer’s expenses and financial obligations to exceed available business revenue and cause the small employer to cease operating at a minimal capacity;
2. the absence of the employee or employees requesting leave would pose a substantial risk to the financial health or operational capacity of the small employer because of their specialized skills, knowledge of the business, or responsibilities; or 
3. the small employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services the employee or employees requesting leave provide, and these labor or services are needed for the small employer to operate at a minimal capacity.

Small businesses that qualify for an exemption under the above criteria are not required to send documentation to the department, but must retain records for their own files.

Here is a look at specific provisions of the new law that booksellers should know (keep in mind that state and local laws may also apply):

Job-Protected Family Leave

The bill provides employees of employers with fewer than 500 employees, who have been on the job for at least 30 days, with the right to take up to 12 weeks of job-protected leave under the Family and Medical Leave Act if:

• “The employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.”

The first two weeks can be unpaid. For the remaining 10 weeks, employees will receive a benefit from employers that will be at least two-thirds of the employee’s usual pay, with a cap of $200 per day.

The Labor Department will have the option of exempting workers at any company with fewer than 50 employees, if it determines that providing paid leave would jeopardize the viability of the business as a going concern.

Tax Credit for Paid Family Leave

The bill provides employers with a refundable tax credit equal to 100% of qualified family leave wages paid. Employers can claim the credit quarterly.

Tax Credit for Paid Family Leave for Self-Employed Individuals

The bill provides employers with a refundable tax credit equal to 100% of a qualified family leave equivalent amount for eligible self-employed individuals. The qualified family leave equivalent amount is capped at the lesser of $200 per day or the average daily self-employment income for the tax year and is limited to 50 days.

Paid Sick Leave

The bill requires employers with fewer than 500 employees to provide employees two weeks of paid sick leave if the employee is unable to work (or telework) because:

1. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19;
2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19;
3. The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis;
4. The employee is caring for an individual who is subject to an isolation order or who is a quarantined employee;
5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID–19 precautions;
6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor;

Paid leave is calculated based on the employee’s regular compensation, but is capped at $511 for employees who meet categories (1), (2), or (3) above and $200 for employees who meet categories (4), (5), or (6).

Full-time employees are entitled to 80 hours of paid sick time and part-time employees are entitled to the typical number of hours that they work, on average, in a typical two-week period.

The Labor Department will have the option of exempting workers at any company with fewer than 50 employees, if it determines that providing paid leave would jeopardize the viability of the business as a going concern.

Tax Credit for Paid Sick Leave

The bill provides employers with a refundable tax credit equal to 100% of qualified sick leave wages paid. Employers can claim the credit quarterly.

Tax Credit for Paid Sick Leave for Self-Employed

The bill provides a refundable tax credit equal to 100% of a qualified sick leave equivalent amount for eligible self-employed individuals who meet categories (1), (2), or (3) in the “Paid Sick Leave” section. The bill provides a refundable tax credit equal to 67 percent of a qualified sick leave amount for eligible self-employed individuals who meet categories (4), (5), or (6).

Unemployment Compensation

The bill provides $1 billion for emergency grants to states for activities related to processing and paying unemployment insurance (UI) benefits, under certain conditions. The allocated money will be used to provide immediate additional funding to all states for staffing, technology, systems, and other administrative costs. In addition, the bill reserves emergency grants for states that experience at least a 10 percent increase in unemployment.

U.S. Department of Labor’s Guidance on Unemployment Insurance Flexibilities

While not part of the Families First Coronavirus Response Act, the Department of Labor issued new guidance outlining flexibilities that states have in administering their unemployment insurance (UI) programs to assist Americans affected by the COVID-19 outbreak. Federal law allows states to pay benefits where:

1. An employer temporarily ceases operations due to COVID-19, preventing employees from coming to work;
2. An individual is quarantined with the expectation of returning to work after the quarantine is over; and
3. An individual leaves employment due to a risk of exposure or infection or to care for a family member.

Federal law does not require an employee to quit in order to receive benefits as a result of COVID-19. However, an individual receiving paid sick leave or paid family leave is still receiving pay. Thus, generally speaking, the individual is not “unemployed,” so the individual is ineligible for unemployment insurance.

Since states administer unemployment compensation, check with your state government’s website to see if you are eligible.