How does the “Families First Coronavirus Response Act” affect me?

In the past week, small businesses across America are feeling the financial impact from coronavirus restrictions that placed millions of people at home - avoiding non-essential activities, even visits to their eye doctors. As optometrists, we are in one of the highest risk categories for transmission and contraction of the virus. We are also responsible for ensuring the safety of our patients and for our optometric team. On March 17th, 2020, all non-essential care has been ordered to cease and all eye care providers and staff (not providing urgent care) are advised to stay home in the most sweeping measures undertaken in the U.S. to contain the coronavirus. The gravity of these extreme measures not only put a hold on patient care, but also is an economic strain for all optometrists. 


To cushion the financial impact of the COVID-19 outbreak on the American workforce, on March 18, 2020, President Trump signed into law, the Families First Coronavirus Response Act, by introducing the Emergency “Paid Sick Leave” and an expanded “Family and Medical Leave Act” to the nation’s workforce.


This article will address questions that optometric employers and employees may have about the impact of the COVID-19 outbreak on their business and income. 

 

Paid Sick Leave Act

  • (1) If you employ 500 or fewer employees, you will be required to provide your employees with 2 weeks or 10 days (80 hours) of paid sick leave at 100% their pay rate.

  • (2) Starts April 2 and ends December 31, 2020.

  • (3) Employees who are unable to work, the max is $511 per day and $5,110 in the 10 day aggregate

  • (4) For employees who are unable to work due to having children whose school or daycare closed, the maximum is $200 per day and $2,000 in the 10 day aggregate

  • (5) An employer may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the 10 sick days

Who does it affect?


If you employ 500 or fewer employees, this act pertains to you. If you are a W2 employee, this act is here to help you. 


The Act will require employers to provide their employees with 2 weeks or 10 days (80 hours) of paid sick leave at 100% their pay rate. 


Part-time employees receive a pro-rated amount of paid leave based on the number of hours that they work on average during a two-week period. 


Under the FFCRA, an employee qualifies for expanded family and medical leave if the employee is unable to work (or unable to telework) due to a need for leave because the employee:

  1. Is subject to a Federal, State, or local quarantine or isolation order related to COVID-19

  2. Has been advised by a health care provider to self-quarantine related to COVID-19

  3. Is experiencing COVID-19 symptoms and is seeking a medical diagnosis

  4. Is caring for an individual subject to an order described in (1) or self-quarantine as described in (2)

  5. Is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19

  6. Is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

This emergency paid sick leave is to be available for use immediately, no matter how long the employee has been employed.


But unemployment Income (UI) Benefits may be available to those who are on temporary layoff. These benefits occur for claimants whose employer stop operations for  a short period of time.


NOTE If the employer's place of business has shut down, emergency paid sick leave will not have to be paid.

"This emergency paid sick leave is to be available for use immediately, no matter how long the employee has been employed. But If the employer's place of business has shut down, emergency paid sick leave will NOT have to be paid"

When does this begin?


The Act Begins April 2 and ends December 31, 2020.  


Is there a Maximum amount of paid sick leave I have to pay my employees?


Yes, for employees who are unable to work due to reasons 1-4, the maximum is $511 per day and $5,110 in the 10 day aggregate. For employees who are unable to work due to having children whose school or daycare closed, the maximum is $200 per day and $2,000 in the 10 day aggregate


Can I use my employee’s PTO and accrued sick days for the 10 day sick leave mandate?


No, an employer may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the 10 sick days under the Family First Act. Paid sick time under this section shall not carry over from 1 year to the next and must be available for immediate use by the employee for the purposes described in the section above regardless of how long the employee has been employed by an employer


Employers who fail to pay their employees under the Family First Act or employers who unlawfully terminate their employees will be subject to penalties under the Fair Labor Standards Act.

FMLA (Family Medical Leave Act)

  • (1) Employers who employ more than 50 employees are subject to the FMLA 

  • (2) An employee, who is unable to work or telework can take up to 12 weeks of job-protected leave to care for their child (under the age of 18)

  • (3) The first 10 days of Emergency FMLA may be unpaid. During this period, an employee may elect to substitute any accrued paid leave (like vacation or sick leave) to cover some or all of the ten-day unpaid period.

  • (4) After ten days, the employer must pay employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled to work, for the next 10 weeks - totaling 12 weeks of job protected leave. 

  • (5) Limits this pay entitlement to $200 per day and $10,000 in the aggregate per employee (Must be employed >30 days)

  • (6) Provides payroll tax credits to offset all costs of providing these paid leaves. These tax credits equal 100% of the qualified emergency sick-leave and family-leave payments made by the employer pursuant to the act (as long as they fall within the daily caps)

  • (7) If you are a self-employed individual who is affected by the coronavirus emergency, the Act allows you to claim a refundable credit against your federal income-tax bill

What if the employee requires more than 10 days of Paid Time off due to care of a dependent?


After the 10 day “Paid Sick Leave”, employers who employ more than 50 employees are subject to the FMLA (Family Medical Leave Act).


The act exempts Employers who have fewer than 50 employees if the imposition of such conditions would jeopardize the viability of the business. 


Under the expansion of the “Emergency Family and Medical Leave Act”, an employee, who is unable to work or telework can take up to 12 weeks of job-protected leave to care for the employee’s child (under the age of 18), if the child’s school or child-care provider/place is unavailable, due to a public health emergency. This also includes time off required to care for the employee’s parent or spouse who has a qualifying serious health condition

How many days are employers required to pay under the FMLA act?


The first 10 days of Emergency FMLA may be unpaid. During this period, an employee may elect to substitute any accrued paid leave (like vacation or sick leave) to cover some or all of the ten-day unpaid period. The first 10 days of leave may be in the form of the Emergency Paid Sick leave (as described above). 


After ten days, the employer must pay employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled to work, for the next 10 weeks - totaling 12 weeks of job protected leave.


The Act limits this pay entitlement to $200 per day and $10,000 in the aggregate per employee. The employee must be on the job for at least 30 days to take advantage of this act. 

Will the Employer receive Tax Credit for providing these paid leave payments?


This legislation provides payroll tax credits to offset all costs of providing these paid leaves. These tax credits equal 100% of the qualified emergency sick-leave and family-leave payments made by the employer pursuant to the act (as long as they fall within the daily caps).  Aggregate number days may not exceed the excess number of days required under the paid sick leave.


The credit is first used to offset the Social Security tax component of the employer’s federal payroll-tax bill. If the tax credits exceed the amount that the employer owes, they will receive a tax refund.


Warning: The credit is not available to employers that are already receiving the pre-existing credit for paid family and medical leave under Internal Revenue Code Section 45S.


Remember, the qualified sick leave caps wages at $511 per day ($200 per day if the leave is for caring for a family member or child) for up to 10 days per employee in each calendar quarter.


Secondly, the qualified family leave caps wages at $200 per day for each individual up to $10,000 total per calendar quarter. Only those employers required to offer Emergency FMLA and Emergency Paid Sick Leave (summarized above) may receive these credits.


No double dipping. No tax deduction is allowed for any amount of the credit.

"The FMLA Tax credit is first used to offset the Social Security tax component of the employer’s federal payroll-tax bill. If the tax credits exceed the amount that the employer owes, they will receive a tax refund.

Warning: The credit is not available to employers that are already receiving the pre-existing credit for paid family and medical leave"

What if I am Self Employed?


If you are a self-employed individual who is affected by the coronavirus emergency, the Act allows you to claim a refundable credit against your federal income-tax bill, including the self-employment tax hit. If the credit exceeds your bill, you will receive a tax refund.


The credit follows the same “daily pay caps” and “maximums” as the above “Paid Sick Leave” and “FMLA” act. Please see above for specific details.

The Bottom Line


As business owners, it is our duty to take care of our employees and ensure the viability of our businesses during this economic crisis. It is also important to make sure we are well informed on the new labor laws that have recently passed, to avoid future penalties.


In the past week, there have been almost daily developments on the coronavirus-related front that may affect you and your business. We will do our best to keep you informed. So stay tuned — and stay healthy!


If you have questions or concerns about employment issues involving COVID-19, including Emergency FMLA or paid sick leave, we advise that you consult with your accountant or tax counsel for further guidance. 

"As business owners, it is our duty to take care of our employees and ensure the viability of our businesses during this economic crisis. It is also important to make sure we are well informed on the new labor laws that have recently passed, to avoid future penalties."

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About Julie Phan

Dr. Phan is the co-owner (along with her husband, Toan Nguyen OD) of a highly successful optometry private practice in San Marino CA while also running a Sam’s Club sublease in nearby San Bernardino. Always the entrepreneur at heart, Dr. Phan also invests in rental properties. Through leveraging a talented team of realtors, contractors, and property managers spanning five states, Dr. Phan has steadily built a real estate business that generates consistent passive income. Along the way, she hopes to inspire friends, family, and colleagues about the value of real estate investment so they can work towards their own financial independence. Follow Julie's REI Journey on IG @ house_hustle at instagram.com/house_hustle/

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