As the US government provides aid to business and families like, it’s crucial to understand the specifics of the FFCRA and the CARES Act.
Note: The following is the UpCounsel Legal Team’s analysis of the CARES Act and the FFCRA, and how they may affect employers. It is not legal advice. Consult your own legal resources before making decisions for your business.
In March, the United States government signed into law H.R. 6201, or the Families First Coronavirus Response Act (FFCRA) just weeks before signing in the CARES Act, which further tweaked the FFCRA to amend it for employees who had been laid off after March 1st and recently rehired.
Together, these two Acts were created to relieve some 59 million employees who are employed by 31 million small businesses. With these changes, employers can anticipate a variety of changes that can benefit a business throughout the corona period, as these Acts were created to boost the economy and provide immediate relief for both employers and employees across the nation. Here are five things that employers need to know about these acts and how it can affect business in the coming months:
1. The Emergency Family and Medical Leave Expansion Act involves employee leave
This act will require employers to provide up to 12 weeks of unpaid leave to an employee who is unable to work due certain reasons involving COVID-19. These certain reasons include an employee who:
- is unable to work after being diagnosed with COVID-19,
- has to care for a child who is sick,
- has to care for a child who cannot go to school due to school closures,
- has to care for a child whose typical caretaker is unavailable, or
- is otherwise unable to work due to a COVID-19 public health emergency, as declared by any Federal, state, or local authority.
2. The Emergency Paid Sick Leave Act provides paid sick leave
The Emergency Paid Sick Leave Act is a landmark Act that will require an employer to provide up to two (2) weeks of paid sick leave to any employee who cannot work due to illness related to or caused by coronavirus. This also applies to employees who can carry out work remotely.
3. Employers have access to refundable payroll tax credits
As mentioned in a previous article, these Acts provide relief for businesses who are keeping their employees rather than laying them off. Perhaps the most useful for the provisions under these Acts is to provide $350 billion in loans to cover payrolls. A small business with corona-related disruptions may be able to apply to up to $10 million in loans to cover both payroll and other certain business expenses.
Added to this are refundable tax credits to use against payroll taxes, which, although has certain limitations, is intended to be used to equal 100% of the qualified wages paid by an employer. The CARES Act amended these refundable credits so that if an employer anticipates being granted a tax credit, the employer can receive the tax credit in real-time, rather than undergoing the traditional application and reimbursement of credits.
4. The CARES Act expanded the FFCRA’s “Eligible Employees”
Under the amendments, an eligible employee includes any employee who has been employed for 30 days or more. This means that anyone who has been employed for at least 30 days is eligible for up to 12 weeks of leave.
5. The CARES Act has included employees who were laid off and rehired
Under this amendment, an eligible employee who was laid off by an employer and rehired by the same employer will be able to receive benefits under the FFCRA. This eligible employee must also have been laid off after March 1st, 2020 and had worked for at least 30 of the 60 prior days.
Together, the FFCRA and the CARES Act are intended to help small businesses through this time while encouraging employers to keep their employees on the payroll (to learn more about this in a previous blog post, click here). They also outline how eligible employees should be covered should they be unable to work due to caring for someone during corona-related circumstances or to recover from corona virus-related illness. Additionally, these Acts allow employers to apply for refundable and deferrable tax credits for payroll and other certain expenses.
Understanding these nuances can allow employers and employees to support each other during COVID-19 and the proceeding months.
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