Author: Slattery & Holman, P.C.

On Wednesday, March 18, President Trump enacted a coronavirus emergency relief package, the Families First Coronavirus Response Act. The legislation includes relief for American workers required to take time off work because of the coronavirus, the Emergency Paid Leave Act of 2020.

The act includes both paid leave benefits for American workers and tax credits for American employers, to offset the financial burden. Additionally, self-employed taxpayers are eligible for the tax credit.

Paid Sick Leave Eligibility

The new legislation mandates paid leave for many American workers. Private employers with fewer than 500 workers and public employers are now required to provide paid sick leave to workers who are affected by the coronavirus. A worker must have been employed at the company for at least thirty days prior to being impacted by coronavirus in order to qualify.

To be eligible for paid sick leave under this act, a worker must meet one or more of the following criteria:

1. They have been ordered to self-quarantine or isolate by a federal, state, or local authority.
2. They have been warned to self-quarantine or isolate by a healthcare provider.
3. They are currently seeking a medical diagnosis for coronavirus symptoms they are experiencing.
4. They are caring for someone who qualifies under either criterion 1 or 2, above.
5. They are caring for a child whose school, daycare, or other childcare provider is unavailable as a result of coronavirus concerns.

Additionally, to receive paid sick leave, an eligible worker must take 14 or more days of leave (due to one of the circumstances listed above) in a one-month period.

Paid Sick Leave Details

Full-time workers qualify for up to 80 hours (two weeks) of sick leave. Those who are sick or quarantined qualify for full pay, up to $511 per day (maxing out at $5,110). Those who are on leave to care for another person are eligible for two-thirds of their normal pay, up to $200 per day (maxing out at $2,000). Part-time employees are eligible for sick leave equal to the average number of hours they work in a two-week period.

Additionally, the new legislation enhances the Family and Medical Leave Act (FMLA) that governs employee absences in order to care for minor children. In the event that a worker’s child cannot go to school or daycare as a result of coronavirus closures, the worker qualifies to receive two-thirds of their regular salary, up to $200 per day (maxing out at $10,000). This aid only becomes available after the worker has already been on leave for 10 days.

Please note: these paid sick leave provisions are not permanent. This legislation expires on December 31, 2020.

Tax Credit Details

In order to help employers pay for the sick leave as outlined above, the legislation outlines a new payroll tax credit. Employers will be reimbursed for the full amount of sick leave coverage. The credit has the same limitations as the leave for workers: $511 per day for workers who take leave due to sickness or quarantine and $200 per day for workers who take leave to care for another person.

For full details, read the text of the Families First Coronavirus Response Act at congress.gov. Alternatively, click here for a detailed summary from the House Committee on Appropriations.

As always, please do not hesitate to reach out to your Slattery & Holman P.C. accounting advisor with any questions or concerns. We are here to help.

On Wednesday, March 18, President Trump enacted a coronavirus emergency relief package, the Families First Coronavirus Response Act. The legislation includes relief for American workers required to take time off work because of the coronavirus, the Emergency Paid Leave Act of 2020. In order to help employers manage the cost of paid sick leave, the aid package also includes new tax credits designed to offset the financial burden.

The bill establishes payroll tax credits that are refundable through 2020 for employers with workers who take leave under the new paid leave programs (sick leave and/or family leave). The credit is equal to up to 10 days of leave wages per employee who goes on leave. For reference, here are the limits on sick leave and family leave included in the legislation:

• Sick leave guidelines:
  • Eligible full-time workers who are sick or quarantined can receive wages equaling their full pay, up to $511/day (with a maximum of $5,110).
  • Eligible full-time workers who are caring for an ill family member or child whose school or daycare has closed can receive wages equaling two-thirds of their regular pay, up to $200/day (with a maximum of $2,000).
  • Eligible part-time workers can receive sick leave equal to the average number of hours they work in a two-week period.
• Family leave guidelines:
  • Eligible workers who are caring for a child whose school or daycare has closed can receive two-thirds of their regular salary, up to $200/ day (with a maximum of $10,000)

The new tax credit comes in the form of a refund on an employer’s Social Security payroll tax. The credit has the same limitations as the leave for workers: $511 per day for workers who take leave due to sickness (maximum of $5,110) or quarantine and $200 per day for workers who take leave to care for another person (maximum of $2,000). Like the number of sick leave days, the tax credit is limited to 10 sick days per worker.

Additionally, the new legislation includes payroll tax credits for both the group health plan costs for workers on sick or family leave and the Medicare payroll tax on sick and family leave wages.

Employers who pay sick leave and family leave wages can expect to be reimbursed via a payroll tax credit for the entire amount. In the event that the tax credit exceeds what the employer owes in taxes, they will be given a refund for the remaining amount.

For full details, read the text of the Families First Coronavirus Response Act at congress.gov.

Alternatively, click here for a detailed summary from the House Committee on Appropriations.

As always, please do not hesitate to reach out to your Slattery & Holman P.C. accounting advisor with any questions or concerns. We are here to help.

For more than six decades, the U.S. Small Business Administration (SBA) has been a resource for small business owners and entrepreneurs in the U.S. In response to the COVID-19 pandemic, the bureau created a resource page dedicated to helping small businesses learn to establish safe, secure, and healthy practices in the face of the outbreak.

The SBA enumerates areas in which small business owners should anticipate encountering difficulties during this time:

1. Capital – Dealing with the COVID-19 outbreak will put a financial strain on small businesses. Shifting demand will have a big impact on revenue, inventory, and payroll. Business owners should strive to get out ahead by exploring various options for accessing capital.
2. Workforce – The workforce will be impacted by both illness and business closures (both temporary and permanent). Workplace safety will be key for businesses that remain open.
3. Inventory and Supply Chain – Rapidly changing demand will be difficult to meet. Suppliers’ inability to meet demand may impact your ability to keep inventory in stock.
4. Cleanliness – In order to protect customers and employees alike, small businesses will need to implement new COVID-19 remediation and cleaning practices.
5. Insurance Coverage – Businesses should review their insurance policies to determine coverage.
6. Ability to Operate – It is possible that restrictions preventing some small businesses from operating will be imposed.
7. Communication – Keeping open lines of communication with customers and clients is key during times of disaster.
8. Preparedness – Small business owners should create contingency plans for dealing with the various possible scenarios.

For more details, visit the SBA website to view the list in full.

As the COVID-19 pandemic continues to unfold, business owners are facing a lot of uncertainty. It is not possible to know with confidence how events will continue to evolve over the next days, weeks, and months. However, there are some key steps that business owners can take to strive to mitigate damages and put themselves in the best possible position during this unprecedented time.

1. Stay Home

Do your part to lessen the spread of COVID-19. This is nothing new, but it certainly bears repeating. As much as possible, limit contact with people outside of your home. If it is possible, work remotely, and have your employees do the same. Lead by example and encourage your team members to follow the COVID-19 protocols outlined by the Centers for Disease Control (CDC).

2. Stay Informed

It might be tempting to shelter at home and check out of current events, but this is not a good strategy. Rather, you should try to review news on all levels—local, state, national, and world-wide. Compile a list of one or two reputable resources for each category and visit them online each day. Staying informed will help you as you consider what your strategy should be moving forward.

3. Stay Alert

Focus your attention on developing strategies for maintaining the continuity of your business. Work with your teammates to develop plans for various contingencies that might play out over the next few weeks and months. Consider reaching out to your bank to establish or renew a line of credit to have available in the event that you might need it.

4. Stay Focused on Your Clients

If your business can function with a remote team, then keep working! Be proactive about finding ways to go the extra mile for your clients. Put yourself in their shoes—what could you be doing for them that would be beneficial? How can you adjust your traditional practices to best meet the evolving needs of your customers and community?

5. Stay in Contact with Your CPA

Now more than ever, you need good business advice. Do not hesitate to reach out to your accounting advisor in order to determine if they have any suggestions for you. We are partners in this together and our firm is committed to guiding you through these unprecedented times.

The U.S. Small Business Administration (SBA), which has been a resource for small business owners and entrepreneurs in the U.S. since 1953, recently released a list of disaster-relief measures in response to the COVID-19 pandemic.

Per the Coronavirus Preparedness and Response Supplemental Appropriations Act, which was enacted by the President on March 6^th, the SBA has the authority to issue Economic Injury Disaster Loan declarations for states and territories whose Governor requests it. This declaration makes loans available to small businesses and private non-profits in specific areas that are suffering substantial economic injury due to COVID-19. The goal of the loans is to help alleviate economic injury. The Governors of states and territories will need to coordinate with the SBA’s Office of Disaster Assistance in order to submit their requests.

Interest rates for the loans are as follows:

*Please note: Only small businesses without access to credit from any other source are eligible. Small businesses that have access to other sources of credit are not eligible.

Further details about the SBA’s Economic Injury Disaster Loan program include the following:

• The program will offer up to $2 million in assistance.
• The loans can be used to pay a variety of obligations, including fixed debts, payroll, accounts payable, and other bills.
• The program offers long-term repayments with a maximum of 30 years.
• Loan repayment terms will be determined on a case-by-case basis.

For more details, visit SBA.gov/disaster, call the SBA disaster assistance customer service center at 1-800-659-2955, or email disastercustomerservice@sba.gov.