Imagine you are a small business owner, adapting to operations during the global coronavirus pandemic. Unfortunately, one of your employees received notification from local authorities that they were in contact with someone who recently tested positive for COVID-19. Instead of coming to work, that employee must now stay home for a mandatory 14-day quarantine period.
You wonder not only what responsibilities you have towards your employee, but also how you can protect your business from the effects of losing an employee for two weeks. Fortunately, the Families First Coronavirus Response Act (FFCRA) protects both employees and employers in these situations and provides small business owners clarity in an otherwise unfamiliar area of law.
When are my employees entitled to emergency paid sick leave?
Under the FFCRA, a full-time employee is eligible for up to 80 hours of paid sick leave if the employee falls into one of the following five categories:
- The employee is subject to a federal, state, or local quarantine or isolation order related to COVID–19.
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19.
- The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.
- The employee is caring for an individual who is subject to either number 1 or 2 above. (An employee qualifies for leave under this section if the employee’s relationship with the “individual” creates the expectation that the employee would care for the person while s/he quarantined.)
- The employee is experiencing any other substantially similar condition specified by the U.S. Department of Health and Human Services. (As of August 31, 2020, there is no such qualifying condition because DHHS has not identified any.)
Additionally, the FFCRA requires that businesses provide paid leave if an employee is caring for a child whose school or child care is closed for reasons related to COVID-19. Instead of receiving a maximum eligibility for 80 hours of leave, a full-time employee caring for a child who would otherwise be in school is eligible for 80 hours of paid sick leave followed by 10 weeks of paid expanded family and medical leave.
Are there any exemptions for when businesses must provide paid sick leave?
No businesses can receive exemption from categories 1–5 above. However, some small businesses may qualify for exemption from the requirement to provide leave due to school closing or childcare unavailability. To qualify, small businesses must meet two criteria:
- Employ fewer than 50 staff, and
- Providing extended paid leave due to school closing or child care inability would jeopardize the viability of the business.
Businesses who think they might qualify for exemption must proactively document their qualifying status. The second criterion can be met by showing that providing extended leave would result in the business’s expenses and financial obligations exceeding available business revenues and cause the business to cease operating at a minimal capacity. Alternatively, a business could document that the absence of an employee requesting an extended leave would create a substantial risk to the company because of that employee’s specialized skills, knowledge, or responsibilities. Finally, a business could provide documentation showing that no qualified, willing, able worker(s) could perform the labor or services provided by the employee requesting leave whose job is essential for the business to operate at a minimum capacity. If you are an eligible employer, keeping these documents on file can help deter a potential legal challenge from an employee denied leave due to a school closing or childcare unavailability.
Are there any other ways my business can recover costs associated with paid leave?
The FFCRA provides employers with less than 500 employees refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing paid sick and family leave wages to their employees for leave related to COVID-19. These tax credits can be applied to both any mandatory 80-hour paid leave, and any leave taken because an employee needed to care for a child who would have otherwise received supervision at school or from a childcare provider. Even more importantly, employers can access these refunds prior to traditional tax filing deadlines by either accessing federal employment tax withholdings, or by requesting an advance from the Internal Revenue Service.
Employers requesting the tax credit will need to substantiate their eligibility. If an employer receives a request for paid leave, the requesting employee must provide a document with the employer’s name, the dates for which leave is requested, a statement of the COVID-19 related reason the employee is requesting leave and written support for such reason, and a statement that the employee is unable to work including telework, because of the COVID-19 related reason. If the leave request is based on a mandatory quarantine order or self-quarantine advice, the statement from the employee should include the governmental authority or healthcare provider mandating the quarantine. If a request is based on school closures or childcare unavailability, the employee should include the name and age of their child or children, the name of the school or other place of care that is unavailable, and a statement affirming that no other person will be providing childcare during the period of requested leave.
In addition to the relevant employee information, employers must maintain documentation showing how the employer determined the amount of sick and family leave wages paid to employees. If applicable, the employer must also document how any of the employee’s qualified health plan expenses were allocated to wages. Finally, once an employer files any forms requesting reimbursement for mandatory paid leave due to COVID-19, the employer should maintain copies of those forms.
Worden Thane’s attorneys have the experience and expertise to help your business adapt during these changing times. Whether you need assistance navigating tax exemptions, or simply want to update your employee leave policy to reflect the most current legislation, don’t hesitate to reach out to an attorney at Worden Thane today.
Article Written by Jori Quinlan and Noah Hill