Ultimate FFCRA Guide for Small Business Owners
The Families First Coronavirus Response Act (FFCRA) may require you to provide paid sick leave to your employees if they are absent from work for certain coronavirus-related reasons. This guide will help you figure out if your business is required to comply with this law and, if so, what you need to provide your employees. It will also point you in the right direction to claim exemptions and to apply for tax credits and reimbursements.
Where can I read the Families First Coronavirus Response Act?
You can read the FFCRA in its entirety here, but it’s a lot to wade through. This printout for notifying employees of their rights under FFCRA is much easier to read, as is this official breakdown of what employers need to do to comply with FFCRA.
What is the Families First Coronavirus Response Act?
The purpose of the FFCRA is twofold: It ensures employers are providing their employees with the necessary paid medical leave for coronavirus-related absences, and it helps reimburse them for doing so. According to the Department of Labor, “FFCRA helps the United States combat the workplace effects of COVID-19 by reimbursing American private employers that have fewer than 500 employees with tax credits for the cost of providing employees with paid leave taken for specified reasons related to COVID-19.”
When is the Families First Coronavirus Response Act in effect?
The Families First Coronavirus Response Act was passed by Congress and signed by President Donald Trump on March 1, 2020. It went into effect on April 1 and will stay in effect through Dec. 31, 2020. It’s possible that the emergency paid leave accommodations outlined in the FFCRA will be extended further, depending on the progression of COVID-19 nationwide.
Does my small business have to be FFCRA compliant?
If you have 500 or fewer full- or part-time employees, you may be subject to FFCRA compliance, meaning you will need to provide emergency paid sick leave to affected employees. In counting your employees, be sure to include those on temporary leave, including FMLA leave, as well as seasonal and temporary workers. [Read related article: The COVID-19 Return-to-Work Guide for Small Businesses]
Are some small businesses exempt from the FFCRA?
Businesses with fewer than 50 employees are exempt from offering certain provisions outlined in the FFCRA. Namely, qualifying small businesses may be exempt from offering paid medical leave to employees whose absence is a result of lack of child care due to COVID-19 closures, rather than due to sickness.
The small business exemption does not apply to other accommodations outlined in the FFCRA, like those for people who are in quarantine or caring for someone ill with coronavirus-like symptoms. Small businesses must still provide paid sick leave to employees who are quarantining, experiencing COVID-19 symptoms or caring for an ill member of their household.
What qualifying reason can exempt my business from FFCRA?
Under FFCRA, small businesses aren’t required to provide paid sick leave for employees who miss work because they have children at home due to day care or school closures.
“An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business,” according to the Department of Labor.
How do I apply for a small business exemption to the FFCRA?
The official process of applying for a small business exemption, if there indeed is one, is wildly unclear. The only guidance the federal government offers is to appoint an internal “authorized officer of the business” to outline the qualifying reason for the exemption, and to not email or send anything to the Department of Labor. It gives no other information on the qualification process.
The most useful advice on the matter comes from a recent article in The National Law Review, which states, “We recommend that an ‘authorized officer’ of the employer simply make a record of his or her conclusion that one or more of the three qualifying reasons apply, and keep that record in its files to use in the case of an audit or challenge.”
What does the FFCRA require me to provide to my workers?
The Families First Coronavirus Response Act compels employers to offer paid sick leave and expanded family medical leave to their employees. Paid leave distributed to employees because of the FFCRA will be reimbursed through a tax credit.
The amount of pay you must provide for your employees depends on the qualifying reason for their absence as well as the employee’s regular pay rate. For example, if an employee cannot work because their child’s school or usual place of care is closed, you only have to pay them two-thirds of their usual pay. Employees who are absent due to caretaking duties for ill family members must also be granted two-thirds their usual pay. Employees who are ill themselves (and in quarantine) are granted full pay for the duration of their qualified sick leave.
Further specifics on sick leave wages are available under the Calculation of Pay section on the Department of Labor’s FFCRA Employer Paid Leave Requirements webpage.
Is there a tax credit for the employer offering FFCRA paid leave?
Yes. The federal government will reimburse emergency paid sick leave through a tax credit. The IRS provides a comprehensive breakdown of the paid sick time and paid family leave tax credits as well as the process for claiming them, but it’s simple: It gets filed on your taxes under Form 941, Employer’s Quarterly Federal Tax Return. According to the IRS, “Form 941 is used to report income and Social Security and Medicare taxes withheld by the employer from employee wages, as well as the employer’s portion of Social Security and Medicare tax.”