There is no doubt that COVID-19 – otherwise known as the coronavirus – has significantly impacted how the world does business. With Congress’ recent passage of the Families First Coronavirus Response Act (FFCRA) and the CARES Act comes the need for businesses – most especially small businesses – to ensure that they are complying with the necessary provisions.
In these times of uncertainty, small business owners can be unsure of where to turn and what they need to do in order to comply with these recently enacted laws. California small business attorney Claire Kalia of Kalia Law P.C. is ready to help ensure that you and your business are meeting the necessary requirements and providing your employees with the benefits they need during this difficult time. Please give our office a call today to learn more about the legal services that we provide for small businesses.
The Families First Coronavirus Response Act (FFCRA)
The two primary parts of the Families First Coronavirus Response Act (FFCRA) include the provision which allows for employees to receive up to two weeks of paid sick leave – for reasons relating to the COVID-19 crisis – and a provision which expands the current version of the Family and Medical Leave Act (FMLA). Specifically, the new federal law permits a partially paid employee leave of absence (which is protected) in the following cases:
- Where an employee cannot work because he or she needs to take care of a minor child, and the child’s daycare or school is currently closed due to the COVID-19 crisis.
- Where an employee cannot work because his or her minor child’s caregiver cannot go to work because of the COVID-19 crisis
As you can imagine, both employers and employees have presented numerous questions about this newly enacted law. Consequently, the Department of Labor has issued some clarification. Specifically, employers may be able to claim a tax credit when FMLA leave or sick leave is paid to an employee who qualifies. However, the employer is required to collect certain documentation from the employee that supports that he or she is eligible for these benefits.
Moreover, employers are required to provide all of the necessary notifications regarding the FFCRA to employees by the first of April, 2020. Finally, any employees who do not have work to do (even due to the COVID-19 crisis) – and who have been furloughed – may not make a claim for benefits under the newly enacted FFCRA. These employees, however, may still be eligible to file a claim for unemployment benefits.
The CARES Act
The CARES Act is another piece of federal legislation that was recently passed by the United States Congress, in response to the evolving COVID-19 crisis. The primary purpose of this newly enacted CARES Act is to try and kickstart the economy during this difficult financial time. Although the entire statute is roughly 900 pages in length, there are essentially five primary components of the statute. Those five components include the Paycheck Protection Program, the Retention Payroll Tax Credit, the Deferment of Payroll Taxes, the Expansion of Emergency Economic Injury Disaster Loan Program, and Expanded Unemployment Insurance Benefits:
Paycheck Protection Program
Under the Paycheck Protection Program provision of the CARES Act, businesses who qualify may be eligible to receive a loan that can be used to cover certain business expenses during the time period from March 1, 2020, until December 31, 2020. Qualifying business expenses include mortgage or rent, utility payments, and payroll expenses (including the costs of insurance premiums). Moreover, if the business requesting the loan uses the proceeds for one or more of these specified purposes – and within eight weeks of the time the loan was received – it may ultimately be able to have the principal portion of the loan forgiven. However, in the event the employer terminates employees during this eight-week period or undertakes similar actions, then the amount of the loan forgiveness may be reduced accordingly.
Retention Payroll Tax Credit
As a result of COVID-19, some businesses have been partially or fully suspended due to shutdowns and government orders. If that is the case with your business – or if there was a sharp decline in business receipts (defined as a decline in excess of 50 percent, when compared with the same business quarter in the year 2019) – then your business may be eligible for an employment tax credit which is refundable.
Deferment of Payroll Taxes
Under this provision of the Act, employers now have the option of choosing to delay paying their required component of the Social Security Payroll Tax that they will incur or which they may have already incurred from the present time up until year’s end. If an employer selects this option, then the employer can pay one-half the amount on or before December 31, 2021, with the remaining half to be paid on or before December 31, 2022.
Expansion of Emergency Economic Injury Disaster Loan Program
The Economic Injury Disaster Loan Program – otherwise known as the EIDL Program – was significantly expanded under the recently passed CARES Act. Specifically, the CARES Act expansion allows certain businesses to be eligible for an EIDL loan because of economic hardships that have directly resulted from the COVID-19 crisis.
Also, under the CARES Act, an EIDL loan applicant is able to request a maximum advance in the amount of $10,000, and that amount must then be used to pay for the business’ “working capital needs.” However, it should be noted that no loan forgiveness applies to an EIDL loan, which is different from the Paycheck Protection Program.
Expanded Unemployment Insurance Benefits
Under the CARES Act, coverage for unemployment insurance benefits has been significantly expanded, as it applies to weeks of partial unemployment, total unemployment, and total inability to work – specifically from January 27, 2020 up until December 30, 2020. Under the current expansion, individuals may be able to make a claim for unemployment benefits in any of the following circumstances:
- The employee has a family member who is currently suffering from COVID-19
- The employee himself or herself has recently tested positive for COVID-19 or is experiencing one or more symptoms of the virus and is in the process of being diagnosed
- The employee, as a result of the COVID-19 pandemic, has a child who currently cannot go to school, cannot work because his or her place of employment has closed, cannot get to work due to a quarantine which is currently in effect, has been forced to quit his or her job, has become the sole breadwinner for his or her household, cannot go to work because a health care provider has encouraged him or her to self-quarantine, and/or was supposed to start a job and no longer has one (or cannot get to work)
Contact a Knowledgeable California Business Attorney about Your Legal Issue Today
If you are interested in learning more about how the Families First Coronavirus Response Act (FFCRA) and the Cares Act apply to you and your business, please call attorney Claire Kalia of Kalia Law P.C. To schedule a free case evaluation and legal consultation with a California small business lawyer, please call us at (650) 701-7617 or contact us online to learn more about how we can assist both you and your business during the ever-evolving COVID-19 crisis.