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The Families First Coronavirus Response Act (FFCRA) was recently passed into law and provides relief for offering paid time off for business owners, employees and freelancers during the Coronavirus (COVID-19) outbreak, with an offset cost to the employer/freelancer.

 

The Basics

Alright, so there are two types of paid leave on the table right now under FFCRA and the benefit is based on your regular rate of pay.

  • Paid Sick Leave: Capped at two weeks (10 working days), max benefit is $511/day
  • Paid Family Leave: Capped at three months, max benefit is $200/day

To explain it as simply as possible: if you are unable to work or telework, you will receive pay for up to 12 weeks at no cost to you.

In order to qualify, there are various requirements to meet. I’m going to break it down as simply as possible below.

 

First: Is Your Employer a “Covered” Employer (Is Your Business Considered a “Covered” Employer)?

Under the Families First Coronavirus Response Act, if your employer or business is in the private or public sector and has less than 500 employees, it’s considered a covered employer. Any employees in the business (you may be the only employee) would then be considered a “Covered Employee” and possibly eligible for benefits under the act.

Small businesses with less than 50 employees may qualify for exemption from the requirement to provide paid time off if it would jeopardize the business. AKA – if providing these benefits is going to take you out, you don’t have to provide them.

 

Second: Now That You Know You’re a Covered Employee, Are You Eligible for Benefits?

If you work for a covered employer and are unable to work (or telework) for the following reasons, you are eligible for benefits:

  1. You’re subject to a Federal, State, or local quarantine or isolation order related to COVID-19
  2. You have been advised by a health care provider to self-quarantine related to COVID-19
  3. You are experiencing COVID-19 symptoms and are seeking a medical diagnosis
  4. You are caring for an individual that is subject to (1) or (2)
  5. You are caring for a child whose school or place of care is closed or childcare is otherwise unavailable due to reasons related to COVID-19
  6. You are experiencing any other substantially-similar condition specified by the US Department of Health and Human Services (HHS)
Duration of Benefits

Remember at the beginning of the post when I said that there are two types of leave on the table right now?

Paid Sick Leave (2 weeks) and Paid Family Leave (12 weeks)?

The type of leave you’re eligible for is based on which of the reasons above you fall under.

The big difference is whether or not you’re caring for a child. So – if you are not caring for a child and/or fall under items 1-4 or 6 (above), you are eligible for 2 weeks of pay (10 days) under the Paid Sick Leave.

If you are caring for a child and fall under item 5, you are eligible for up to 12 weeks of pay. This will be broken down as 2 weeks of pay under Paid Sick Leave and then 10 weeks of pay under Paid Family Leave.

 

Third: How Do You Get Benefits?

The benefits are going to be paid out in the form of a payroll tax credit.

For Employers

If you are running payroll for yourself or an employee, instead of remitting the payroll taxes (federal withholding, social security, medicare) to the IRS, you will keep them to offset the cost of the wages.

For Freelancers

If you are freelancing or a single-member LLC and are not running payroll for yourself, you won’t have any payroll taxes to remit so the credit won’t be instantaneous. Instead, you will receive a credit on your taxes. Right now, it is assumed that this credit will be given on 2020’s taxes.

In order to ensure you are eligible for the benefits, please make sure you are keeping good records. You will need to be able to show that you were in fact out of work, unable to work or telework, etc.

This goes into effect April 1, 2020. There is still a lot we do not know about how this will be enforced. As soon as more information is available, we will update!

 

Questions?

Please reach out, we’d love to help! 

 

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Countless assumes no liability for actions taken in reliance upon the information contained herein.

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