President Signs Covid-19 Relief Act

21.03.20 06:09 AM By Managing Partner

You may have heard that lawmakers are proposing significant economic relief to Americans to combat the economic effects of this global pandemic. On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (H.R. 6201). Recognizing that this is only the first federal attempt to offer Americans relief in these difficult times, our analysis is that the new law does not offer enough assistance and may even hurt some small businesses by requiring that employees be paid sick and family leave.

While the new law is expansive, below is a list of the main takeaways from the Act.

Expanded Family and Medical Leave

The Act changes the Family and Medical Leave Act (FMLA) for those employees that are employed for at least 30 calendar days and work for businesses with fewer than 500 employees. Although FMLA only requires job-protection status (meaning employers don’t have to pay you, they just have to keep your job for you upon your return), the new law requires employers to pay employees after 14 days at two-thirds the employees pay rate. 

Many Americans won’t benefit from this provision because small businesses with fewer than 50 employees may be exempted if compliance would jeopardize the viability of their business.

Paid Sick Leave

The Act requires employers with fewer than 500 employees to provide two weeks of paid sick leave, to be paid at the same rate of pay, so that those employees may quarantine, seek a diagnosis or preventative care for the novel coronavirus. After the two-week period expires, employees may receive pay at 2/3rd their pay rate under the expanded FMLA provisions discussed above. Full time employees are to be paid 80 hours of paid sick leave while part-time employees are entitled to the regular number of hours they work in a typical two-week period.

Impact on Business

Recognizing the potentially hefty monetary hit this may have on small businesses, the Act provides tax credits for impacted businesses. In some instances, impacted employers may claim an elective 100% tax credit against their share of Social Security taxes for wages they pay out.

How We Can Help

Lawmakers, both at the state and federal levels are considering taking additional actions to help people access healthcare services and to stabilize the economy with a stimulus bill that could exceed $1 trillion. We are expecting the stimulus package to include direct financial assistance to impacted individuals and relief for businesses severely impacted by this global pandemic.

If you need help determining how these new laws impact your business, including possible relief that is available, contact the attorneys at Mohamed Zain, LLP. Our attorneys are well versed in employment law, the tax code, and have years of experience helping small businesses. 

© 2019 Mohamed Zain, LLP