The Families First Coronavirus Response Act and you
Paid sick leave is an employee right, but veterinary practices can take advantage of new payroll tax credits.
Approved by Congress on March 18, the Families First Coronavirus Response Act consists of two parts of particular interest to employers and employees:
- Emergency Paid Sick Leave Act
- Emergency Family and Medical Leave Expansion Act
Under the provisions, small and midsize employers can take advantage of two new refundable payroll tax credits from April 1 through December 31, 2020. Here’s how everything works.
Emergency Paid Sick Leave Act
An employee is entitled to take paid leave if he or she is unable to work in person or remotely for reasons related to the COVID-19 pandemic. The act consists of two tiers.
- Is the employee subject to a federal, state or local quarantine or isolation order related to COVID-19?
- Has the employee been advised by a health care provider to self-quarantine for COVID-19 reasons?
- Is the employee experiencing COVID-19 symptoms and seeking a medical diagnosis?
Under any one of those conditions, the employer must pay up to 80 hours of paid sick leave, or a part-time employee’s two-week equivalent.
The U.S. Department of Labor provided guidance on the calculation of part-time equivalent. If the schedule of part-time employees is set, the hours of leave can be calculated based on the number of hours an employee is normally scheduled to work. If the normal hours are unknown or the hours are different every week, a six-month average may be used. To do that, add all the hours worked by the employee over the past six months and divide by 13. Full-time employees with variable schedules will use the same calculation.
An example: Your kennel technician works more hours during holidays but is mostly present 20 hours a week. You will need to go back and look at the total hours worked over the past six months. Say she worked 600 hours over those six months. She will be paid 46.15 hours’ worth of wages for the two weeks she is on paid sick leave. (600 divided by 13 equals 46.15 hours.)
Please note that if an employee is paid through commissions, tips or piece rates, those wages will be incorporated into the pay rate calculation. Keep in mind a veterinarian’s production bonuses or staff commissions.
- Is the employee caring for someone diagnosed with COVID-19?
- Is the employee caring for a child because the child’s school or child care facility is closed, or is the child care provider unavailable due to COVID-19?
An employee eligible under the second tier is entitled to two-thirds pay, or up to $200 a day or $2,000 total over the entire two-week period.
Here are a few questions and answers.
Q. I hired my receptionist a week ago. Is she entitled to paid sick leave under the Families First Coronavirus Response Act?
A. Yes, a minimum length of employment is not required for paid sick leave.
Q. Are any businesses exempt?
A. Only if you have more than 500 employees. State and government agencies are exempt, too. Also, a small business exclusion might apply to those with fewer than 50 employees if the viability of the business is threatened. This one is tricky as no guidance is available yet.
Q. Will payroll tax credits be available?
A. Yes, the employer will retain a certain amount of the payroll taxes. Technical guidance will be released soon, but here are two examples:
- If an eligible employer paid $4,000 in sick leave and is otherwise required to deposit $5,000 in payroll taxes, including taxes withheld from all its employees, the employer could spend up to $4,000 of that $5,000 on qualified sick pay. The required payroll tax deposit will be $1,000 due on the next regular deposit date.
- From the other perspective, if an eligible employer paid $7,000 in sick leave and was required to deposit $4,000 in payroll taxes, the employer could put the entire $4,000 toward sick pay and request an accelerated credit for the remaining $3,000.
Q. I am confused. How long do I have to implement all this and what are the penalties if I don’t comply?
A. A 30-day non-enforcement period will be in effect if good-faith compliance efforts are made. The Internal Revenue Service says employers that do not have the funds necessary for paid sick leave can seek an expedited advance from the IRS by submitting a streamlined claim. Details will be released soon.
Q. My veterinary practice has been closed for two weeks and my cash flow is not good. Can I avoid the requirements by laying off employees before April 1?
A. Yes, the law is not retroactive.
Emergency Family and Medical Leave Expansion Act
Employees have the right to an additional 10 weeks of paid leave if they need to care for a child whose school or child care facility is closed or if child care provider is unavailable due to COVID-19. The only major difference is the employee has to be employed at least 30 days before medical leave is requested. Full-time and part-time employees are eligible.
Remember that all employers are required to post an “Employee Rights” notice, which can be found at https://bit.ly/2wwnAPn.
A lot of new announcements are coming every day, so please keep your eyes and ears open, and most importantly, stay safe.
Mira Johnson is managing partner with JF Bell Group, a CPA firm serving exclusively veterinarians. To learn more, visit www.jfbellgroup.com.
For more information about employer paid leave requirements under the Families First Coronavirus Response Act, check out a Department of Labor document posted at https://bit.ly/2UEp424.