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Small Businesses Making Sense of H.R.6201 – Families First Coronavirus Response Act

Many small businesses have expressed great concern over having to comply with the Paid Sick Leave and the Paid FMLA required by the H.R.6201 – Families First Coronavirus Response Act. The financial burden of having to comply means employers must pay two-thirds of an employee’s salary for them to not work for up to 12 weeks. Small businesses feel that this requirement will surely put them out of businesses. How can they proceed when there is so much at stake? This post recommends the steps small businesses can take to implement the new law and stay compliant.

First, know that you can, as a small business with less than 50 employees apply for an exemption. However, you will have to provide proof, in the form of financial documents showing that complying with the new law will put you out of business. So far, the Department of Labor (DOL) has not yet provided guidance on what specific financial records are needed.

How Small Businesses Can Comply

The first step of compliance is to post the act in a visible location. Download it here: Families First Coronavirus Response Act Employee Rights Poster

The second step is to maintain as much normalcy as possible and try not to panic. Many small businesses have everyone working at home. It’s easy to assume that the law doesn’t apply to remote workers because technically, they are already self-isolating at home. But, it does. Rather than fear the worst scenario where all your workers request paid time off, approach it case, by case.

Tax Credits

If companies do end up issuing paid leave for their employees, tax credits will be provided by the IRS to cover the cost. Also, social security taxes will be waived and anything above and beyond the amount can be submitted for reimbursement. There will be more guidance issued on how the reimbursement works but as I understand it right now, there will be credits for the quarterly payroll taxes owed. If companies have a payroll service, they may be a valuable resource and can help explain how they will be processing it.

Take Away

I completely understand the concerns that small businesses have. But the law has passed and every company is subject to it. The tax credits are intended to remove the burden from the employer. In the scenario where someone is sick or quarantined, if employers issue paid time off, rest assured that you will get the tax credits for it. The policy is important to help everyone be consistent in how the leave is handled.

It’s most important to understand the risk of not complying. If an employee learns about the law, requests leave and gets denied they could complain to the DOL. I feel it’s my duty to help business owners understand the risks they face when dealing with all employment requirements. During the COVID-19 crisis, I am offering free HR Support. Contact us to get started.

Melissa Marsh, SPHR, SHRM-SCP, is a human resources consultant and founder of HRinDemand, a human resources company in Reno, NV, offering expert guidance and easy-to-use tools to help small businesses with employment regulations, compliance, employee relations, and company growth.

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