In response to the American economy reeling from the coronavirus (COVID-19) pandemic, the federal government recently signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act). Among other provisions, the CARES Act provides businesses suffering under the debilitating effects of the pandemic with unprecedented access to emergency loans. This document will serve as an overview of the loan programs available.

How Does the CARES Act Address Small Business Loans?

The CARES Act is the largest economic stimulus measure in modern history and promises to provide help for struggling American families and businesses. Specifically, the Act includes the following provisions:

• The Act includes nearly $350 billion for a federal small business loan program called the Paycheck Protection Program. The program is designed to get cash in the hands of suffering small businesses quickly, with less stringent eligibility requirements than the existing U.S. Small Business Association (SBA) loan programs. Paycheck Protection Program loans are designed to incentivize business owners to keep employees on payroll.
• In addition to businesses already eligible for SBA programs, most businesses with 500 or fewer employees are now eligible for disaster loans of up to $2 million for working capital. Those businesses will also be eligible for an emergency cash advance of $10,000 within days of making the application, which is not repayable even if their loan application is denied.

Overview of CARES Act Small Business Loan Provisions

As noted above, the CARES Act provides two main avenues for obtaining a business loan:

1. Through the Paycheck Protection Program
2. Through the SBA as a disaster loan

Below you will find an overview of the eligibility requirements, key loan terms, and how to apply for each program.

Paycheck Protection Program Loans

The CARES Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Included in the CARES Act was the Paycheck Protection Program, which provides 100% federally guaranteed loans to small businesses, through Jun. 30, 2020. Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis. Though information on the program continues to be rolled out, the following is an overview of information available now:

Eligibility

You are eligible for a loan under this program if you are:

• A small business that was in operation on Feb. 15, 2020, with fewer than 500 employees (The 500-employee threshold includes all employees: full-time, part-time and any other status.)
• A small business that otherwise meets the SBA’s size standard
• A 501(c)(3) with fewer than 500 employees
• An individual who operates as a sole proprietor
• An individual who operates as an independent contractor
• An individual who is self-employed and who regularly carries on any trade or business
• A tribal business concern that meets the SBA size standard
• A 501(c)(19) Veterans Organization that meets the SBA size standard

Terms of the Loan

The terms of a Paycheck Protection Program loan are as follows:

• The amount of a Paycheck Protection Program loan available to each borrower is 2.5 times the borrower’s average monthly payroll costs, not to exceed $10 million.
• Paycheck Protection Program loans require no collateral, have a maximum 10-year term, and an interest rate of no more than 4%.
• The loans are available to eligible companies to be used for the following costs incurred from Feb. 15, 2020 through Jun. 30, 2020: payroll (including salary, wage, parental, family, medical or sick leave, and more); health care benefits and related insurance premiums; employee compensation; mortgage interest obligations; and rent and utilities.
• A borrower of a Paycheck Protection Program loan is eligible for loan forgiveness equal to the amount spent during the eight-week period after the date of the original loan for rent on a leasing agreement, payroll costs (including wages for USA employees capped at $100,000 per employee), mortgage interest and utilities. The amount forgiven may be reduced if the borrower reduces the number of employees, or salaries and wages of employees. Borrowers must apply through their lender for forgiveness on the loan.

How to Apply for a Paycheck Protection Program Loan

The application has been posted on the Treasury Department’s CARES Act resource page. The SBA has a network of 1,800 approved lenders that process small business loans. If you are interested in a Paycheck Protection Program loan, you should first contact your bank to see if it is an SBA-approved lender. If your bank is not an SBA-approved lender, you can contact the SBA to find one.

SBA Economic Injury Disaster Loans

Another option for small businesses is the SBA’s existing Economic Injury Disaster Loan (EIDL) Program, which was expanded by the CARES Act and provides for longer-term loans with favorable borrowing terms. Companies in all 50 states, District of Columbia, and some U.S. territories are typically eligible for EDIL loans relating to economic injury caused by the COVID-19 pandemic, and will be available until Dec. 31, 2020.

Eligibility

The CARES Act expanded EIDL loan eligibility for the period between Jan. 31, 2020, and Dec. 31, 2020, to include:

• Businesses with 500 or fewer employees
• Sole proprietorships and independent contractors with or without employees
• Private nonprofits and cooperatives
• Tribal small business concerns and ESOPs with 500 or fewer employees

If your business meets the aforementioned requirements and your revenues have suffered substantial economic injury from COVID-19, your business is eligible no matter your line of business.

Terms of the Loan

The terms of an EIDL loan are outlined below:

• The amount of an EIDL loan available to each borrower is the business’s actual economic injury as determined by the SBA, not to exceed $2 million.
• EIDL loans under the CARES Act do not require personal guarantees for loans up to $200,000, but the SBA will take a collateral interest in your business’s assets to the extent available.
• The interest rate on EIDL loans is 3.75% fixed for small businesses and 2.75% for nonprofits. EIDL loans have up to a 30-year term. Specific terms will be determined on a case-by-case basis, based upon each borrower’s ability to repay the loan.
• EIDL loans may be used for payroll, debts and to pay obligations that cannot be met due to the pandemic.
• Your business may be approved for an EIDL loan based on credit score alone, without being required to submit tax returns.

The CARES Act also permits applicants to request an advance of up to $10,000 which may be used to keep employees on payroll, to pay for sick leave, meet increased production costs, or pay business obligations. If you apply, the advance should be paid to your business within three days. This advance, available backdated from Jan.31, 2020 to Dec. 31, 2020, is not required to be repaid even if your application is denied. To access this advance, borrowers must first apply for an EIDL and then request the advance.

How to Apply for an SBA Economic Injury Disaster Loan

EIDL loans are available directly from the SBA. They have introduced a streamlined application process, which you can access here. Additionally, SBA resource partners are available to help guide you through the EIDL application process. You can find the nearest Small Business Development Center (SBDC), Women’s Business Center, or SCORE mentorship chapter here.

What’s Next?

It is clear that both Paycheck Protection Program loans and SBA EIDL loans provide very favorable terms to prospective borrowers. Eligible small businesses who have been economically impacted by the COVID-19 pandemic would be wise to consider taking advantage of such programs.

Businesses interested in the Paycheck Protection Program loans should consult with their banker(s). In the meantime, those also interested in the EIDL loans should evaluate with its advisors whether they are eligible. If so, businesses can consider gathering all relevant company documents and financial information that borrowers would ordinarily expect a lender to want to review (e.g., payroll information).

Please consult with your banking, accounting and legal professionals for guidance on the CARES Act and how it might help you and your business. As the pandemic continues to evolve and more information about the CARES Act and other such programs are published, the agents and underwriters here at Morris & Reynolds Insurance will look forward to sharing details with you. Until then, please contact us with any questions that you might have about this topic or your insurance protection as we are most happy to help and until then, stay safe and be mindful of maintaining a respectful social distance from one another of at least six feet.  

As part of sweeping legislation—the Families First Coronavirus Response Act (FFCRA)—signed into law by President Trump on March 18, 2020, two laws were enacted that provide workers with paid leave for reasons related to the coronavirus (COVID-19) pandemic.

• The “Emergency Family and Medical Leave Expansion Act” allows 12 weeks of partially compensated FMLA leave to care for a child whose school or child care facility has been closed due to COVID-19.
• The “Emergency Paid Sick Leave Act” requires employers to provide 80 hours of paid sick time to employees in specified circumstances related to COVID-19 exposure and prevention.

As required by this legislation, the U.S. Department of Labor (DOL) will be issuing implementing regulations. Additionally, as warranted, the DOL will continue to provide compliance assistance to employers and employees on their responsibilities and rights under the FFCRA.

The DOL issued the following questions and answers (Q&As) as part of these efforts.

Definitions

• “Paid sick leave” means paid leave under the Emergency Paid Sick Leave Act.
• “Expanded family and medical leave” means paid leave under the Emergency Family and Medical Leave Expansion Act.

Questions and Answers

1. What is the effective date of the FFCRA, which includes the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act?

The FFCRA’s paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and Dec. 31, 2020.

2. As an employer, how do I know if my business is under the 500-employee threshold and therefore must provide paid sick leave or expanded family and medical leave?

An employer has fewer than 500 employees if, at the time an employee’s leave is to be taken, the employer employs fewer than 500 full-time and part-time employees within the United States (including any state, the District of Columbia, or any territory or possession of the United States). In making this determination, employers should include:

• Employees on leave;
• Temporary employees who are jointly employed by the employer and another employer (regardless of whether the jointly-employed employees are maintained on only one employer’s payroll); and
• Day laborers supplied by a temporary agency (regardless of whether the employer is the temporary agency or the client firm if there is a continuing employment relationship).

Workers who are independent contractors under the Fair Labor Standards Act (FLSA), rather than employees, are not considered employees for purposes of the 500-employee threshold.

Typically, a corporation (including its separate establishments or divisions) is considered to be a single employer, and its employees must each be counted towards the 500-employee threshold. Where a corporation has an ownership interest in another corporation, the two corporations are separate employers unless they are joint employers under the FLSA with respect to certain employees. If two entities are found to be joint employers, all of their common employees must be counted in determining whether paid sick leave must be provided under the Emergency Paid Sick Leave Act, and expanded family and medical leave must be provided under the Emergency Family and Medical Leave Expansion Act.

In general, two or more entities are separate employers unless they meet the integrated employer test under the Family and Medical Leave Act (FMLA). If two entities are an integrated employer under the FMLA, then employees of all entities making up the integrated employer will be counted in determining employer coverage for purposes of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act.

3. If I am a private sector employer and have 500 or more employees, do the Acts apply to me?

No. Private sector employers are only required to comply with the Acts if they have fewer than 500 employees.

Federal employees are eligible to take paid sick leave under the Emergency Paid Sick Leave Act. However, only some federal employees are eligible to take expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act. An employee’s eligibility will depend on whether they are covered under Title I or Title II of the FMLA. The DOL encourages federal employees to discuss questions about their eligibility for expanded family and medical leave with their employers or with the Office of Personnel Management. Additional FAQs regarding public sector employers will be forthcoming.

4. If providing child care-related paid sick leave and expanded family and medical leave at my business with fewer than 50 employees would jeopardize the viability of my business as an ongoing concern, how do I take advantage of the small business exemption?

To elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the DOL, which will be addressed in more detail in forthcoming regulations. You should not send any materials to the DOL when seeking a small business exemption for paid sick leave and expanded family and medical leave.

5. How do I count hours worked by a part-time employee for purposes of paid sick leave or expanded family and medical leave?

A part-time employee is entitled to leave for his or her average number of work hours in a two-week period. Therefore, you calculate hours of leave based on the number of hours the employee is normally scheduled to work. If the normal hours scheduled are unknown, or if the part-time employee’s schedule varies, you may use a six-month average to calculate the average daily hours. Such a part-time employee may take paid sick leave for this number of hours per day for up to a two-week period, and may take expanded family and medical leave for the same number of hours per day up to ten weeks after that.

If this calculation cannot be made because the employee has not been employed for at least six months, use the number of hours that you and your employee agreed that the employee would work upon hiring. If there is no such agreement, you may calculate the appropriate number of hours of leave based on the average hours per day the employee was scheduled to work over the entire term of his or her employment.

6. When calculating pay due to employees, must overtime hours be included?

Yes. The Emergency Family and Medical Leave Expansion Act requires you to pay an employee for hours the employee would have been normally scheduled to work even if that is more than 40 hours in a week.

However, the Emergency Paid Sick Leave Act requires that paid sick leave be paid only up to 80 hours over a two-week period. For example, an employee who is scheduled to work 50 hours a week may take 50 hours of paid sick leave in the first week and 30 hours of paid sick leave in the second week. In any event, the total number of hours paid under the Emergency Paid Sick Leave Act is capped at 80.

If the employee’s schedule varies from week to week, please see the answer to Question 5, because the calculation of hours for a full-time employee with a varying schedule is the same as that for a part-time employee.

Please keep in mind the daily and aggregate caps placed on any pay for paid sick leave and expanded family and medical leave as described in the answer to Question 7.

Please note that pay does not need to include a premium for overtime hours under either the Emergency Paid Sick Leave Act or the Emergency Family and Medical Leave Expansion Act.

7. As an employee, how much will I be paid while taking paid sick leave or expanded family and medical leave under the FFCRA?

It depends on your normal schedule as well as why you are taking leave.

If you are taking paid sick leave because you are unable to work or telework due to a need for leave because you: (1) are subject to a federal, state or local quarantine or isolation order related to COVID-19; (2) have been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or (3) are experiencing symptoms of COVID-19 and are seeking medical diagnosis, you will receive for each applicable hour the greater of:

• Your regular rate of pay;
• The federal minimum wage in effect under the FLSA; or
• The applicable state or local minimum wage.

In these circumstances, you are entitled to a maximum of $511 per day, or $5,110 total, over the entire paid sick leave period.

If you are taking paid sick leave because you are: (1) caring for an individual who is subject to a federal, state or local quarantine or isolation order related to COVID-19 or an individual who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; (2) caring for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; or (3) experiencing any other substantially similar condition that may arise, as specified by the Secretary of Health and Human Services (HHS), you are entitled to compensation at two-thirds of the greater of the amounts above. Under these circumstances, you are subject to a maximum of $200 per day, or $2,000 over the entire two week period.

If you are taking expanded family and medical leave, you may take paid sick leave for the first 10 days of that leave period, or you may substitute any accrued vacation leave, personal leave, or medical or sick leave you have under your employer’s policy. For the following 10 weeks, you will be paid for your leave at an amount no less than two-thirds of your regular rate of pay for the hours you would be normally scheduled to work. The regular rate of pay used to calculate this amount must be at or above the federal minimum wage, or the applicable state or local minimum wage. However, you will not receive more than $200 per day or $12,000 for the 12 weeks that include both paid sick leave and expanded family and medical leave when you are on leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.

To calculate the number of hours for which you are entitled to paid leave, please see the answers to Questions 5-6 that are provided in this guidance.

8. What is my regular rate of pay for purposes of the FFCRA?

For purposes of the FFCRA, the regular rate of pay used to calculate your paid leave is the average of your regular rate over a period of up to six months prior to the date on which you take leave.[1] If you have not worked for your current employer for six months, the regular rate used to calculate your paid leave is the average of your regular rate of pay for each week you have worked for your current employer.

If you are paid with commissions, tips or piece rates, these wages will be incorporated into the above calculation.

You can also calculate this amount for each employee by adding all compensation that is part of the regular rate over the above period and divide that sum by all hours actually worked in the same period.

9. May I take 80 hours of paid sick leave for my self-quarantine and then another amount of paid sick leave for another reason provided under the Emergency Paid Sick Leave Act?

No. You may take up to two weeks—or 10 days—(80 hours for a full-time employee or, for a part-time employee, the number of hours equal to the average number of hours that the employee works over a typical two-week period) of paid sick leave for any combination of qualifying reasons. However, the total number of hours for which you receive paid sick leave is capped at 80 hours under the Emergency Paid Sick Leave Act.

10. If I am home with my child because his or her school or place of care is closed, or child care provider is unavailable, do I get paid sick leave, expanded family and medical leave, or both—how do they interact?

You may be eligible for both types of leave, but only for a total of 12 weeks of paid leave. You may take both paid sick leave and expanded family and medical leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons. The Emergency Paid Sick Leave Act provides for an initial two weeks of paid leave. This period, thus, covers the first 10 workdays of expanded family and medical leave, which are otherwise unpaid under the Emergency and Family Medical Leave Expansion Act unless you elect to use existing vacation, personal, or medical or sick leave under your employer’s policy. After the first 10 workdays have elapsed, you will receive two-thirds of your regular rate of pay for the hours you would have been scheduled to work in the subsequent 10 weeks under the Emergency and Family Medical Leave Expansion Act.

Please note that you can only receive the additional 10 weeks of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act for leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.

11. Can my employer deny me paid sick leave if my employer gave me paid leave for a reason identified in the Emergency Paid Sick Leave Act prior to the Act going into effect?

No. The Emergency Paid Sick Leave Act imposes a new leave requirement on employers that is effective beginning on April 1, 2020.

12. Is all leave under the FMLA now paid leave?

No. The only type of family and medical leave that is paid leave is expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act when such leave exceeds 10 days. This only includes leave taken because the employee must care for a child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.

13. Are the paid sick leave and expanded family and medical leave requirements retroactive?

No.

14. How do I know whether I have “been employed for at least 30 calendar days by the employer” for purposes of expanded family and medical leave?

You are considered to have been employed by your employer for at least 30 calendar days if your employer had you on its payroll for the 30 calendar days immediately prior to the day your leave would begin. For example, if you want to take leave on April 1, 2020, you would need to have been on your employer’s payroll as of March 2, 2020.

If you have been working for a company as a temporary employee, and the company subsequently hires you on a full-time basis, you may count any days you previously worked as a temporary employee toward this 30-day eligibility period.

15. What records do I need to keep when my employee takes paid sick leave or expanded family and medical leave?

If one of your employees takes paid sick leave under the Emergency Paid Sick Leave Act, you must require your employee to provide you with appropriate documentation in support of the reason for the leave, including: the employee’s name, qualifying reason for requesting leave, statement that the employee is unable to work (including telework) for that reason, and the date(s) for which leave is requested. Documentation of the reason for the leave will also be necessary, such as the source of any quarantine or isolation order, or the name of the health care provider who has advised the employee to self-quarantine. For example, this documentation may include a copy of the federal, state or local quarantine or isolation order related to COVID-19 applicable to the employee or written documentation by a health care provider advising the employee to self-quarantine due to concerns related to COVID-19. If you intend to claim a tax credit under the FFCRA for your payment of the sick leave wages, you should retain this documentation in your records. You should consult Internal Revenue Service (IRS) applicable forms, instructions and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit.

If one of your employees takes expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act to care for his or her child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19, you must require your employee to provide you with appropriate documentation in support of that leave, just as you would for conventional FMLA leave requests. For example, this could include a notice that has been posted on a government, school or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care or child care provider. This requirement also applies when the first two weeks of unpaid leave run concurrently with paid sick leave taken for the same reason. If you intend to claim a tax credit under the FFCRA for the expanded family and medical leave, you should retain this documentation in your records. You should consult IRS applicable forms, instructions and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit.

16. What documents do I need to give my employer to get paid sick leave or expanded family and medical leave?

You are entitled to paid sick leave if you are unable to work or telework due to a qualifying reason related to COVID-19. You must provide documentation to your employer in support of the reasons for your paid sick leave. These documents may include a copy of the federal, state or local quarantine or isolation order related to COVID-19 or written documentation by a health care provider advising you to self-quarantine due to concerns related to COVID-19.

You must provide documentation to your employer in support of your expanded family and medical leave taken to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons. For example, this requirement may be satisfied with a notice of closure or unavailability from your child’s school, place of care or child care provider, including a notice that may have been posted on a government, school or day care website, published in a newspaper, or emailed to you from an employee or official of the school, place of care or child care provider. Your employer must retain this notice or documentation in support of expanded family and medical leave, including while you may be taking unpaid leave that runs concurrently with paid sick leave, if taken for the same reason.

Please also note that all existing certification requirements under the FMLA remain in effect if you are taking leave for one of the existing qualifying reasons under the FMLA. For example, if you are taking leave beyond the two weeks of emergency paid sick leave because your medical condition for COVID-19-related reasons rises to the level of a serious health condition, you must continue to provide medical certifications under the FMLA, if required by your employer.

17. When am I able to telework under the FFCRA?

You may telework when your employer permits or allows you to perform work while you are at home or at a location other than your normal workplace. Telework is work for which normal wages must be paid and is not compensated under the paid leave provisions of the FFCRA.

18. What does it mean to be unable to work (including telework) for COVID-19 related reasons?

You are unable to work if your employer has work for you and one of the COVID-19 qualifying reasons set forth in the FFCRA prevents you from being able to perform that work, either under normal circumstances at your normal worksite or by means of telework.

If you and your employer agree that you will work your normal number of hours, but outside of your normally scheduled hours (for instance, early in the morning or late at night), then you are able to work and leave is not necessary unless a COVID-19 qualifying reason prevents you from working that schedule.

19. If I am or become unable to telework, am I entitled to paid sick leave or expanded family and medical leave?

If your employer allows teleworking—for example, allows you to perform certain tasks or work a certain number of hours from home or at a location other than your normal workplace—and you are unable to perform those tasks or work the required hours because of one of the qualifying reasons for paid sick leave, then you are entitled to take paid sick leave.

Similarly, if you are unable to perform those teleworking tasks or work the required teleworking hours because you need to care for your child whose school or place of care is closed, or child care provider is unavailable, because of COVID-19 related reasons, then you are entitled to take expanded family and medical leave. Of course, to the extent that you are able to telework while caring for your child, paid sick leave and expanded family and medical leave is not available.

20. May I take my paid sick leave or expanded family and medical leave intermittently while teleworking?

Yes, if your employer allows it and if you are unable to telework your normal schedule of hours due to one of the qualifying reasons in the Emergency Paid Sick Leave Act. In that situation, you and your employer may agree that you may take paid sick leave intermittently while teleworking. Similarly, if you are prevented from teleworking your normal schedule of hours because you need to care for your child whose school or place of care is closed, or child care provider is unavailable, because of COVID-19 related reasons, you and your employer may agree that you can take expanded family medical leave intermittently while teleworking.

You may take intermittent leave in any increment, provided that you and your employer agree. For example, if you agree on a 90-minute increment, you could telework from 1:00 PM to 2:30 PM, take leave from 2:30 PM to 4:00 PM, and then return to teleworking.

The DOL encourages employers and employees to collaborate to achieve flexibility and meet mutual needs, and the DOL is supportive of these voluntary arrangements that combine telework and intermittent leave.

21. May I take my paid sick leave intermittently while working at my usual worksite (as opposed to teleworking)?

It depends on why you are taking paid sick leave and whether your employer agrees. Unless you are teleworking, paid sick leave for qualifying reasons related to COVID-19 must be taken in full-day increments. It cannot be taken intermittently if the leave is being taken because:

• You are subject to a federal, state or local quarantine or isolation order related to COVID-19;
• You have been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
• You are experiencing symptoms of COVID-19 and seeking a medical diagnosis;
• You are caring for an individual who either is subject to a quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
• You are experiencing any other substantially similar condition specified by the Secretary of HHS.

Unless you are teleworking, once you begin taking paid sick leave for one or more of these qualifying reasons, you must continue to take paid sick leave each day until you either: (1) use the full amount of paid sick leave; or (2) no longer have a qualifying reason for taking paid sick leave. This limit is imposed because, if you are sick or possibly sick with COVID-19, or caring for an individual who is sick or possibly sick with COVID-19, the intent of FFCRA is to provide paid sick leave as necessary to keep you from spreading the virus to others.

If you no longer have a qualifying reason for taking paid sick leave before you exhaust your paid sick leave, you may take any remaining paid sick leave at a later time, until Dec. 31, 2020, if another qualifying reason occurs.

In contrast, if you and your employer agree, you may take paid sick leave intermittently if you are taking paid sick leave to care for your child whose school or place of care is closed, or whose child care provider is unavailable, because of COVID-19 related reasons. For example, if your child is at home because his or her school or place of care is closed, or child care provider is unavailable, because of COVID-19 related reasons, you may take paid sick leave on Mondays, Wednesdays and Fridays to care for your child, but work at your normal worksite on Tuesdays and Thursdays.

The DOL encourages employers and employees to collaborate to achieve maximum flexibility. Therefore, if employers and employees agree to intermittent leave on less than a full work day for employees taking paid sick leave to care for their child whose school or place of care is closed, or child care provider is unavailable, because of COVID-19-related reasons, the DOL is supportive of those voluntary arrangements.

22. May I take my expanded family and medical leave intermittently while my child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons, if I am not teleworking?

Yes, but only with your employer’s permission. Intermittent expanded family and medical leave should be allowed only when you and your employer agree upon this type of schedule. For example, if your employer and you agree, you may take expanded family and medical leave on Mondays, Wednesdays and Fridays, but work Tuesdays and Thursdays, while your child is at home because your child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons, for the duration of your leave.

The DOL encourages employers and employees to collaborate to achieve flexibility. Therefore, if employers and employees agree to intermittent leave on a day-by-day basis, the DOL supports these voluntary arrangements.

23. If my employer closed my worksite before April 1, 2020 (the effective date of the FFCRA), can I still get paid sick leave or expanded family and medical leave?

No. If, prior to the FFCRA’s effective date, your employer sent you home and stopped paying you because it does not have work for you to do, you will not get paid sick leave or expanded family and medical leave, but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it is required to close pursuant to a federal, state or local directive. You should contact your state workforce agency or state unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.

It should be noted, however, that if your employer is paying you pursuant to a paid leave policy or state or local requirements, you are not eligible for unemployment insurance.

24. If my employer closes my worksite on or after April 1, 2020 (the effective date of the FFCRA), but before I go out on leave, can I still get paid sick leave and/or expanded family and medical leave?

No. If your employer closes after the FFCRA’s effective date (even if you requested leave prior to the closure), you will not get paid sick leave or expanded family and medical leave, but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it was required to close pursuant to a federal, state or local directive. You should contact your state workforce agency or state unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.

25. If my employer closes my worksite while I am on paid sick leave or expanded family and medical leave, what happens?

If your employer closes while you are on paid sick leave or expanded family and medical leave, your employer must pay for any paid sick leave or expanded family and medical leave you used before the employer closed. As of the date your employer closes your worksite, you are no longer entitled to paid sick leave or expanded family and medical leave, but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because the employer was required to close pursuant to a federal, state or local directive. You should contact your state workforce agency or state unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.

26. If my employer is open, but furloughs me on or after April 1, 2020 (the effective date of the FFCRA), can I receive paid sick leave or expanded family and medical leave?

No. If your employer furloughs you because it does not have enough work or business for you, you are not entitled to then take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. You should contact your state workforce agency or state unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.

27. If my employer closes my worksite on or after April 1, 2020 (the effective date of the FFCRA), but tells me that it will reopen at some time in the future, can I receive paid sick leave or expanded family and medical leave?

No, not while your worksite is closed. If your employer closes your worksite—even for a short period of time—you are not entitled to take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it was required to close pursuant to a federal, state or local directive. You should contact your state workforce agency or state unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx. If your employer reopens and you resume work, you would then be eligible for paid sick leave or expanded family and medical leave as warranted.

28. If my employer reduces my scheduled work hours, can I use paid sick leave or expanded family and medical leave for the hours that I am no longer scheduled to work?

No. If your employer reduces your work hours because it does not have work for you to perform, you may not use paid sick leave or expanded family and medical leave for the hours that you are no longer scheduled to work. This is because you are not prevented from working those hours due to a COVID-19 qualifying reason, even if your reduction in hours was somehow related to COVID-19.

You may, however, take paid sick leave or expanded family and medical leave if a COVID-19 qualifying reason prevents you from working your full schedule. If you do, the amount of leave to which you are entitled is calculated based on your work schedule before it was reduced (see Question 5).

29. May I collect unemployment insurance benefits for time in which I receive pay for paid sick leave and/or expanded family and medical leave?

No. If your employer provides you paid sick leave or expanded family and medical leave, you are not eligible for unemployment insurance. However, each state has its own unique set of rules, and the DOL recently clarified additional flexibility to the states (UIPL 20-10) to extend partial unemployment benefits to workers whose hours or pay have been reduced. Therefore, individuals should contact their state workforce agency or state unemployment insurance office for specific questions about eligibility. For more information, please see https://www.careeronestop.org/LocalHelp/service-locator.aspx.

30. If I elect to take paid sick leave or expanded family and medical leave, must my employer continue my health coverage? If I remain on leave beyond the maximum period of expanded family and medical leave, do I have a right to keep my health coverage?

If your employer provides group health coverage that you’ve elected, you are entitled to continued group health coverage during your expanded family and medical leave on the same terms as if you continued to work. If you are enrolled in family coverage, your employer must maintain coverage during your expanded family and medical leave. You generally must continue to make any normal contributions to the cost of your health coverage. See WHD Fact Sheet 28A.

If you do not return to work at the end of your expanded family and medical leave, check with your employer to determine whether you are eligible to keep your health coverage on the same terms (including contribution rates). If you are no longer eligible, you may be able to continue your coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA, which generally applies to employers with 20 or more employees, allows you and your family to continue the same group health coverage at group rates. Your share of that cost may be higher than what you were paying before, but may be lower than what you would pay for private individual health insurance coverage. (If your employer has fewer than 20 employees, you may be eligible to continue your health insurance under state laws that are similar to COBRA. These laws are sometimes referred to as “mini COBRA” and vary from state to state.) Contact the Employee Benefits Security Administration (EBSA) at https://www.dol.gov/agencies/ebsa/workers-and-families/changing-jobs-and-job-loss to learn about health and retirement benefit protections for dislocated workers.

If you elect to take paid sick leave, your employer must continue your health coverage. Under the Health Insurance Portability and Accountability Act (HIPAA), an employer cannot establish a rule for eligibility or set any individual’s premium or contribution rate based on whether an individual is actively at work (including whether an individual is continuously employed), unless absence from work due to any health factor (such as being absent from work on sick leave) is treated, for purposes of the plan or health insurance coverage, as being actively at work.

31. As an employee, may I use my employer’s preexisting leave entitlements and my FFCRA paid sick leave and expanded family and medical leave concurrently for the same hours?

No. If you are eligible to take paid sick leave or expanded family and medical leave under the FFCRA, as well as paid leave that is already provided by your employer, unless your employer agrees, you must choose one type of leave to take. You may not simultaneously take both, unless your employer agrees to allow you to supplement the amount you receive from paid sick leave or expanded family and medical leave under the FFCRA, up to your normal earnings, with preexisting leave. For example, if you are receiving two-thirds of your normal earnings from paid sick leave or expanded family and medical leave under the FFCRA and your employer allows it, you may use your preexisting employer-provided paid leave to get the additional one-third of your normal earnings so that you receive your full normal earnings for each hour.

32. If I am an employer, may I supplement or adjust the pay mandated under the FFCRA with paid leave that the employee may have under my paid leave policy?

If your employee chooses to use existing leave you have provided, yes; otherwise, no. Paid sick leave and expanded family medical leave under the FFCRA is in addition to employees’ preexisting leave entitlements, including federal employees. Under the FFCRA, the employee may choose to use existing paid vacation, personal, medical or sick leave from your paid leave policy to supplement the amount your employee receives from paid sick leave or expanded family and medical leave, up to the employee’s normal earnings.

However, you are not required to allow an employee to use existing paid leave to supplement the amount your employee receives from paid sick leave or expanded family and medical leave. Further, you may not claim, and will not receive tax credit, for these supplemental amounts.

33. If I am an employer, may I require an employee to supplement or adjust the pay mandated under the FFCRA with paid leave that the employee may have under my paid leave policy?

No. Under the FFCRA, only the employee may decide whether to use existing paid vacation, personal, medical or sick leave from your paid leave policy to supplement the amount your employee receives from paid sick leave or expanded family and medical leave. The employee would have to agree to use existing paid leave under your paid leave policy to supplement or adjust the paid leave under the FFCRA.

34. If I want to pay my employees more than they are entitled to receive for paid sick leave or expanded family and medical leave, can I do so and claim a tax credit for the entire amount paid to them?

You may pay your employees in excess of FFCRA requirements. However, you cannot claim—and will not receive tax credit for—those amounts in excess of the FFCRA’s statutory limits.

35. I am an employer that is part of a multiemployer collective bargaining agreement. May I satisfy my obligations under the Emergency Family and Medical Leave Expansion Act through contributions to a multiemployer fund, plan or program?

You may satisfy your obligations under the Emergency Family and Medical Leave Expansion Act by making contributions to a multiemployer fund, plan or other program in accordance with your existing collective bargaining obligations. These contributions must be based on the amount of paid family and medical leave to which each of your employees is entitled under the Act based on each employee’s work under the multiemployer collective bargaining agreement. This type of fund, plan or other program must allow employees to secure or obtain their pay for the related leave they take under the Act. Alternatively, you may also choose to satisfy your obligations under the Act by other means, provided they are consistent with your bargaining obligations and collective bargaining agreement.

36. I am an employer that is part of a multiemployer collective bargaining agreement. May I satisfy my obligations under the Emergency Paid Sick Leave Act through contributions to a multiemployer fund, plan or program?

You may satisfy your obligations under the Emergency Paid Sick Leave Act by making contributions to a multiemployer fund, plan or other program in accordance with your existing collective bargaining obligations. These contributions must be based on the hours of paid sick leave to which each of your employees is entitled under the Act based on each employee’s work under the multiemployer collective bargaining agreement. This type of fund, plan or other program must allow employees to secure or obtain their pay for the related leave they take under the Act. Alternatively, you may also choose to satisfy your obligations under the Act by other means, provided they are consistent with your bargaining obligations and collective bargaining agreement.

37. Are contributions to a multiemployer fund, plan or other program the only way an employer that is part of a multiemployer collective bargaining agreement may comply with the paid leave requirements of the FFCRA?

No. Both the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act provide that, consistent with its bargaining obligations and collective bargaining agreement, an employer may satisfy its legal obligations under both Acts by making appropriate contributions to such a fund, plan or other program based on the paid leave owed to each employee. However, the employer may satisfy its obligations under both Acts by other means, provided they are consistent with its bargaining obligations and collective bargaining agreement.

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Whether you have a question about this topic or need help with any form of insurance, please contact us at any time at 305.238.1000.

The U.S. Department of Health and Human Services (HHS) issued a bulletin to remind covered entities and their business associates that the HIPAA Privacy Rule’s protections still apply during a public health emergency, such as the current coronavirus (COVID-19) outbreak. The bulletin also outlines the different ways that patient information may be shared under the Privacy Rule during an outbreak of infectious disease or another emergency situation.

The Privacy Rule only applies to covered entities and their business associates, and not to employers. Covered entities include health plans, most health care providers and health care clearinghouses. In general, medical information that is provided to an employer directly by an employee is not subject to the Privacy Rule, although other federal and state privacy restrictions may apply, including the Americans with Disabilities Act (ADA). However, any medical information that employers receive from their health plans  is subject to the Privacy Rule and generally cannot be used for employment purposes.

In addition, HHS announced that it will not impose penalties for HIPAA noncompliance against health care providers that serve patients through everyday communication technologies (such as FaceTime or Skype) during the COVID-19 nationwide public health emergency.

This Compliance Bulletin contains HHS’s bulletin regarding HIPAA compliance during the COVID-19 outbreak.

Action Steps

Covered entities and their business associates should review HHS’ guidance regarding the protection of health information during an outbreak of infectious disease.

Sharing Patient Information

Treatment
Under the Privacy Rule, covered entities may disclose, without a patient’s authorization, protected health information (PHI) about the patient as necessary to treat the patient or to treat a different patient. Treatment includes the coordination or management of health care and related services by one or more health care providers and others, consultation between providers, and the referral of patients for treatment. See 45 CFR §§ 164.502(a)(1)(ii), 164.506(c), and the definition of “treatment” at 164.501.

Public Health Activities
The HIPAA Privacy Rule recognizes the legitimate need for public health authorities and others responsible for ensuring public health and safety to have access to PHI that is necessary to carry out their public health mission. Therefore, the Privacy Rule permits covered entities to disclose needed PHI without individual authorization:

✓ To a public health authority, such as the CDC or a state or local health department, that is authorized by law to collect or receive such information for the purpose of preventing or controlling disease, injury or disability. This would include, for example, the reporting of disease or injury; reporting vital events, such as births or deaths; and conducting public health surveillance, investigations or interventions. A “public health authority” is an agency or authority of the U.S. government, a state, a territory, a political subdivision of a state or territory, or Indian tribe that is responsible for public health matters as part of its official mandate, as well as a person or entity acting under a grant of authority from, or under a contract with, a public health agency. See 45 CFR §§ 164.501 and 164.512(b)(1)(i). For example, a covered entity may disclose PHI to the CDC on an ongoing basis as needed to report all prior and prospective cases of patients exposed to or suspected or confirmed to have COVID-19.

✓ At the direction of a public health authority, to a foreign government agency that is acting in collaboration with the public health authority. See 45 CFR 164.512(b)(1)(i).

✓ To persons at risk of contracting or spreading a disease or condition if other law, such as state law, authorizes the covered entity to notify such persons as necessary to prevent or control the spread of the disease or otherwise to carry out public health interventions or investigations. See 45 CFR 164.512(b)(1)(iv).

Disclosures to Family, Friends, and Others Involved in an Individual’s Care and for Notification
A covered entity may share PHI with a patient’s family members, relatives, friends or other persons identified by the patient as involved in the patient’s care. A covered entity also may share information about a patient as necessary to identify, locate and notify family members, guardians, or anyone else responsible for the patient’s care, of the patient’s location, general condition or death. This may include, where necessary to notify family members and others, the police, the press or the public at large. See 45 CFR 164.510(b).

• The covered entity should get verbal permission from individuals or otherwise be able to reasonably infer that the patient does not object, when possible. If the individual is incapacitated or not available, covered entities may share information for these purposes if, in their professional judgment, doing so is in the patient’s best interest.
• For patients who are unconscious or incapacitated: A health care provider may share relevant information about the patient with family, friends or others involved in the patient’s care or payment for care, if the health care provider determines, based on professional judgment, that doing so is in the best interests of the patient. For example, a provider may determine that it is in the best interests of an elderly patient to share relevant information with the patient’s adult child, but generally could not share unrelated information about the patient’s medical history without permission.
• In addition, a covered entity may share PHI with disaster relief organizations that, like the American Red Cross, are authorized by law or by their charters to assist in disaster relief efforts, for the purpose of coordinating the notification of family members or other persons involved in the patient’s care, of the patient’s location, general condition or death. It is unnecessary to obtain a patient’s permission to share the information in this situation if doing so would interfere with the organization’s ability to respond to the emergency.

Disclosures to Prevent a Serious and Imminent Threat
Health care providers may share patient information with anyone as necessary to prevent or lessen a serious and imminent threat to the health and safety of a person or the public – consistent with applicable law (such as state statutes, regulations or case law) and the provider’s standards of ethical conduct. See 45 CFR 164.512(j). Thus, providers may disclose a patient’s health information to anyone who is in a position to prevent or lesson the serious and imminent threat, including family, friends, caregivers and law enforcement without a patient’s permission. HIPAA expressly defers to the professional judgment of health professionals in making determinations about the nature and severity of the threat to health and safety. See 45 CFR 164.512(j).

Minimum Necessary 
For most disclosures, a covered entity must make reasonable efforts to limit the information disclosed to that which is the “minimum necessary” to accomplish the purpose. (Minimum necessary requirements do not apply to disclosures to health care providers for treatment purposes.) Covered entities may rely on representations from a public health authority or other public official that the requested information is the minimum necessary for the purpose, when that reliance is reasonable under the circumstances. For example, a covered entity may rely on representations from the CDC that the PHI requested by the CDC about all patients exposed to or suspected or confirmed to have COVID-19 is the minimum necessary for the public health purpose. In addition, internally, covered entities should continue to apply their role-based access policies to limit access to PHI to only those workforce members who need it to carry out their duties. See 45 CFR §§ 164.502(b), 164.514(d).

Disclosures to the Media or Others Not Involved in the Care of the Patient/Notification
In general, except in the limited circumstances described elsewhere in this Bulletin, affirmative reporting to the media or the public at large about an identifiable patient, or the disclosure to the public or media of specific information about treatment of an identifiable patient, such as specific tests, test results or details of a patient’s illness, may not be done without the patient’s written authorization (or the written authorization of a personal representative who is a person legally authorized to make health care decisions for the patient). See 45 CFR 164.508 for the requirements for a HIPAA authorization. Where a patient has not objected to or restricted the release of PHI, a covered hospital or other health care facility may, upon a request to disclose information about a particular patient asked for by name, release limited facility directory information to acknowledge an individual is a patient at the facility, and may provide basic information about the patient’s condition in general terms (e.g., critical or stable, deceased, or treated and released). Covered entities may also disclose information when the patient is incapacitated, if the disclosure is believed to be in the best interest of the patient and is consistent with any prior expressed preferences of the patient. See 45 CFR 164.510(a).

Safeguarding Patient Information

In an emergency situation, covered entities must continue to implement reasonable safeguards to protect patient information against intentional or unintentional impermissible uses and disclosures. Further, covered entities (and their business associates) must apply the administrative, physical, and technical safeguards of the HIPAA Security Rule to electronic PHI.

HIPAA Applies Only to Covered Entities and Business Associates

The HIPAA Privacy Rule applies to disclosures made by employees, volunteers, and other members of a covered entity’s or business associate’s workforce. Covered entities are health plans, health care clearinghouses, and those health care providers that conduct one or more covered health care transactions electronically, such as transmitting health care claims to a health plan. Business associates generally are persons or entities (other than members of the workforce of a covered entity) that perform functions or activities on behalf of, or provide certain services to, a covered entity that involve creating, receiving, maintaining or transmitting PHI. Business associates also include subcontractors that create, receive, maintain or transmit PHI on behalf of another business associate. The Privacy Rule does not apply to disclosures made by entities or other persons who are not covered entities or business associates (although such persons or entities are free to follow the standards on a voluntary basis if desired). There may be other state or federal rules that apply.

A business associate of a covered entity (including a business associate that is a subcontractor) may make disclosures permitted by the Privacy Rule, such as to a public health authority, on behalf of a covered entity or another business associate to the extent authorized by its business associate agreement.

Other Resources

• For more information on HIPAA and Public Health, please visit: https://www.hhs.gov/hipaa/for-professionals/special-topics/public-health/index.html
• For more information on HIPAA and Emergency Preparedness, Planning, and Response, please visit: https://www.hhs.gov/hipaa/for-professionals/special-topics/emergencypreparedness/index.html
• General information on understanding the HIPAA Privacy Rule may be found at: https://www.hhs.gov/hipaa/for-professionals/privacy/index.html
• For information regarding how Federal civil rights laws apply in an emergency, please visit: https://www.hhs.gov/civil-rights/for-individuals/special-topics/emergencypreparedness/index.html

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Whether you have a question about this topic or need help with any form of insurance, please contact us at any time at 305.238.1000.

As part of the Families First Coronavirus Response Act signed into law by President Trump on March 18, 2020, two laws were enacted that provide workers with paid leave for reasons related to the coronavirus (COVID-19) pandemic. One of the new leave provisions, the “Emergency Family and Medical Leave Expansion Act,” allows 12 weeks of partially compensated FMLA leave to care for a child whose school or child care facility has been closed due to COVID-19. The leave applies only to workers who have been employed by their current employer for 30 days.

The other new law providing employee leave, the “Emergency Paid Sick Leave Act,” requires employers to provide 80 hours of paid sick time to employees in specified circumstances, including:

✓ A quarantine or isolation order for the employee or someone the employee is caring for, or medical advice to self-quarantine;

✓ When the employee has symptoms of COVID-19; or

✓ When the employee’s child’s school or child care facility is closed.

Employers with 500 employees or more are exempt from the laws, and employers may exclude employees who are health care providers and emergency responders. The legislation also allows for future regulations
exempting businesses with fewer than 50 employees from providing leave for child care reasons if the leave would jeopardize the viability of the business. The leave benefits take effect on April 1, 2020, and expire on Dec. 31, 2020.

Action Steps

Employers should familiarize themselves with the new leave requirements to ensure compliance.   

Overview

In response to the coronavirus (COVID-19) pandemic, Congress enacted a bill (the “Families First Coronavirus Response Act”) providing various forms of relief, including two separate laws mandating that employers give employees paid leave for specified purposes related to COVID-19. The two leave laws are the “Emergency Family and Medical Leave Expansion Act,” and the “Emergency Paid Sick Leave Act.” The leave mandates take effect on April 1, 2020 and sunset on Dec. 31, 2020.

The Emergency Family and Medical Leave Expansion Act

In general, the Emergency Family and Medical Leave Expansion Act amends the federal Family and Medical Leave Act (FMLA) to allow employees to take leave for certain child care purposes related to COVID-19. It requires employers to partially compensate that leave after the first 10 days.

Covered Employers

The expanded FMLA requirements apply to private employers with fewer than 500 employees, and all government employers. Thus, small employers that are not subject to the FMLA’s regular leave provisions are subject to the new FMLA leave rules that allow employees to take leave for specified child care purposes related to COVID-19.

The law allows for future regulations to exempt businesses with fewer than 50 employees if the leave would jeopardize the viability of the business. The law states that employers with fewer than 50 employees will not be subject to civil damages in an employee action brought under the FMLA for violation of the new provisions.

Covered Employees

All employees who have worked for their current employer for 30 calendar days are eligible for the new FMLA leave; however, employers are permitted to deny leave to employees who are health care providers or emergency responders.

Using Leave

Eligible employees of covered employers may take up to 12 weeks of FMLA leave if they are unable to work (or telework) because they must care for a son or daughter under 18 years of age. The need for leave must be caused by the closing of the child’s elementary or high school or place of care, or the unavailability of the child’s child care provider, due to a declared COVID-19 public health emergency.

“Child care provider” means a provider who receives compensation for providing child care services on a regular basis.

Where the need for leave is foreseeable, employees should provide their employers with as much notice of leave as is practicable.

Compensation

Employers are not required to pay employees for the first 10 days of the new FMLA leave, but employees may substitute any accrued vacation leave, personal leave, or medical or sick leave for this unpaid leave. Thereafter, the employer must compensate FMLA leave taken under the new provision at a rate of at least two-thirds of the employee’s regular rate of pay, based on the number of hours the employee would otherwise normally be scheduled to work, up to a maximum of $200 per day, or $10,000 total. 

Special calculation rules apply for employees with variable schedules.

Special rules apply to multi-employer collective bargaining agreements.

Job Protection

While FMLA leave is usually job-protected, meaning employees who take leave must be restored to their position (or an equivalent) when they return to work, the new law provides a limited exception to this requirement. Employers with fewer than 25 employees are not subject to the job restoration requirement, if:

X The employee took FMLA leave under the new COVID-19 expansion of the law;

X The employee’s position no longer exists due to economic conditions or changes in operating conditions of the employer that affect employment and are caused by a public health emergency;

X The employer makes reasonable efforts to restore the employee to an equivalent position; and

X If these efforts fail, the employer makes reasonable efforts to contact the employee if an equivalent position becomes available. The contact period is for one year, beginning on the earlier of:

• The date on which the employee’s need for leave ends
• Twelve weeks after the employee’s leave begins

Tax Credit

Employers are entitled to a credit against the tax imposed by section 3111(a) or 3221(a) of the IRS Code for each calendar quarter of an amount equal to 100% of qualified family leave wages paid. Tax credits are also available for self-employed people.

Emergency paid Sick Leave

The second law passed providing paid employee leave in relation to the coronavirus is the Emergency Paid Sick Leave Act.

Covered Employers

The paid sick leave law applies to all private employers with fewer than 500 employees, and all government employers. The law allows for future regulations exempting businesses with fewer than 50 employees from providing leave for specific child care reasons under certain conditions, described later in this document under Using Paid Sick Leave.

Covered Employees

All employees are covered, regardless of the length of their employment with their current employer. However, employers may choose not to provide paid sick leave to employees who are health care providers or emergency responders.

Using Paid Sick Leave

All full-time employees, regardless of the length of time they have worked for their employer, are entitled to 80 hours of paid sick time, available for immediate use. Part-time employees are entitled to an amount of paid sick time equal to the average number of hours they work over a two-week period.

Paid sick time may be taken when the employee:

1. Is subject to a federal, state or local quarantine or isolation order related to COVID-19
2. Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
3. Is experiencing symptoms of COVID-19 and is seeking a medical diagnosis
4. Is caring for an individual who is subject to a federal, state or local quarantine or isolation order related to COVID-19, or who has been advised by a health care provider to self-quarantine
5. Is caring for his or her child if the child’s school or place of care has closed, or the child’s care provider is unavailable, because of COVID-19 precautions
6. Is experiencing another substantially similar condition specified by the Secretary of Health and Human Services (HHS)

Employers may not require employees to use other paid leave before using paid leave under the new law. The law allows for future regulations exempting businesses with fewer than 50 employees from providing leave for reason 5, above, if the leave would jeopardize the viability of the business as a going concern.

An employer may require the employee to follow reasonable notice procedures after taking leave the first time.

Compensation

Under the new paid sick leave law, employers must pay employees their regular rate of pay if the employee is taking leave for a reason related to their own symptoms of, or exposure to, COVID-19. Employees who are taking leave to care for family members are only entitled to be paid at two-thirds of their regular rate. Daily and total maximum limits apply, as set forth in the compensation table below.

Special calculation rules apply for part-time employees with variable work schedules.

Employer Notice Requirements

Employers must post this notice in conspicuous places on their premises, where notices to employees are customarily posted. An employer may satisfy this requirement by emailing or direct mailing this notice to employees, or posting the notice on an employee information internal or external website.

Enforcement

Employers who violate the new paid sick leave law will be subject to penalties under the federal Fair Labor Standards Act. The DOL has issued guidance saying it will not bring enforcement actions against any employer for violations of either leave provision in the Families First Coronavirus Response Act occurring within the first 30 days after it was passed (March 18 through April 17, 2020). This reprieve from enforcement only applies if the employer has made reasonable, good faith efforts to comply with the Act.

Tax Credit

Employers are entitled to a credit against the tax imposed by section 3111(a) or 3221(a) of the IRS Code for each calendar quarter, of an amount equal to 100% of qualified sick leave wages paid. Tax credits are also available for the self-employed.

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Whether you have a question about this topic or need help with any form of insurance, please contact us at any time at 305.238.1000.

The Coronavirus (COVID-19) pandemic has put a major strain on every aspect of daily life around the world, including the United States. As spread of the disease shows no sign of slowing down, there is a steadily increasing concern in the United States regarding the health and wellness of not only our citizens, but the economy as well. In response, the United States Congress has been negotiating a historic stimulus package to address the havoc caused by the pandemic. 

It appears Congress’ hard work has paid off, as they just passed a $2 trillion package to provide a jolt to the economy reeling from the deadly virus. All Americans would do well to understand the package’s provisions, as it will offer direct relief to businesses and individuals alike.

What is in the Stimulus Package?

The $2 trillion stimulus package, negotiated by Republican and Democratic leaders, is the largest economic stimulus measure in modern history. The bill is a $2 trillion combination of tax provisions and other stimulus measures, including emergency business lending. The measure promises to provide help for struggling American families and businesses, as well as health care workers on the front lines of the coronavirus outbreak.

Significant Provisions Affecting Businesses

The tax package itself is broad, with tax payment relief and significant business tax incentives. Here is a list of the most significant provisions affecting businesses:

• $367 billion will be made available in loans for small businesses and $150 billion for state and local governments. The loans will be forgiven so long as businesses pledge not to lay off their workers.
• Small businesses forced to suspend operations or that have seen gross receipts fall by 50% from the previous year will be eligible for a tax credit worth up to 50% of wages paid during the crisis, so long as they keep their workers employed throughout.
• The Treasury Department will distribute $500 billion in loans to struggling industries (e.g., passenger airlines and businesses critical to maintaining national security). Additionally, an oversight board and inspector general will be created to oversee loans to large companies.
• Health care providers will receive $100 billion in grants to help fight the coronavirus and make up for revenue lost by delaying elective surgeries and other procedures.
• $200 million will be carved out for the Federal Communications Commission to provide health care providers with connected devices to facilitate telemedicine services, with the goal of freeing up hospital beds. Another $25 million will go to a grant program that helps rural communities purchase broadband equipment for telemedicine.
• The Commodity Credit Corporation, an institution that USDA uses to stabilize the farm economy, would see its spending authority increased to $14 billion. The package also sets up a $9.5 billion emergency fund for producers, including fresh fruit
• and vegetable growers, dairy farmers and cattle ranchers, along with local food systems like farmers markets.
• Colleges and universities, as well as school districts, will receive more than $30 billion.
• State and local governments will receive $150 billion, with $8 billion set aside for local governments.
• The package will provide the U.S. Postal Service with a $10 billion Treasury loan to stave off insolvency. Retailers, restaurateurs and hotels will be able to immediately deduct from their taxes what they spend on property improvements.
• Employers can defer the 6.2% tax they pay on wages used to fund Social Security.

Significant Provisions Affecting Individuals

The major piece of the individual tax changes will offer rebate checks based on a new tax credit of $1,200 per filing adult and $500 for each qualifying child. Additionally, unemployed individuals will receive an unprecedented expansion of benefits and payments.

Here is a list of the most significant provisions affecting individuals, many of which will be discussed in detail later in this piece:

• Single Americans will receive $1,200, married couples will get $2,400 and parents will receive $500 for each child.
• Unemployed individuals, including freelancers and furloughed employees, will get an extra $600 per week for up to four months, on top of state unemployment benefits.
• The package also calls for a new pandemic unemployment assistance program, which will provide jobless benefits to those who are unemployed, partially unemployed or unable to work because of COVID-19 and don’t qualify for traditional benefits.
• The Department of Education will suspend payments for student loan borrowers without penalty through September 30.
• There will be housing protections against foreclosures on mortgages and evictions for renters. Anyone facing a financial hardship from the coronavirus will receive a forbearance on federally backed mortgage loans of up to 60 days. Those with federally backed mortgage loans who have tenants are not allowed to evict tenants solely for failure to pay rent for a 120-day period.

As you can see, the package will have a far-reaching impact as it drives money toward workers, small businesses and industries that have been impacted by the economic downturn due to the pandemic.

Overview of Major Bill Provisions

Now that you’re aware of the major implications for both businesses and individuals, let’s take a more in-depth look at the most important provisions.

Loans and Tax Credit Available to Small Businesses

Keeping businesses afloat and workers under the wing of their employers is critical for ensuring the economy can quickly restart after the pandemic subsides. To this end, the stimulus package creates a $367 billion federally guaranteed loan program for small businesses that employ 500 or fewer people who must pledge not to lay off their workers. The loans will be available during an emergency period ending June 30, and would be forgiven if the business uses the loan funds for approved purposes and maintains the average size of its full-time workforce, based on when it received the loan.

Additionally, small businesses forced to suspend operations or that have seen gross receipts fall by 50% from the previous year, will be eligible for a tax credit worth up to 50% of wages paid during the crisis, so long as they keep their workers employed through the crisis. Wages remain eligible until business is no longer suspended or gross receipts for a quarter reach 80% of the prior year. The credit could be applied to all wages for employers with fewer than 100 employees, while the benefit is capped at $10,000 in wages per employee for larger employers.

Expansion of Unemployment Benefits

The stimulus package includes a significant expansion of unemployment benefits that will extend unemployment insurance by 13 weeks and include a four-month enhancement of benefits (for reference, many states already provide 26 weeks of unemployment benefits, and thus participants in such states would be eligible for a total of 39 weeks when adding the 13 weeks of federal relief). The enhanced benefits will provide an additional $600 per week on top of what state unemployment programs pay.

Note that many individuals who typically do not qualify for unemployment insurance will qualify under the package, including independent contractors and self-employed individuals. In sum, those who are unemployed, partially unemployed or who cannot work for a wide variety of coronavirus-related reasons will be more likely to receive benefits.

Individual Checks to Taxpayers

As noted earlier, the package will provide direct payments to taxpayers based on the adjusted gross income found on their 2019 federal tax return. All U.S. residents with adjusted gross incomes up to $75,000 ($150,000 for married couples) will get a $1,200 ($2,400 for couples) payment. Families will receive an additional $500 per child, as a way to create a safety net for those whose jobs and businesses are affected by the pandemic. However, the payments will start to phase out for individuals with adjusted gross incomes greater than $75,000. Those with incomes higher than $99,000 will not qualify for payments under the stimulus package.

It is unclear how long it will take the IRS to process every payment. The Trump administration has indicated that Americans could be seeing direct payments as soon as April 6.

How Can I Take Advantage of the Stimulus?

Now that you’re acquainted with the impact of the stimulus package, let’s discuss how you might take advantage of these benefits:

How can I obtain a small business loan from the government?

The U.S. Small Business Administration (SBA) is offering loans for qualifying small businesses. These are low-interest (3.75% for small businesses and 2.75% for nonprofits) loans with terms potentially as long as 30 years. You can apply for an SBA loan through its website. Be prepared to provide the following information:

• Tax Information Authorization (IRS Form 4506T), completed and signed by each principal or owner
• Recent federal income tax returns
• Personal Financial Statement (SBA Form 413)
• Schedule of Liabilities listing all fixed debts (SBA Form 2202)

You may also need to provide profit and loss statements, recent tax returns and balance sheets.

After you apply, the SBA will review your credit before conducting its own inspection to verify your losses. The SBA says its goal is to arrive at a decision on any disaster loans within two to three weeks. If it determines you are eligible, it will send you a loan closing document for your signature.

How can employees collect unemployment assistance?

If your business is closed because of COVID-19 and your employees cannot work from home, or your employees are unable to work due to the disease or need to take care of someone who has it, they can likely collect unemployment. As each state administers a separate unemployment insurance program, employees should be told to visit their state’s unemployment insurance website, which will provide the relevant details regarding their individual programs. The information employees will need includes their Social Security number and driver’s license or state ID.

Conclusion

If there’s anything that is certain, it is that the full economic impact of this unprecedented pandemic is yet to be understood. Despite the unpredictability, Congress’ historic economic stimulus package is a sight for sore eyes for struggling businesses and individuals alike.

As the pandemic develops and the stimulus package is rolled out, look for more relevant guidance from Morris & Reynolds Insurance in the near future, and continue to stay abreast of the latest state and federal developments.