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A Guide to the Recently Passed Paid Leave Benefits Amidst Global Pandemic

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To help prevent further spread of COVID-19, there’s a consensus that Americans need to stay home and adhere to social distancing practices. This is especially recommended if one feels sick or has a suspected or confirmed case of the virus. As directed by the Centers for Disease Control and Prevention (CDC), it’s important to self-quarantine and be mindful of personal hygiene, such as washing your hands and the like. Our health and the health of the nation is top of mind, but the question remains: will U.S. workers still get paid if they stay home?

Roughly 25 percent of U.S. workers currently receive little to no paid sick leave, many of which are low-wage employees who depend on their paychecks.1 On March 18, 2020, President Donald Trump signed the Families First Coronavirus Response Act, which intends to give paid leave to workers who did not have it and extend paid leave for workers who only received a few days. These benefits are only temporary, but they allow certain employees to receive paid leave if they need to take time off from work, due to the present virus. 

Understanding the Families First Coronavirus Response Act

The recently passed bill allows qualified employees two weeks of paid sick leave if they are sick, quarantined or seeking a diagnosis or preventative care for COVID-19, or if they are caring for ill family members. Those who are caring for children whose schools are closed or whose childcare provider is unavailable due to the pandemic will be granted 12 weeks of paid leave.2 

As long as you’ve been employed for at least 30 days, most employees of small and midsize companies, as well as nonprofit and government employees can receive paid leave. If you are a part-time worker, you will be paid the amount you earn in a two-week period.2 Alternatively, if you’re self-employed and pay taxes, you can also receive paid leave.

Who Is Excluded?

Employees working at companies with more than 500 people are excluded from these benefits. Those employed at companies with less than 50 employees are included, but the Labor Department is able to exempt small businesses if providing leave would put them out of business.3 Employers can also decline to give leave to those facing the crisis head-on, including emergency responders and healthcare providers. 

How Will My Business Be Affected?

Companies with more than 500 employees will need to pay the cost of paid sick and emergency leave, but they will be eligible for reimbursement tax credits at a later time. 

Businesses will be reimbursed up to $511 per employee, per day for paid sick leave wages paid to employees who must quarantine because they are sick with COVID-19 or are trying to receive a diagnosis. For those employees caring for family members, employers will be reimbursed up to $200 per worker, per day.3 Self-employed individuals are also eligible to receive reimbursable tax credits. 

Those with fewer than 50 employees who are interested in applying for an exemption to the paid leave mandate because the viability of their business may be in jeopardy should reach out to the Department of Labor

Are the Paid Leave Benefits Permanent?

The sick leave benefits included in the Families First Coronavirus Response Act will only last through December 31, 2020.3  

When Does It Take Effect?

The recently passed bill was signed into law on March 18, 2020, and the paid leave provisions are expected to take effect within 15 days.2 As we continue to see global increases in illnesses and deaths, the United States government is being urged to continue on the path of providing for America’s workforce. 

Guidelines will be issued for the Families First Coronavirus Response Act in order to assist employers in calculating how much paid leave their employees should receive. At that point, workers should be able to simply inform their employers of time off, take their leave and receive payment specified by the law. 

If there is any assistance we can provide, please contact us. The Austin team can be reached at 512-342-0202, the Georgetown team can be reached at 512-864-0721.

  1. https://www.pewresearch.org/fact-tank/2020/03/12/as-coronavirus-spreads-which-u-s-workers-have-paid-sick-leave-and-which-dont/
  2. https://www.congress.gov/bill/116th-congress/house-bill/6201/text
  3. https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus

This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.