House Bill Moves to Senate - Big Effect on Small Business

On Friday, the House passed the Families First Coronavirus Response Act, which is designed to give relief to people and businesses affected by Covid-19. It specifically amends the Family Medical Leave Act (FMLA), giving some key changes. The most important is that this affects all companies with fewer than 500 employees--it doesn't have the 50-employee floor that FMLA has. However, the Department of Labor has the ability to exempt small businesses if they can show this would cause financial hardship. These changes do not affect larger businesses with over 500 employees. This means that your mom-and-pop shop with three employees is affected, while Google is not.

Changes to FMLA

  1. It amends the definition of employee to anyone who has been employed by an employer for at least 30 days.It changes the definition of employer from "50 or more employees" to "fewer than 500 employees.".

  2. It provides leave to provide care for a family member who is under a coronavirus-related quarantine.

  3. It provides leave to care for a minor son or daughter of an employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, related to coronavirus.It expands the definition of family member to include next of kin and grandparents.

  4. It provides that leave after the first 14 days of any coronavirus-related family leave.

  5. It is to be paid in an amount that is not less than two-thirds of an employee's regular rate of pay for the number of hours the employee otherwise would have worked.

  6. It requires job restoration following any such leave for any employee of an employer with 25 or more employees.

First 14 days

The first 14 days of leave may be unpaid, but an employee can choose to substitute accrued vacation leave, personal leave, or other medical or sick leave during the leave. The employer cannot force an employee to use their accrued paid leave.

After the first 14 days

After 14 days of unpaid leave, employers must pay FMLA leave (only for the reasons above) at no less than two-thirds the employee's regular rate of pay for the number of hours the employee would have been normally scheduled.

Tax Credits to Help Pay for Costs

The bill does provide for some tax relief to help make it more affordable, but it will fall short of covering all of the costs. It can cover up to 100 percent of qualified paid sick leave, for employers, and a 67 percent refundable tax credit for self-employed people caring for a child or family member. For the self-employed, the benefits are capped at either $200 per day or the average daily income rate, whichever is smaller.