The Families First Coronavirus Response Act was passed last week with an effective date of April 2. The situation remains fluid; the provisions are coming at us quickly and can be confusing. We are providing this summary to help you understand the general provisions of the Act. If you have specific questions about whether and how the Act applies to you, please do not hesitate to reach out for more information.
In fact, Congress has already issued new guidance on the Act, mostly designed to ease the anxiety of small businesses. A summary of that guidance is set forth below.
1) Small Businesses Exemption
The Act now provides potential exemptions for small businesses (less than 50 employees) with regard to complying with the expanded FMLA leave and paid sick leave provisions, if the required leave would jeopardize the viability of their business. The exemption will be limited to leave requirements relating to school closings or childcare unavailability. The Department of Labor (“DOL”) has committed to providing “simple and clear criteria” to “the viability of an employer’s business as a going concern” soon.
2) Tax credits
The tax credits are designed to help employers manage the costs of compliance with the paid leave provisions. Employers who pay qualifying sick or childcare leave will be able to retain an amount of their regular payroll taxes equal to the amount of qualifying sick and childcare leave that they paid, rather than deposit them with the IRS. If payroll taxes are insufficient to cover the cost of qualified sick and childcare leave paid, employers will be able to file a request for an “accelerated payment” from the IRS, the details of which should be available prior to the April 2 effective date.
3) “Adjustment period”
The DOL is issuing a 30-day non-enforcement policy to provide employers time to adjust to the new paid leave requirements, during which time employers who act reasonably and in good faith compliance with the law will not be subject to enforcement action.
As we can see, these situations are fluid and changing daily. The DOL and IRS will seek to issue more comprehensive guidance prior to the April 2 effective date to provide greater clarity in this area. Importantly, though, it appears that the government is poised to offer meaningful relief to small- and medium-sized businesses.
Fournier Legal Services has been a customer-service oriented, technology-based, paperless law firm from the day we opened, and we are uniquely positioned to help our clients navigate the current environment. For any questions related to Business Law or Estate Planning, please contact us by calling 860.670.3535 or emailing firstname.lastname@example.org.
Joseph E. Fournier is an Attorney and a CPA who has more than twenty years of experience in a variety of business legal matters, including start-ups and company formations, drafting shareholder and operating agreements, contracts, employment law, commercial litigation, tax planning and audit defense, and mergers and acquisitions (M&A). He also handles estate planning matters, such as business succession planning, wills, trusts, and probate.