The uncertainty surrounding COVID-19, or the coronavirus, has left many small business owners concerned about the future. While some businesses are practicing social distancing with work-from-home policies, other businesses don’t have the capabilities to do so, leaving many without work. This unprecedented series of events has left many small business owners worried about their future. However, the recent passing of The CARES Act, the largest economic stimulus package in US history, includes a number of provisions that will assist businesses both large and small.
For businesses with less than 500 employees, here is a quick breakdown of how The CARES Act will impact your operations and employees.
Emergency Paid Sick Leave Act
The Emergency Paid Sick Leave Act will require businesses to provide paid sick time to employees if they are unable to work due to COVID-19 or other related reasons including the following:
- Entering self-isolation
- Experiencing symptoms of COVID-19
- Responsible for the care of an individual in quarantine
During paid sick leave, employees will receive pay equal to the average number of hours typically worked over a two-week period up to 80 hours. If the time off is taken for self-care, employees must be compensated at either the employee’s regular rate of pay, the federal minimum wage, or the local minimum wage, depending on which of those is highest. If the time off is taken in order to care for a sick relative, employees will be compensated at two-thirds of their regular rate of pay. However, if you are an employer of health care providers or emergency responders, you are not required to provide this leave.
Families First Coronavirus Response Act
Serving as an expansion of the Family and Medical Leave Act (FMLA), The Families First Coronavirus Response Act will provide paid emergency family leave for employees who are unable to work due to the closing of their child’s school or place of care.
The paid leave will be applicable for up to 12 weeks. The employee may choose to substitute vacation or personal time during the first 10 days. After that, workers will receive two-thirds of their regular pay rate, with a maximum of $200 per day. If an employee’s weekly hours fluctuate, the employer may take an average over a six-month period.
For companies with 25 or more employees, the FMLA’s standard requirements for job restoration apply. Employers with fewer than 25 employees will not be held to these requirements if the employee’s position no longer exists due to economic conditions or if the employer restores the employee to an equivalent position.
Paycheck Protection Program
For most small businesses, the most important provision included in the stimulus bill is the Paycheck Protection Program. The program sets aside $350 billion in government-backed loans to create an emergency loan that can be used to maintain payroll. Small businesses can receive a loan advance of up to $10 million, with an interest rate at no higher than 4%. In addition, loans will be forgiven if all employees are kept on the payroll for eight weeks, and the loan is utilized to pay for rent, mortgage interest, or utilities.
Available until June 30, this program allows more banks, credit unions, and lenders to issue these loans. The program’s purpose is to encourage small businesses to avoid employee lay-offs and allow for businesses to rehire individuals who have already lost their jobs due to COVID-19.
In addition to the policies stated above, the relief bill brings additional changes including adjustments to business tax policies and the SBA’s Economic Injury Disaster Loan eligibility.