Navigating your Business through Coronavirus (COVID-19)

As owners and business leaders, we are experiencing unprecedented disruption due to the Coronavirus (COVID-19) pandemic. While the Federal and State governments are continuing to work to help ease the financial loss, following are programs and resources that can help you in the near future.

Economic Injury Disaster Loan Program

The SBA’s Economic Injury Disaster Loan program provides small businesses with low interest loans of up to $2 million to help overcome the temporary loss of revenue they are experiencing due to the Coronavirus (COVID-19) pandemic. Refer to the links below for program information.

SBA Coronavirus (COVID-19) Program Overview

SBA Disaster Loan Website

SBA Loan Application Checklist

Apply Online

SBA Funding Programs Disaster Assistance

At this time, it is unclear if any portion of loans under this program will be eligible for forgiveness under the pending Phase III stimulus package.

The Families First Coronavirus (COVID-19) Response Act

The Act provides for paid sick leave, expanded family and medical leave for Coronavirus (COVID-19) related reasons. It also created the refundable paid sick leave credit as well as the paid child care leave credit for eligible employers. Businesses and tax-exempt organizations with fewer than 500 employees are required to provide emergency paid sick leave, emergency paid family and medical leave under the Act.

Eligible employers will be able to claim these credits based on the qualifying leave they provide between the effective date and Dec. 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances. These provisions are effective April 1, 2020 and expire December 31, 2020.

Emergency Paid Sick Leave Act

Private employers with fewer than 500 employees, and public employers of any size, must provide 80 additional hours of paid sick time to full-time employees who are unable to work (or telework) for specified virus-related reasons. Part-time employees are entitled to sick time based on their average hours worked over a 2-week period. This amount is immediately available regardless of the employee’s length of employment. The maximum amounts payable vary based on the reason for absence.

  • Employees who are (1) subject to a quarantine or isolation order, (2) advised by a health provider to self-quarantine, or (3) experiencing symptoms and seeking diagnosis, must be compensated at their regular rate, up to a maximum of $511 per day ($5,110 total).
  • Employees caring for an individual described in category (1), (2), or (3) above, caring for a son or daughter whose school is closed or child care provider is unavailable, or experiencing a “substantially similar condition” specified by the government must receive two-thirds of their regular rate, up to a maximum of $200 per day ($2,000 total).
  • Employers cannot require employees to find a replacement worker or use other sick leave before providing this sick time. Employers may exclude health care providers and emergency responders, and the DOL can issue regulations exempting businesses with fewer than 50 employees. The sick leave mandate takes effect April 1, 2020 and expires December 31, 2020.

Emergency Family and Medical Leave Expansion Act

Employers with fewer than 500 employees have to provide both paid and unpaid public health emergency leave to certain employees through December 31, 2020. The emergency leave generally is available to an employee who has been employed for at least 30 days, and is unable to work or telework due to a need to care for a son or daughter under age 18 because a school or place of care has been closed, or a childcare provider is unavailable, due to an emergency with respect to Coronavirus (COVID-19) that is declared by a federal, state, or local authority.

The first 10 days of the leave may be unpaid, or the employee may use PTO or the Sick Leave referenced above if they quality. After 10 days, paid leave is required. The calculation is based on an amount not less than two-thirds of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work, not to exceed $200 per day and $10,000 in the aggregate. Certain exemptions and special rules apply, and a tax credit may be available (see below examples).

Tax Credits

Also under the Families First Coronavirus Response Act, employers who pay sick or family leave under the act, can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus (COVID-19) related leave to their employees.

Examples

If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.

Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.

Additional Resources

COVID-19 and the Fair Labor Standards Act Questions and Answers

COVID-19 and the Family and Medical Leave Act Questions and Answers

CDC Centers for Disease Control and Prevention

NJ COVID-19 Scenarios & Benefits Available for Workers

As these programs are evolving every day, refer to your employment attorney to ensure your compliance to these new Acts. Please do not hesitate to contact us on 973.298.8500 if you have additional questions.