South Florida Hospital News
Sunday September 27, 2020
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August 2020 - Volume 17 - Issue 2
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Avoid Costly Fines While Offering a COVID-19 Benefit to Your Employees

As we find ourselves in the latest COVID-19 epicenter here in Florida, many businesses will have employees affected, in some way, by the virus. The Families First Coronavirus Response Act was signed into law back in mid-March, taking effect on April 1, 2020, and it provides federally-mandated paid sick and family leave to your employees to cover their absence from work. This paid leave must be offered by all employers with fewer than 500 employees, with few exceptions, otherwise, they are subject to the equivalent of a minimum wage violation with the U.S. Department of Labor.

Your employees will receive paid leave if they are unable to work or telework, due to a need for leave under one of the following six reasons in addition to the employer having work available. This means if your business is closed, then the employee would not be eligible for paid leave and, instead, would be entitled to unemployment benefits. The six reasons for paid leave are:
 
1. The employee is subject to a COVID-19-related federal/state/local quarantine or isolation order, including shelter-in-place or stay-at-home orders that cause the employee to be unable to work.
2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
3. The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
4. The employee is caring for an individual who is subject to a federal/state/local quarantine order or the individual has been advised to self-quarantine due to COVID-19-related concerns.
5. The employee is caring for the employee’s son or daughter due to the closing of the child’s school (elementary or secondary) or childcare facility, or the child’s care provider is unavailable due to COVID-19 precautions.
6. The employee is experiencing any other substantially similar condition specified by Health and Human Services in consultation with the Department of the Treasury and the U.S. DOL.
 
The first three reasons are for the employee’s own health, and the employee is eligible to be paid at 100% their regular rate of pay, while reasons four and five are for the employee acting as a caregiver and is paid at two-thirds their regular rate of pay. Reason six has not been defined yet, but when it is, it too will be paid at two-thirds the employee’s regular rate of pay.
 
A full-time employee is eligible for two weeks/ten days of pay across all six reasons. This means if the employee is off work for one week while awaiting their test results (reason two) and several months later their family member tests positive and cares for them (reason four), then they are only eligible for one additional week, allowing them two weeks total. Employees who are not full-time and working 40 hours per week will receive a prorated portion of time off based on their average number of hours they work over a two-week period. There is no minimum amount of time an employee needs to work in order to be eligible for this paid leave and there is no waiting period from when the employee is hired. If the employee is out of work due to reason 5, the employee is eligible for an additional ten weeks of paid leave. This paid leave is also paid at two-thirds their regular rate of pay and requires the employee to have been employed for at least 30 days.
 
While employers are mandated to offer this paid leave to their employees, it will come as no cost to the employer via an immediate payroll tax credit from your next 941 tax deposit. Also included in the tax credit is 100% of the wages paid toward this leave, plus the related payroll taxes and the cost of employer provided health insurance. There is a limit, though. For the first three reasons, employees are limited to receive $511 per day and $5,110 for the two weeks, and for reasons four through six, the employee is limited to $200 per day and $2,000 for the two weeks. For reason five, the additional ten weeks of paid leave is also limited to $200 per day and $10,000 over the full course of the leave.
 
This paid leave and the payroll tax credit will remain in effect until December 31, 2020, and any unused time by the employees will be lost at that time. Since this is basically a government-funded paid leave, there are few exceptions to offering it if you have less than 500 employees. Details of the few exemptions can be found on the DOL website. The Department of Labor has also released a poster that must be posted conspicuously to your employees in your place of business. Failure to do so may result in a hefty fine. If you do not have the poster, you can find it at dol.gov by doing a google search for ‘DOL FFCRA Poster WH1422.’ Simply print a copy on plain paper and post it on your bulletin board and save yourself a potential fine.
 
Compliance with this new law can be tricky, so be sure to consult with your payroll service or human resource professional for guidance, so you can remain penalty free.

Romeo Chicco, CPA, is President/CEO of PayMaster. For more information, visit www.paymaster.com.

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