Second Round of Legislation Provides Mandatory Paid Sick Leave to be Paid For With Payroll Tax Credits

Dear Clients and Friends,
We are all receiving daily updates regarding Covid-19. As we navigate through this difficult time, our firm is committed to providing assistance to our clients in any way possible. There will be an end to this pandemic and we are prepared to provide guidance to your business through these troubling times. To that end, we will provide updates concerning relevant state and federal legislation being passed to provide assistance to you and your company.
On March 18, 2020, the President signed into law the Families First Coronavirus Response Act. The law includes short-term paid sick leave benefits and longer-term paid family leave for some workers. All provisions will take effect 15 days after enactment, do not provide for retroactive benefits, and expire December 31, 2020. The following is a summary of relevant terms:
Employers with fewer than 500 employees. Businesses with fewer than 50 employees may seek a waiver of the legislation’s provisions if it would cause significant financial hardship to the extent that it would jeopardize the viability of the business as a going concern. There are additional exclusions for specific industries and employers.
Affected employers will now be required to provide up to two weeks of paid sick leave for immediate use to workers unable to work due to their own quarantine or symptoms of coronavirus paid sick leave for an employee who is: (1) quarantined or isolated because of a doctor’s recommendation or a federal, state or local order related to COVID-19; (2) is experiencing COVID-19 symptoms and seeking a medical diagnosis; (3) caring for an individual subject either of the foregoing conditions; or (4) is caring for a child if their school or place of care has been closed. The paid sick leave is at the employee’s regular rate of pay, but capped at $511 per day and $5,110 in the aggregate if the leave is for the reasons under clause (1) or (2) above. If the leave is to care for others under clause (3) or (4) above, the employee will receive two-thirds of their regular pay up to a sum of $200 per day and $2,000 in the aggregate.
Separately, an expansion of the Family and Medical Leave Act (FMLA) requires employers to provide paid family leave to workers who are unable to work because their child’s school or daycare has closed due to coronavirus in the amount of two-thirds of their regular pay (up to $10,000) for up to 12 weeks, after a 10-day unpaid waiting period.
The financial impact on participating employers will be offset with a 100% refundable credit on employers’ quarterly payroll tax return.
If you are a New Jersey-based business and cannot cover the cost of this provision or any of the other financial impact from COVID-19, you may apply to the Small Business Administration’s Economic Injury Disaster Loan Program for loans up to $2,000,000. Unfortunately, as of this date, New York- and Pennsylvania-based businesses have not been approved to access that loan program, but other SBA loan programs may be available to assist affected businesses. In addition, many banks are offering low-interest business loans to affected businesses.
Congress is currently working on a third and more comprehensive piece of legislation designed to offset COVID-19’s economic impact. New Jersey has joined with New York, Pennsylvania, and Connecticut to lobby for small business grants to be included in the forthcoming legislation. Whatever the exact contours of the legislation, it is clear that it will involve a mix of relief for households and businesses.
New Jersey is also considering a bill that would make an employee eligible for earned sick leave, family temporary disability leave, temporary disability leave or family leave, as appropriate, if they are unable to work during a state of emergency because a physician or public health authority has determined they should quarantine to protect the health of others, as well as a bill that would allow the Economic Development Authority to issue grants to help businesses remain afloat and make payroll while operation is interrupted.
We will provide further updates regarding federal and state legislation as they become available.