COVID-19 Employee Leave Programs for Your Small Business

March 30, 2020 - 7 minutes read
Kathy Miller, PHR, CPLP

Webinar Recap by Kathy Miller, PHR, CPLP
Business Growth Consultant

Watch HR Management During COVID-19 On-Demand here!

“The times, they are a-changing”. Never have the words of Bob Dylan been truer than now given the international impact of the COVID-19 virus and its effect on American small business owners, employees, and contract workers.

The State of Michigan and the Federal Government have quickly responded with employee relief legislation to assist with the loss of work, productivity, and revenue to fund payrolls. While information is still forthcoming, you can begin to plan now to make the best use of these resources toward the long-term sustainability of your business.

Health & Safety: Utmost in your mind as a small business owner or employee is safety. If your business is still operating at some capacity, click here and here for tips on creating and maintaining a safe workplace.

Employee Leave: There are currently three paid leave programs available for your employees,
depending on your company operational needs and status.

1. Emergency Paid Sick Leave (EPSL): For companies still in operation with active employees
who are unable to work or telework due to circumstances directly related to COVID-19:

  • is subject to a governmental quarantine or isolation order,
  • has been advised by a health-care provider to self-quarantine,
  • is experiencing symptoms of COVID-19 and seeking a medical diagnosis,
  • is caring for an individual who is subject to governmental or self-quarantine,
  • is caring for the employee’s child because the child’s school or child-care provider is
    closed, or
  • is experiencing a substantially similar circumstance related to COVID-19 as specified by
    the Department of Health and Human Services, in consultation with the Department of
    Labor.

EPSL requires all employers with fewer than 500 employees to provide affected full-time
employees with 10 days (80 hours) of paid sick leave. Part-time employees are entitled to
the number of hours of paid sick time equal to the number of hours they work, on average,
over a two-week period. Every employee is eligible for this benefit immediately, regardless
of tenure. Payment is capped at $511 a day and $5,110 aggregate. Reimbursements will be
made via payroll tax credits. Effective date is 4/2/2020 through 12/31/2020. For more
details on specific requirements, click here and here. For IRS reimbursement info, click here.

2. Expanded FML (EFML): For companies still in operation with active employees who are
unable to work or telework due to caring for children whose school or daycare is closed due
to a public health emergency.

EFML requires all employers with fewer than 500 employees to provide affected employees
with 12 weeks of job-protected paid leave. An employee must have worked for at least 30
days for the employer to be eligible. The first 10 days of EFML are unpaid through the
EFML, but an employee can use accrued time off during the first 10 days or may be eligible
for EPSL for the first 10 days. The employer cannot require use of accrued paid time off.
After 10 days of EFML, the employee is paid 2/3 of the regular rate of pay, which is capped
at $200 a day and $10,000 aggregate. Part-time employee hours are pro-rated. Employers
are entitled to a fully refundable tax credit equal to 100 percent of the qualified paid Family
and Medical Leave Act (FMLA) wages paid by the employer. Effective date is 4/2/2020
through 12/31/2020. For more details and requirements, click here and here. For IRS
reimbursement info, click here.

3. Expanded Unemployment: For companies who must cease operations due to mandate, and
therefore have no work available for employees. Michigan has expanded unemployment
benefits to 26 weeks with a 28-day application period. Displaced employees are
encouraged apply on-line for faster service. Employers must provide this notice to
employees seeking unemployment benefits. For more information, click here.

Employee Benefits Continuation: The above programs may provide reimbursement for the
employer cost of benefits. See links above and check the following items for eligibility:

  • Your benefit plan documents. These plan documents set the rules for participation and
    may/may not allow laid-off employees to remain on the benefit plan even if the
    employer pays their share of the premium.
  • Your company employee policies. Internal policies regarding leaves of absence, lay-
    offs, reduction in force, or any other policy related to how these employees were laid-
    off/placed on leave may have some bearing on what is covered and/or reimbursable.
  • Reimbursements:  See the US DOL and Treasury websites for details on tax credits for health insurance costs for EPSL, EFML.

Exclusion for employers with < 50 employees: Employers with fewer than 50 employees may
apply for an exclusion to EPSL and/or EFML; however, there is currently no form or procedure
to do so. You are encouraged to monitor the SBDC COVID-19 web page here for updates.

Self-Employed/Contract Workers: The CARES Act has expanded unemployment to cover you, but the
rules have not yet passed down to the State. You are encouraged to monitor the SBDC COVID-19 web page here for updates.

In summary, as a small business owner struggling with the effects of COVID-19, there are
resources available to help you mitigate the negative effects to your business and employees.
Some details are still forthcoming; stay abreast of recent developments by following our SBDC
COVID-19 web page here. SBDC consultants are here to assist you in this process! To register
for our no-cost consulting services click here. | kwm