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Coronavirus FAQs
Here, you will find answers to the most popular questions regarding coronavirus SBA loans. Didn’t find what you need? Just send us a question.
General FAQs
Can I apply for a 7(a) Paycheck Protection Program loan and a Disaster loan?
A borrow can apply for an receive both a 7(a) Paycheck Protection Program Loan and a 7(b) Economic Injury Disaster Loan. However, a borrower that receives a 7(a) loan for employee salaries, payroll support, mortgage payments and/or other debt obligations would not be able to receive an SBA economic injury disaster loan (EIDL) for the same purpose, or co-mingle funds from another loan for the same purpose.
If I take employer tax credits under the FFCRA Sick or Family Leave, the Employee Retention Tax Credit, or defer payroll taxes, does that prevent me from taking the new CARES Act Loans?
If a business obtains a loan through the Paycheck Protection Program (PPP), it:
- Is still able to get credit for sick and family leave to employees under the Family First Coronavirus Response Act (FFCRA); and- Is still able defer paying its payroll taxes under the CARES Act rules;
However, a business will not be able to get loan forgiveness under the PPP for the same sick and family leave payroll amounts credited to them under that Act. In addition, most deferred payroll taxes will become payable once the PPP loan is forgiven. Also, taking any SBA coronavirus loan, like the PPP or EIDL, will prohibit the business from taking advantage of the Employee Retention Tax Credit (ERTC). However, the Paycheck Protection Program Flexibility Act just clarified that a PPP borrower can get a PPP loan forgiven and take advantage of the Social Security Payroll Tax Deferral.Are any SBA grants available in addition to loans?
Borrowers may apply for an EIDL disaster grant in addition to a loan under the Paycheck Protection Program, provided the loans are not used for the same purpose. If the application is denied, the applicant is not required to repay the $10,000 advance. Emergency advance funds can be used for payroll costs, increased material costs, rent or mortgage payments, or for repaying obligations that cannot be met due to revenue losses.
Can I apply for an SBA Disaster Grant in addition to an SBA Paycheck Protection Program loan?
Borrowers may apply for an EIDL grant in addition to a loan under the Paycheck Protection Program, provided the funds are not used for the same purpose.
What if I already have an SBA loan, can I take advantage of these new programs too?
Yes. The SBA will pay the principal, interest, and associated fees on certain pre-existing SBA loans for 6 months. You may also refinance your existing loan into one of these revised ones. Check with your SBA lender for details.
Where can I get a loan?
● For PPP loans, you must check with your local lender. See the PPP FAQs for more details.● For EIDL loans, you apply directly at the SBA website. See the EIDL FAQs for more details.● For Express Bridge Loans, please see the SBA's Program Guide.
What will the lender need from me to get a loan?
Under the Payment Protection Program, a Program Lender must consider at minimum whether the applicant:
● Completed the PPP application form;● Was in operation on February 15, 2020; and● Had employees for whom the borrower paid salaries and payroll taxes, or paid independent contractors, as reported on a Form 1099-MISC.
All other requirements are at the discretion of the SBA and the lender, and depend on the loan and what is being requested. Please see details in the further FAQs below.I laid off staff at the start of the pandemic. Can I still qualify for a Paycheck Protection loan?
Employers who re-hire workers previously laid off as a result of the COVID-19 crisis will not be penalized for having a reduced payroll for the beginning of the relevant period. Forgiveness may also include additional wages paid to tipped workers.
For salary/wage reductions, the amount forgiven will be reduced dollar-for-dollar for the amounts of any salary or wage reductions in excess of 25% as compared to the employee’s most recent full quarter. However, this applies only to such salary/wage reductions for employees who did not receive, during any single pay period during 2019, wages or salary at an annualized rate of more than $100,000. Salary/wage reductions for employees above that pay range do not impact eligibility for loan forgiveness. Again, the reduction does not apply if, by December 31st, 2020, a borrower restores any salaries/wages reduced between February 15, 2020, and 30 days after enactment of the act.
SBA Payroll Protection Program (PPP) Loan FAQs
What is the Paycheck Protection Program (the "PPP")?
The Paycheck Protection Program (PPP) authorizes hundreds of billions in forgivable loans to small businesses to pay their employees during the COVID-19 outbreak. All loan terms will be the same for everyone. Loan amounts will be forgiven as long as: ●The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 or 24 week period (at borrower's election) after the loan is made ●Employee and compensation levels are maintained Payroll costs are capped at $100,000 on an annualized basis for each employee. Because of anticipated high demand, it’s likely that not more than 25% of the forgiven amount may be for non-payroll costs. Loan payments will be deferred for 6 months.
Are all small businesses eligible?
Small businesses with 500 or fewer employees—including for-profit, nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries like food service and hospitality if they have less than 500 employees per location. You are eligible for a PPP loan if you have 500 or fewer employees whoseprincipal place of residence is in the United States, or are a business that operatesin a certain industry and meet the applicable SBA employee-based size standardsfor that industry, and: i. You are: A. A small business concern as defined in section 3 of the Small Business Act (15 USC 632), and subject to SBA’s affiliation rules under 13 CFR 121.301(f) unless specifically waived in the Act; B. A tax-exempt nonprofit organization described in section 501(c)(3) of the Internal Revenue Code (IRC), a tax-exempt veterans organization described in section 501(c)(19) of the IRC, Tribal business concern described in section 31(b)(2)(C) of the Small Business Act, or any other business; and ii. You were in operation on February 15, 2020 and either had employees forwhom you paid salaries and payroll taxes or paid independent contractors,as reported on a Form 1099-MISC. You are also eligible for a PPP loan if you are an individual who operates under a sole proprietorship or as an independent contractor or eligible self employed individual, you were in operation on February 15, 2020. You must also submit such documentation as is necessary to establish eligibility such as payroll processor records, payroll tax filings, or Form 1099-MISC, or income and expenses from a sole proprietorship. For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount.
Must I keep employees on my payroll or rehire them quickly?
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease by December 31st, 2020.
Could I be ineligible for a PPP loan even if I meet the requirements?
You are ineligible for a PPP loan if, for example: ●You are engaged in any activity that is illegal under federal, state, or local law; ●You are a household employer (individuals who employ household employees such as nannies or housekeepers); ●An owner of 20 percent or more of the equity of the applicant is incarcerated, on probation, on parole; presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or has been convicted of a felony within the last five years; or ●You, or any business owned or controlled by you or any of your owners, has ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted within the last seven years and caused a loss to the government. The Administrator, in consultation with the Secretary of the Treasury (the Secretary), determined that household employers are ineligible because they are not businesses. 13 CFR 120.100.
How do I know if my business is NOT eligible for a PPP loan?
Businesses that are not eligible for PPP loans are identified in 13 CFR 120.110 and described further in SBA’s Standard Operating Procedure (SOP) 50 10, Subpart B, Chapter 2, except that nonprofit organizations authorized under the Act are eligible. SOP 50 10 can be found at https://www.sba.gov/document/sop-50-10-5-lender-development-company-loan-programs
Final eligibility determinations will be made by your lender.How much can I get if I’m eligible for a forgivable PPP loan?
Under the PPP, the maximum loan amount is the lesser of $10 million or an amount that you will calculate using a payroll-based formula specified in the Act, as explained in the section How do I calculate the maximum amount I can borrow in a PPP loan?
Do I need to first look for other funds before applying to this program?
No. They are waiving the usual SBA requirement that you try to obtain some or all of the loan funds from other sources (i.e., they are waiving the Credit Elsewhere requirement).
How long will this program last?
Although the program is open until August 8, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan. Analysts estimate there will be more than $1 trillion in demand for the program. That said, Congress and the Federal Reserve have said that they are prepared to support the program to the extent additional funds are needed.
How many loans can I take out under this program?
Only one.
What can I use these loans for?
You should use the proceeds from these loans on your: ●Payroll costs, including benefits; ●Interest on mortgage obligations, incurred before February 15, 2020; ●Rent, under lease agreements in force before February 15, 2020; and ●Utilities, for which service began before February 15, 2020.
Does the PPP cover paid sick leave?
Yes, the PPP covers payroll costs, which include employee benefits such as costs for parental, family, medical, or sick leave. However, it is worth noting that the CARES Act expressly excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (FFCRA) (Public Law 116–127). Learn more about the FFCRA’s Paid Sick Leave Refundable Credit online.
What is my interest rate?
1.00% fixed rate.
When do I need to start paying interest on my loan?
Loan payments are deferred to when the lender receives a forgiveness amount from the SBA or, if the borrower didn’t apply for forgiveness, then 10 months from the last day of the period in which the loan funds must be spent to be forgivable; Treasury will pay any interest that accrues over this period.
Will I be liable for interest that accrues before the end of the ten month deferral for amounts that are not forgiven?
If for some reason your loan is not completely forgiven, the remaining balance will have an 60-month term at a 1% fixed interest rate. This will operate just like a traditional loan with monthly payments to your bank. The CARES Act requires that the SBA/Treasury pay the accrued interest during the deferral period.
When is my loan due?
In 5 years for any unforgiven balance.
Can I pay my loan earlier than 5 years?
Yes. There are no prepayment penalties or fees.
Do I need to pledge any collateral for these loans?
No. No collateral is required.
Do I need to personally guarantee this loan?
No. There is no personal guarantee requirement. However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.
What do I need to certify?
As part of your application, you need to certify in good faith that: ●Current economic uncertainty makes the loan necessary to support your ongoing operations. ●The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments. ●You have not and will not receive another loan under this program. ●You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan. ●Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. ●Not more than 40% of the loaned amount may be for non-payroll costs (i.e. that at least 60% will be spent on qualified payroll expenses). ●All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law. ●You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.
What happens after I apply?
Currently the lenders are reviewing applications as quickly as possible. They will be sending you an email containing updates, next steps, and resources to help answer any questions you might have. In the meantime we suggest collecting your documents in preparation for providing them to your lender in order to make the process as efficient as possible.
When can I apply?
●Starting April 3, 2020, small businesses and sole proprietorships could apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders. ●Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders. ●Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program. ●Banks will no longer accept PPP applications after August 8th, 2020.
How much can I get if I’m eligible for a forgivable PPP loan?
Under the PPP, the maximum loan amount is the lesser of $10 million, or an amount that you will calculate using a payroll-based formula specified in the Act, as explained in this FAQ.
How do I calculate the maximum amount I can borrow in a PPP loan?
This is a general methodology, but the specific methodology depends on the tax filing status for your business. See the FAQs below for your type of business. ●Step 1: Aggregate payroll costs from 2019 or the last twelve months for employees whose principal place of residence is the United States. ●Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000 and/or any amounts paid to an independent contractor or sole proprietor in excess of $100,000 per year. ●Step 3: Calculate average monthly payroll costs (divide the amount from Step 2 by 12). ●Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5. ●Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).
The examples below illustrate this methodology. ●Example 1 – No employees make more than $100,000 ○Annual payroll: $120,000 ○Average monthly payroll: $10,000 ○Multiply by 2.5 = $25,000 ○Maximum loan amount is $25,000 ●Example 2 – Some employees make more than $100,000 ○Annual payroll: $1,500,000 ○Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000 ○Average monthly qualifying payroll: $100,000 ○Multiply by 2.5 = $250,000 ○Maximim loan amount is $250,000 ●Example 3 – No employees make more than $100,000, outstanding EIDL loan of $10,000. ○Annual payroll: $120,000 ○Average monthly payroll: $10,000 ○Multiply by 2.5 = $25,000 ○Add EIDL loan of $10,000 = $35,000 ○Maximum loan amount is $35,000 ●Example 4 – Some employees make more than $100,000, outstanding EIDL loan of $10,000 ○Annual payroll: $1,500,000 ○Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000 ○Average monthly qualifying payroll: $100,000 ○Multiply by 2.5 = $250,000 ○Add EIDL loan of $10,000 = $260,000 ○Maximum loan amount is $260,000 What qualifies as “payroll costs?”
Payroll costs consist of:● compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); ● payment for vacation, parental, family, medical, or sick leave; ● allowance for separation or dismissal; ● payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; ● and for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation.
Is there anything that is expressly excluded from the definition of “payroll costs?”
Yes. The Act expressly excludes the following:
●Any compensation of an employee whose principal place of residence is outside of the
United States;
●The compensation of an individual employee in excess of an annual salary of $100,000,
prorated as necessary;
●Federal employment taxes imposed or withheld between February 15, 2020 and June
30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance
Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be
withheld from employees;
●Qualified sick and family leave wages for which a credit is allowed under sections 7001
and 7003 of the Families First Coronavirus Response Act (Public Law 116–127)What time period should I use to calculate payroll costs and my maximum loan amount?
In general, borrowers can calculate their aggregate payroll costs using data either from the
previous 12 months or from calendar year 2019. For seasonal businesses, the applicant may
use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020.
Borrowers may use their average employment over the same time periods to determine their number of employees, for the purposes of applying an employee-based size standard.
Alternatively, borrowers may elect to use SBA’s usual calculation: the average number of
employees per pay period in the 12 completed calendar months prior to the date of the loan application (or the average number of employees for each of the pay periods that the business has been operational, if it has not been operational for 12 months). Do independent contractors count as employees for purposes of calculating PPP loan amounts?
No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation.
Can I count payments to independent contractors or sole proprietors as “payroll costs?”
No. Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business’s payroll costs. However, an independent contractor or sole proprietor will itself be eligible for a loan under the PPP, if it satisfies the applicable requirements.
The amount of forgiveness of a PPP loan depends on the borrower’s payroll costs over an eight or twenty four week period (chosen by borrower); when does that eight or twenty four week period begin?
The eight or twenty four week period begins on the date the lender makes the first disbursement of the PPP loan to the borrower. The lender must make the first disbursement of the loan no later than ten calendar days from the date of loan approval.
How should I account for federal taxes when determining payroll costs?
Under the Act, payroll costs are calculated on a gross basis without regard to (i.e., not including subtractions or additions based on) federal taxes imposed or withheld, such as the employee’s and employer’s share of Federal Insurance Contributions Act (FICA) and income taxes required to be withheld from employees.
As a result, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by the employer, but payroll costs do not include the employer’s share of payroll tax.
For example, an employee who earned $4,000 per month in gross wages, from which $500 in federal taxes was withheld, would count as $4,000 in payroll costs. The employee would receive $3,500, and $500 would be paid to the federal government. However, the employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from payroll costs under the statute. Can I authorize someone to sign for my PPP loan on my behalf?
Yes. However, the borrower should bear in mind that, as the Borrower Application Form
indicates, only an authorized representative of the business seeking a loan may sign on behalf of the business. An individual’s signature as an “Authorized Representative of Applicant” is a representation to the lender and to the U.S. government that the signer is authorized to make the certifications, including with respect to the applicant and each owner of 20% or more of the applicant’s equity, contained in the Borrower Application Form. Lenders may rely on that representation and accept a single individual’s signature on that basis. What do I need to apply?
You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by August 8, 2020.
What other documents will I need to include in my application?
You will need to provide your lender with payroll, tax, and business documentation. While the required documentation is up to each lender, we expect bank requests to cover the following documents:
● Drivers license for all business owners ● Void check ● Tax returns (2019 an 2018, whichever filed last)● Form 941 Form and instructions HERE Ideally, please have Form 941 for the four quarters of 2019 and, if available, the first quarter of 2020. If you work with a Professional Employer Organization (PEO) and do not have IRS Form 941, please have your latest payroll report from the PEO that covers 12 months of payroll. If you do not file an IRS form 941 please upload the annual IRS 944 filing from 20191099 Misc Form and instructions HEREForm 4506Schedule of LiabilitiesThe start date for your businessYour bank account info and routing numberLegal documents for your business (charter, state licenses)Payroll records for Jan 1, 2019 to present Bank statements Proof of business activity in 2020
If your business has employees, you will likely need to provide:
2019 IRS Form 940 for unemployment costs (here)2019 IRS Form 941 for quarterly salary, wages, commissions, and tips (here)2019 IRS Form 944 (here)2019 IRS Form 1099-MISC for any independent contractors that your business paid (not to exceed $100,000 for the year) (here) 2019 IRS Form 1040-C if your business is a sole proprietorship (see more for sole proprietors below) (here)2019 IRS Form W-3 (not required, but recommended) (here) Monthly payroll statements that will provide the following information Salary, wages, commissions, or tips (not exceeding $100,000 annually for each employee) Any costs for the separation or dismissal of employees Any costs for vacation, parental, family, medical or sick leave Any state & local taxes assessed on employee compensation
If your business pays for health insurance or retirement for employees, you will also need to provide the following from 1099 or W2 forms:
All health insurance premiums paid by the business owner under a group health plan All retirement plan funding paid for by the business owner
If you are a sole proprietor or self-employed, you will likely need to provide:
2019 IRS Form 1099-MISC for any independent contractors paid, not to exceed $100,000 for the year (here) 2019 IRS Form 1040-C if your business is a sole proprietorship (here)I have multiple Tax IDs, how many applications should I file?
You should submit a unique application for each eligible EIN, regardless of how many locations you have.
I have multiple business locations under one tax ID, how many applications should I file?
You should submit a unique application for each eligible EIN, regardless of how many locations you have.
What are covered utility payments?
Payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access. The services must have been in place before February 15, 2020.
Are PPP loans for existing customers considered new accounts for FinCEN Rule CDD purposes?
If the PPP loan is being made to an existing customer and the necessary information was previously verified, you do not need to re-verify the information. Furthermore, if federally insured depository institutions and federally insured credit unions eligible to participate in the PPP program have not yet collected beneficial ownership information on existing customers, such institutions do not need to collect and verify beneficial ownership information for those customers applying for new PPP loans, unless otherwise indicated by the lender’s risk-based approach to BSA compliance.
Will my PPP loan be fully forgiven?
Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities, with at least 60% of the forgiven amount used for payroll. Loan payments will also be deferred for ten months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
How much of my loan will be forgiven?
You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 or 24 weeks after getting the loan. No more than 40% of the forgiven amount may be for non-payroll costs, or forgiveness will be proportionately reduced. You will also owe money if you do not maintain your staff and payroll.
Here are more details:● 60% Payroll: At least 60% of the amount loaned must be used on payroll expenses, or forgiveness will be reduced.● Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount. ● Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019. ● Re-Hiring: You have until December 31st, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020. ● FFCRA Leave Credits: You cannot claim forgiveness for any payroll amounts credited under the FFCRA sick or family leave.How can I request loan forgiveness?
You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.
Is rent and mortgage is forgivable, especially if I own my building through a holding company?
The PPP will not be eligible or forgiven for rental payments made to a real estate holding company that you own; however interest you pay on a mortgage for the commercial real estate that you own in which you operate your business is eligible.
In sum:
- Only mortgage interest payments, not principal payments, are eligible
- Mortgage or lease agreements must have been in effect prior to February 15, 2020
- Rent payments made to a real estate holding company that you own are NOT eligible; however, interest you pay on a mortgage for the commercial real estate that own that houses your business is eligible.How should I track my forgivable PPP expenses?
You will submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments.
How does a Partnership apply for a PPP loan?
Partnerships are eligible for PPP loans under the Act, but a partnership and its partners (and an LLC filing taxes as a partnership) is limited to one PPP loan before the statutory deadline of August 8, 2020. This limitation will allow lenders to more quickly process applications and lower the burdens of applying for partnerships/partners. The SBA has determined that permitting partners to apply as self-employed individuals would create unnecessary confusion regarding which entity, the partner or the partnership, applies for partner and LLC member income, and would generate loan proceeds use coordination and allocation issues. Rent, mortgage interest, utilities, and other debt service are generally incurred at the partnership level, not partner level, so it is most natural to provide the funds for these expenses to the partnership, not individual partners. The self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership.
In addition, you should be aware that participation in the PPP may affect your eligibility as a partner for state-administered unemployment compensation or unemployment assistance programs, including the programs authorized by Title II, Subtitle A of the CARES Act, or CARES Act Employee Retention Credits. See SBA SOP 50 10How do I calculate the maximum amount I can apply for a Payroll Protection Program (PPP) Loan as Partnership?
• Step 1: Compute 2019 payroll costs by adding the following:o 2019 Schedule K-1 (IRS Form 1065) Net earnings from self-employment of individual U.S. based general partners that are subject to self-employment tax, computed from box 14a (reduced by any section 179 expense deduction claimed, unreimbursed partnership expenses claimed, and depletion claimed on oil and gas properties) multiplied by 0.9235,2 up to $100,000 per partner (if 2019 schedules have not been filed, fill them out);o 2019 gross wages and tips paid to your employees whose principal place of residence is in the United States, if any, which can be computed using 2019 IRS Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips, subtracting any amounts paid to any individual employee in excess of $100,000 and anyamounts paid to any employee whose principal place of residence is outside the U.S;o 2019 employer contributions for employee health insurance, if any (portion of IRS Form 1065 line 19 attributable to health insurance);o 2019 employer contributions to employee retirement plans, if any (IRS Form 1065 line 18); ando 2019 employer state and local taxes assessed on employee compensation, primarily state unemployment insurance tax (from state quarterly wage reporting forms), if any.• Step 2: Calculate the average monthly payroll costs (divide the amount from Step 1 by 12).• Step 3: Multiply the average monthly payroll costs from Step 2 by 2.5.• Step 4: Add any outstanding amount of any EIDL made between January 31, 2020 and April 3, 2020 that you seek to refinance, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid).
The partnership’s 2019 IRS Form 1065 (including K-1s) and other relevant supporting documentation if the partnership has employees, including the 2019 IRS Form 941 and state quarterly wage unemployment insurance tax reporting form from each quarter (or equivalent payroll processor records or IRS Wage and Tax Statements) along with records of any retirement or health insurance contributions, must be provided to substantiate the applied-for PPP loan amount.
If the partnership has employees, a payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish the partnership was in operation and had employees on that date. If the partnership has no employees, an invoice, bank statement, or book of record establishing the partnership was in operation on February 15, 2020 must instead be provided.How do I calculate the maximum amount I can apply for a Payroll Protection Program (PPP) Loan as an S Corporation or C Corporation?
• Step 1: Compute 2019 payroll costs by adding the following:o 2019 gross wages and tips paid to your employees whose principal place of residence is in the United States, which can be computed using 2019 IRS Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips, subtracting any amounts paid to any individual employee in excess of $100,000 and anyamounts paid to any employee whose principal place of residence is outside the U.S;o 2019 employer health insurance contributions (portion of IRS Form 1120 line 24 or IRS Form 1120-S line 18 attributable to health insurance);o 2019 employer retirement contributions (IRS Form 1120 line 23 or IRS Form 1120-S line 17); ando 2019 employer state and local taxes assessed on employee compensation, primarily state unemployment insurance tax (from state quarterly wage reporting forms).
• Step 2: Calculate the average monthly payroll costs (divide the amount from Step 1 by 12).
• Step 3: Multiply the average monthly payroll costs from Step 2 by 2.5.
• Step 4: Add the outstanding amount of any EIDL made between January 31, 2020 and April 3, 2020 that you seek to refinance, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid).
The corporation’s 2019 IRS Form 941 and state quarterly wage unemployment insurancetax reporting form from each quarter (or equivalent payroll processor records or IRSWage and Tax Statements), along with the filed business tax return (IRS Form 1120 orIRS 1120-S) or other documentation of any retirement and health insurance contributions,must be provided to substantiate the applied-for PPP loan amount. A payroll statement orsimilar documentation from the pay period that covered February 15, 2020 must beprovided to establish you were in operation and had employees on that date.How do I calculate the maximum amount I can apply for a Payroll Protection Program (PPP) Loan as an Non-Profit Corporation?
• Step 1: Compute 2019 payroll costs by adding the following:
o 2019 gross wages and tips paid to your employees whose principal place of residence is in the United States, which can be computed using 2019 IRS Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips, subtracting any amounts paid to any individual employee in excess of $100,000 and any
amounts paid to any employee whose principal place of residence is outside the U.S;
o 2019 employer health insurance contributions (portion of IRS Form 990 Part IX line 9 attributable to health insurance);
o 2019 employer retirement contributions (IRS Form 990 Part IX line 8); and o 2019 employer state and local taxes assessed on employee compensation, primarily state unemployment insurance tax (from state quarterly wage reporting forms).
• Step 2: Calculate the average monthly payroll costs (divide the amount from Step 1 by 12).
• Step 3: Multiply the average monthly payroll costs from Step 2 by 2.5How do I calculate the maximum amount I can apply for a Payroll Protection Program (PPP) Loan as a Self-Employed Individual WITH employees?
• Step 1: Compute your 2019 payroll costs by adding the following:
o 2019 IRS Form 1040 Schedule C line 31 net profit amount (if you have not yet filed a 2019 return, fill it out and compute the value); if this amount is over $100,000, reduce it to $100,000; and if this amount is less than zero, set this amount at zero;
o 2019 gross wages and tips paid to your employees whose principal place of residence is in the United States, which can be computed using 2019 IRS Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips, subtracting any amount paid to any individual employee in excess of $100,000 and any
amounts paid to any employee whose principal place of residence is outside the U.S;
o 2019 employer contributions for employee health insurance (portion of IRS Form 1040 Schedule C line 14 attributable to health insurance);
o 2019 employer contributions to employee retirement plans (IRS Form 1040 Schedule C line 19); and
o 2019 employer state and local taxes assessed on employee compensation, primarily state unemployment insurance tax (from state quarterly wage reporting forms).
• Step 2: Calculate the average monthly payroll costs amount (divide the amount from Step 1 by 12).
• Step 3: Multiply the average monthly payroll costs amount from Step 2 by 2.5.
• Step 4: Add the outstanding amount of any EIDL made between January 31, 2020 and April 3, 2020 that you seek to refinance, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid).
Your 2019 IRS Form 1040 Schedule C, IRS Form 941 and state quarterly wage unemployment insurance tax reporting form from each quarter (or equivalent payroll
processor records or IRS Wage and Tax Statements), along with documentation of any
retirement or health insurance contributions, must be provided to substantiate the applied for PPP loan amount. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish you were in operation and had employees on that date.As a self-employed person with no employees and file a 1040 Schedule C, am I eligible for a Payroll Protection Program (PPP) Loan?
Yes. You are eligible for a PPP loan if:
• you were in operation on February 15, 2020;
• you are an individual with self-employment income (such as an independent contractor or a sole proprietor);
• your principal place of residence is in the United States; and
• you have filed or will file a Form 1040 Schedule C for 2019.How do I calculate the maximum amount I can apply for a Payroll Protection Program (PPP) Loan as a Self-Employed Individual with no employees?
Step 1: Find your 2019 IRS Form 1040 Schedule C line 31 net profit amount (if youhave not yet filed a 2019 return, fill it out and compute the value). If this amount isover $100,000, reduce it to $100,000. If this amount is zero or less, you are noteligible for a PPP loan.• Step 2: Calculate the average monthly net profit amount (divide the amount fromStep 1 by 12).• Step 3: Multiply the average monthly net profit amount from Step 2 by 2.5.• Step 4: Add the outstanding amount of any Economic Injury Disaster Loan (EIDL)made between January 31, 2020 and April 3, 2020 that you seek to refinance, less theamount of any advance under an EIDL COVID-19 loan (because it does not have tobe repaid).
Your 2019 IRS Form 1040 Schedule C must be provided to substantiate the applied-forPPP loan amount. You must also provide a 2019 IRS Form 1099-MISC detailingnonemployee compensation received (box 7), invoice, bank statement, or book of recordestablishing you were self-employed in 2019 and a 2020 invoice, bank statement, or bookof record establishing you were in operation on February 15, 2020.How much of the PPP loan will be forgiven as a self employed with no employees?
Please note that this is our current understanding of this calculation, but with the Paycheck Protection Program Flexibility Act, the government may increase the allowable forgivable income for owners. We will update this calculation if any such allowance is made.
As a self-employed individual:
1. Eight weeks’ worth (8/52) of your 2019 net profit for a 4 week period or 2.5 X your average 2019 monthly net profit for an 8 week period;2. Mortgage interest you deduct on Schedule C paid during the eight weeks from loan receipt on real or personal business property;3. Rent payments during the covered period on lease agreements in force before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business rent payments); and4. Utility payments under service agreements dated before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business utility payments).
The SBA will reduce your loan forgiveness by any COVID-19 qualified sick or family leave tax credit you claimed.
Examples:
Loan amount: Schedule C shows $120,000 of net profit. Your limit is $100,000. Divide that by 12, and your monthly amount is $8,333. Multiply that by 2.5, and your loan amount is $20,833.
Loan forgiveness: Your loan forgiveness is $15,385 (8/52 of $100,000) plus qualifying interest, rent, and utilities not to exceed total loan forgiveness of more than $20,513.
SBA Economic Injury Disaster Loan (EIDL) FAQs
Can I get both an Economic Injury Disaster Loan (EIDL) and a Paycheck Protection Program Loan (PPP)?
Yes, you can get both loans, but the key is to use the money to cover different expenses. Section 1102(a)(2)(G), the section outlining the PPP loans, explains the borrower requirements. It says the borrower has to certify that “the eligible recipient has not received amounts under this subsection for the same purpose and duplicative amounts.”
What is an Economic Injury Disaster Loan?
While the EIDL was a pre-existing program, the SBA’s coronavirus- specific Economic Injury Disaster Loan (EIDL) program provides small businesses with working capital loans of up to $2 million to help overcome the temporary loss of revenue.
What expenses can an Economic Injury Disaster Loan cover?
The loans may be used to pay fixed debts, payroll, accounts payable, or other bills that can’t be paid because of the COVID-19 outbreak. It is basically designed to support businesses to get by during a disaster. The other bills may include:
● Paid sick leave to employees unable to work due to the direct effect of COVID-19.● Payroll● Increased costs due to supply chain disruption● Rent or mortgage payments ● Repaying obligations that cannot be met due to revenue lossWhat are the interest rates for an EIDL?
The interest rate is 3.75 percent for small businesses without credit available elsewhere, and businesses with credit available elsewhere are not eligible to apply for assistance. The maximum term is 30 years.
What’s the timeline like to get an EIDL?
Once a borrower applies, approval timelines depend on volume. The typical timeline for approval is 2-3 weeks and disbursement can take up to 5 days. Borrowers are assigned individual loan officers for servicing of the loan.
The SBA site still refers to EIDL as a loan. Is it truly a grant?
The EIDL program was a pre-existing government program. The Economic Injury Disaster Loans program still exists for declared disaster areas. The CARES Act expanded this existing program to provide any business in America access to a $10k grant under this program. The $10,000 is a grant and you don't have to pay it back. But you may also have an option to get a loan under EIDL that would be in excess of $10,000. If you do, that would be subject to those loan terms. In general, we recommend that you get the $10,000 EIDL Grant and then focus on the forgivable loan under the PPP program. That is the most favorable approach for most businesses.
Do I need to first look for other funds before applying to this program?
No, it is not required to look for other funds before applying for the coronavirus related EIDL.
Under the Program, a Program Lender must consider whether the applicant:
● Was in operation on February 15, 2020; and● Had employees for whom the borrower paid salaries and payroll taxes, or paid independent contractors, as reported on a Form 1099-MISC.
All other requirements are at the discretion of the SBA and the lender.How do I check the status of my application for EIDL?
Unfortunately there is no status checker on the sba.gov website. The SBA is now advising customers over the phone to call back 10-14 days after the date of their application. You can call the SBA Disaster Customer Service Center's number at (800) 659-2955.
I have multiple Tax IDs, how many applications should I file?
You should submit a unique application for each eligible EIN, regardless of how many locations you have.
I have multiple business locations under one tax ID, how many applications should I file?
You should submit a unique application for each eligible EIN, regardless of how many locations you have.
How long will this program last?
The EIDL loan is currently available until December 31, 2020.
How many loans can I take out under this program?
Only one per disaster.
Do I need to pledge any collateral for these loans?
No. No collateral is required.
Do I need to personally guarantee this loan?
No. There is no personal guarantee requirement. However, if the proceeds are used for
fraudulent purposes, the U.S. government will pursue criminal charges against you.What do I need to certify?
Certifications● Applicant is not engaged in any illegal activity (as defined by Federal guidelines).
No principal of the Applicant with a 50 percent or greater ownership interest is more than sixty (60) days delinquent on child support obligations.● Applicant is not an agricultural enterprise (e.g., farm), other than an aquaculture enterprise, agricultural cooperative, or nursery.● Applicant does not present live performances of a prurient sexual nature or derive directly or indirectly more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature.
Applicant does not derive more than one-third of gross annual revenue from legal gambling activities.● Applicant is not in the business of lobbying.
Applicant cannot be a state, local, or municipal government entity and cannot be a member of Congress.
Questions:● In the past year, has the business or a listed owner been convicted of a criminal offense committed during and in connection with a riot or civil disorder or other declared disaster, or ever been engaged in the production or distribution of any product or service that has been determined to be obscene by a court of competent jurisdiction? Yes/No
Is the applicant or any listed owner currently suspended or debarred from contracting with the Federal government or receiving Federal grants or loans? Yes/No
a. Are you presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction? Yes/No
b. Have you been arrested in the past six months for any criminal offense? Yes/No
c. For any criminal offense - other than a minor vehicle violation - have you ever been convicted, plead guilty, plead nolo contendere, been placed on pretrial diversion, or been placed on any form of parole or probation (including probation before judgment)?When can I apply?
You can apply immediately at www.sba.gov
What other documents will I need to include in my application?
You will need to provide your lender with payroll, tax, and business documentation. While the required documentation is up to the SBA, we expect the required documents may include:
● Drivers license for all business owners ● Void check ● Tax returns (2019 an 2018, whichever filed last)● Form 941 Ideally, please have Form 941 for the four quarters of 2019 and, if available, the first quarter of 2020. If you work with a Professional Employer Organization (PEO) and do not have IRS Form 941, please have your latest payroll report from the PEO that covers 12 months of payroll. If you do not file an IRS form 941 please upload the annual IRS 944 filing from 20191099 Misc Form 4506Schedule of LiabilitiesThe start date for your businessYour bank account info and routing numberLegal documents for your business (charter, state licenses)Payroll records for Jan 1, 2019 to present Bank statements Proof of business activity in 2020
If your business has employees, you will likely need to provide:
2019 IRS Form 940 for unemployment costs (here)2019 IRS Form 941 for quarterly salary, wages, commissions, and tips (here)2019 IRS Form 944 (here)2019 IRS Form 1099-MISC for any independent contractors that your business paid (not to exceed $100,000 for the year) (here) 2019 IRS Form 1040-C if your business is a sole proprietorship (see more for sole proprietors below) (here)2019 IRS Form W-3 (not required, but recommended) (here) Monthly payroll statements that will provide the following information Salary, wages, commissions, or tips (not exceeding $100,000 annually for each employee) Any costs for the separation or dismissal of employees Any costs for vacation, parental, family, medical or sick leave Any state & local taxes assessed on employee compensation
If your business pays for health insurance or retirement for employees, you will also need to provide the following from 1099 or W2 forms:
All health insurance premiums paid by the business owner under a group health plan All retirement plan funding paid for by the business owner
If you are a sole proprietor or self-employed, you will likely need to provide:
2019 IRS Form 1099-MISC for any independent contractors paid, not to exceed $100,000 for the year (here) 2019 IRS Form 1040-C if your business is a sole proprietorship (here)How do I calculate the maximum amount I can borrow in a EIDL loan?
You may apply for up to $2M for the coronavirus EIDL loan. The amount you borrow will be determined by the qualified expenses you document and declare need to be covered due to COVID-19.
Do independent contractors count as employees for purposes of calculating EIDL loan amounts?
No, since independent contractors have the ability to apply for an EIDL or PPP loan on their own, they do not count for purposes of a borrower’s EIDL loan calculation.
FFCRA Leave FAQs
If I take employer tax credits under the FFCRA Sick or Family Leave, or the Employee Retention Tax Credit, does that prevent me from taking the new CARES Act Loans?
A business obtaining a loan through the Paycheck Protection Program will not be able to get loan forgiveness for same payroll amounts credited under either the the Families First Coronavirus Act (FFCRA) or the Employee Retention Tax Credit (ERTC).
What is the effective date of the Families First Coronavirus Response Act (FFCRA), which includes the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act?
The FFCRA’s paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020.
As an employer, how do I know if my business is under the 500-employee threshold and therefore must provide paid sick leave or expanded family and medical leave?
You have fewer than 500 employees if, at the time your employee’s leave is to be taken, you employ fewer than 500 full-time and part-time employees within the United States, which includes any State of the United States, the District of Columbia, or any Territory or possession of the United States. In making this determination, you should include employees on leave; temporary employees who are jointly employed by you and another employer (regardless of whether the jointly-employed employees are maintained on only your or another employer’s payroll); and day laborers supplied by a temporary agency (regardless of whether you are the temporary agency or the client firm if there is a continuing employment relationship). Workers who are independent contractors under the Fair Labor Standards Act (FLSA), rather than employees, are not considered employees for purposes of the 500-employee threshold.
Typically, a corporation (including its separate establishments or divisions) is considered to be a single employer and its employees must each be counted towards the 500-employee threshold. Where a corporation has an ownership interest in another corporation, the two corporations are separate employers unless they are joint employers under the FLSA with respect to certain employees. If two entities are found to be joint employers, all of their common employees must be counted in determining whether paid sick leave must be provided under the Emergency Paid Sick Leave Act and expanded family and medical leave must be provided under the Emergency Family and Medical Leave Expansion Act.
In general, two or more entities are separate employers unless they meet the integrated employer test under the Family and Medical Leave Act of 1993 (FMLA). If two entities are an integrated employer under the FMLA, then employees of all entities making up the integrated employer will be counted in determining employer coverage for purposes of paid sick leave under the Emergency Paid Sick Leave Act and expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act.If I am a private sector employer and have 500 or more employees, do the Acts apply to me?
No. Private sector employers are only required to comply with the Acts if they have fewer than 500 employees.
If providing child care-related paid sick leave and expanded family and medical leave at my business with fewer than 50 employees would jeopardize the viability of my business as a going concern, how do I take advantage of the small business exemption?
To elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations.
You should not send any materials to the Department of Labor when seeking a small business exemption for paid sick leave and expanded family and medical leave.How do I count hours worked by a part-time employee for purposes of paid sick leave or expanded family and medical leave?
A part-time employee is entitled to leave for his or her average number of work hours in a two-week period. Therefore, you calculate hours of leave based on the number of hours the employee is normally scheduled to work. If the normal hours scheduled are unknown, or if the part-time employee’s schedule varies, you may use a six-month average to calculate the average daily hours. Such a part-time employee may take paid sick leave for this number of hours per day for up to a two-week period, and may take expanded family and medical leave for the same number of hours per day up to ten weeks after that.
If this calculation cannot be made because the employee has not been employed for at least six months, use the number of hours that you and your employee agreed that the employee would work upon hiring. And if there is no such agreement, you may calculate the appropriate number of hours of leave based on the average hours per day the employee was scheduled to work over the entire term of his or her employment.When calculating pay due to employees, must overtime hours be included?
Yes. The Emergency Family and Medical Leave Expansion Act requires you to pay an employee for hours the employee would have been normally scheduled to work even if that is more than 40 hours in a week.
However, the Emergency Paid Sick Leave Act requires that paid sick leave be paid only up to 80 hours over a two-week period. For example, an employee who is scheduled to work 50 hours a week may take 50 hours of paid sick leave in the first week and 30 hours of paid sick leave in the second week. In any event, the total number of hours paid under the Emergency Paid Sick Leave Act is capped at 80.
If the employee’s schedule varies from week to week, please see the answer to Question above, because the calculation of hours for a full-time employee with a varying schedule is the same as that for a part-time employee.
Please keep in mind the daily and aggregate caps placed on any pay for paid sick leave and expanded family and medical leave as described in the answer to Question 7.
Please note that pay does not need to include a premium for overtime hours under either the Emergency Paid Sick Leave Act or the Emergency Family and Medical Leave Expansion Act.As an employee, how much will I be paid while taking paid sick leave or expanded family and medical leave under the FFCRA?
It depends on your normal schedule as well as why you are taking leave.
If you are taking paid sick leave because you are unable to work or telework due to a need for leave because you (1) are subject to a Federal, State, or local quarantine or isolation order related to COVID-19; (2) have been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or (3) are experiencing symptoms of COVID-19 and are seeking medical diagnosis, you will receive for each applicable hour the greater of:
your regular rate of pay,
the federal minimum wage in effect under the FLSA, or
the applicable State or local minimum wage.
In these circumstances, you are entitled to a maximum of $511 per day, or $5,110 total over the entire paid sick leave period.
If you are taking paid sick leave because you are: (1) caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or an individual who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; (2) caring for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; or (3) experiencing any other substantially-similar condition that may arise, as specified by the Secretary of Health and Human Services, you are entitled to compensation at 2/3 of the greater of the amounts above.
Under these circumstances, you are subject to a maximum of $200 per day, or $2,000 over the entire two week period.
If you are taking expanded family and medical leave, you may take paid sick leave for the first two weeks of that leave period, or you may substitute any accrued vacation leave, personal leave, or medical or sick leave you have under your employer’s policy. For the following ten weeks, you will be paid for your leave at an amount no less than 2/3 of your regular rate of pay for the hours you would be normally scheduled to work. If you take paid sick leave during the first two weeks of unpaid expanded family and medical leave, you will not receive more than $200 per day or $12,000 for the twelve weeks that include both paid sick leave and expanded family and medical leave when you are on leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons. If you take employer-provided accrued leave during those first two weeks, you are entitled to the full amount for such accrued leave, even if that is greater than $200 per day.What is my regular rate of pay for purposes of the FFCRA?
For purposes of the FFCRA, the regular rate of pay used to calculate your paid leave is the average of your regular rate over a period of up to six months prior to the date on which you take leave. If you have not worked for your current employer for six months, the regular rate used to calculate your paid leave is the average of your regular rate of pay for each week you have worked for your current employer.
If you are paid with commissions, tips, or piece rates, these amounts will be incorporated into the above calculation to the same extent they are included in the calculation of the regular rate under the FLSA.
You can also compute this amount for each employee by adding all compensation that is part of the regular rate over the above period and divide that sum by all hours actually worked in the same period.May I take 80 hours of paid sick leave for my self-quarantine and then another amount of paid sick leave for another reason provided under the Emergency Paid Sick Leave Act?
No. You may take up to two weeks—or ten days—(80 hours for a full-time employee, or for a part-time employee, the number of hours equal to the average number of hours that the employee works over a typical two-week period) of paid sick leave for any combination of qualifying reasons. However, the total number of hours for which you receive paid sick leave is capped at 80 hours under the Emergency Paid Sick Leave Act.
If I am home with my child because his or her school or place of care is closed, or child care provider is unavailable, do I get paid sick leave, expanded family and medical leave, or both—how do they interact?
You may be eligible for both types of leave, but only for a total of twelve weeks of paid leave. You may take both paid sick leave and expanded family and medical leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons. The Emergency Paid Sick Leave Act provides for an initial two weeks of paid leave. This period thus covers the first ten workdays of expanded family and medical leave, which are otherwise unpaid under the Emergency and Family Medical Leave Expansion Act unless you elect to use existing vacation, personal, or medical or sick leave under your employer’s policy. After the first ten workdays have elapsed, you will receive 2/3 of your regular rate of pay for the hours you would have been scheduled to work in the subsequent ten weeks under the Emergency and Family Medical Leave Expansion Act.
Please note that you can only receive the additional ten weeks of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act for leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.Can my employer deny me paid sick leave if my employer gave me paid leave for a reason identified in the Emergency Paid Sick Leave Act prior to the Act going into effect?
No. The Emergency Paid Sick Leave Act imposes a new leave requirement on employers that is effective beginning on April 1, 2020.
Is all leave under the FMLA now paid leave?
No. The only type of family and medical leave that is paid leave is expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act when such leave exceeds ten days. This includes only leave taken because the employee must care for a child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.
Are the paid sick leave and expanded family and medical leave requirements retroactive?
No.
How do I know whether I have “been employed for at least 30 calendar days by the employer” for purposes of expanded family and medical leave?
You are considered to have been employed by your employer for at least 30 calendar days if your employer had you on its payroll for the 30 calendar days immediately prior to the day your leave would begin. For example, if you want to take leave on April 1, 2020, you would need to have been on your employer’s payroll as of March 2, 2020.
If you have been working for a company as a temporary employee, and the company subsequently hires you on a full-time basis, you may count any days you previously worked as a temporary employee toward this 30-day eligibility period.What records do I need to keep when my employee takes paid sick leave or expanded family and medical leave?
Regardless of whether you grant or deny a request for paid sick leave or expanded family and medical leave, you must document the following:
● The name of your employee requesting leave;● The date(s) for which leave is requested;● The reason for leave; and● A statement from the employee that he or she is unable to work because of the reason.
If your employee requests leave because he or she is subject to a quarantine or isolation order or to care for an individual subject to such an order, you should additionally document the name of the government entity that issued the order. If your employee requests leave to self-quarantine based on the advice of a health care provider or to care for an individual who is self-quarantining based on such advice, you should additionally document the name of the health care provider who gave advice.
If your employee requests leave to care for his or her child whose school or place of care is closed, or child care provider is unavailable, you may must also document:
● The name of the child being cared for;● The name of the school, place of care, or child care provider that has closed or become unavailable; and● A statement from the employee that no other suitable person is available to care for the child.
Private sector employers that provide paid sick leave and expanded family and medical leave required by the FFCRA are eligible for reimbursement of the costs of that leave through refundable tax credits. If you intend to claim a tax credit under the FFCRA for your payment of the sick leave or expanded family and medical leave wages, you should retain appropriate documentation in your records. You should consult Internal Revenue Service (IRS) applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit. You are not required to provide leave if materials sufficient to support the applicable tax credit have not been provided.What documents do I need to give my employer to get paid sick leave or expanded family and medical leave?
When requesting paid sick leave or expanded family and medical leave, you must provide your employer either orally or in writing the following information:
● Your name;● The date(s) for which you request leave;● The reason for leave; and● A statement that you is unable to work because of the above reason.
If you request leave because you are subject to a quarantine or isolation order or to care for an individual subject to such an order, you should additionally provide the name of the government entity that issued the order. If you request leave to self-quarantine based on the advice of a health care provider or to care for an individual who is self-quarantining based on such advice, you should additionally provide the name of the health care provider who gave advice.
If you request leave to care for your child whose school or place of care is closed, or child care provider is unavailable, you may must also provide:
● The name of your child;● The name of the school, place of care, or child care provider that has closed or become unavailable; and● A statement that no other suitable person is available to care for your child.
In addition to the above information, you must also provide to your employer written documentation in support of your paid sick leave as specified in applicable IRS forms, instructions, and information.
Please also note that all existing certification requirements under the FMLA remain in effect if you are taking leave for one of the existing qualifying reasons under the FMLA. For example, if you are taking leave beyond the two weeks of emergency paid sick leave because your medical condition for COVID-19-related reasons rises to the level of a serious health condition, you must continue to provide medical certifications under the FMLA if required by your employer.When am I able to telework under the FFCRA?
You may telework when your employer permits or allows you to perform work while you are at home or at a location other than your normal workplace. Telework is work for which normal wages must be paid and is not compensated under the paid leave provisions of the FFCRA.
What does it mean to be unable to work, including telework for COVID-19 related reasons?
You are unable to work if your employer has work for you and one of the COVID-19 qualifying reasons set forth in the FFCRA prevents you from being able to perform that work, either under normal circumstances at your normal worksite or by means of telework.
If you and your employer agree that you will work your normal number of hours, but outside of your normally scheduled hours (for instance early in the morning or late at night), then you are able to work and leave is not necessary unless a COVID-19 qualifying reason prevents you from working that schedule.If I am or become unable to telework, am I entitled to paid sick leave or expanded family and medical leave?
If your employer permits teleworking—for example, allows you to perform certain tasks or work a certain number of hours from home or at a location other than your normal workplace—and you are unable to perform those tasks or work the required hours because of one of the qualifying reasons for paid sick leave, then you are entitled to take paid sick leave.
Similarly, if you are unable to perform those teleworking tasks or work the required teleworking hours because you need to care for your child whose school or place of care is closed, or child care provider is unavailable, because of COVID-19 related reasons, then you are entitled to take expanded family and medical leave. Of course, to the extent you are able to telework while caring for your child, paid sick leave and expanded family and medical leave is not available.May I take my paid sick leave or expanded family and medical leave intermittently while teleworking?
Yes, if your employer allows it and if you are unable to telework your normal schedule of hours due to one of the qualifying reasons in the Emergency Paid Sick Leave Act. In that situation, you and your employer may agree that you may take paid sick leave intermittently while teleworking. Similarly, if you are prevented from teleworking your normal schedule of hours because you need to care for your child whose school or place of care is closed, or child care provider is unavailable, because of COVID-19 related reasons, you and your employer may agree that you can take expanded family medical leave intermittently while teleworking.
You may take intermittent leave in any increment, provided that you and your employer agree. For example, if you agree on a 90-minute increment, you could telework from 1:00 PM to 2:30 PM, take leave from 2:30 PM to 4:00 PM, and then return to teleworking.
The Department encourages employers and employees to collaborate to achieve flexibility and meet mutual needs, and the Department is supportive of such voluntary arrangements that combine telework and intermittent leave.May I take my paid sick leave intermittently while working at my usual worksite (as opposed to teleworking)?
It depends on why you are taking paid sick leave and whether your employer agrees. Unless you are teleworking, paid sick leave for qualifying reasons related to COVID-19 must be taken in full-day increments. It cannot be taken intermittently if the leave is being taken because:
● You are subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
● You have been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
● You are experiencing symptoms of COVID-19 and seeking a medical diagnosis;
● You are caring for an individual who either is subject to a quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
● You are experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
Unless you are teleworking, once you begin taking paid sick leave for one or more of these qualifying reasons, you must continue to take paid sick leave each day until you either (1) use the full amount of paid sick leave or (2) no longer have a qualifying reason for taking paid sick leave. This limit is imposed because if you are sick or possibly sick with COVID-19, or caring for an individual who is sick or possibly sick with COVID-19, the intent of FFCRA is to provide such paid sick leave as necessary to keep you from spreading the virus to others.
If you no longer have a qualifying reason for taking paid sick leave before you exhaust your paid sick leave, you may take any remaining paid sick leave at a later time, until December 31, 2020, if another qualifying reason occurs.
In contrast, if you and your employer agree, you may take paid sick leave intermittently if you are taking paid sick leave to care for your child whose school or place of care is closed, or whose child care provider is unavailable, because of COVID-19 related reasons. For example, if your child is at home because his or her school or place of care is closed, or child care provider is unavailable, because of COVID-19 related reasons, you may take paid sick leave on Mondays, Wednesdays, and Fridays to care for your child, but work at your normal worksite on Tuesdays and Thursdays.
The Department encourages employers and employees to collaborate to achieve maximum flexibility. Therefore, if employers and employees agree to intermittent leave on less than a full work day for employees taking paid sick leave to care for their child whose school or place of care is closed, or child care provider is unavailable, because of COVID-19-related reasons, the Department is supportive of such voluntary arrangements.May I take my expanded family and medical leave intermittently while my child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons, if I am not teleworking?
Yes, but only with your employer’s permission. Intermittent expanded family and medical leave should be permitted only when you and your employer agree upon such a schedule. For example, if your employer and you agree, you may take expanded family and medical leave on Mondays, Wednesdays, and Fridays, but work Tuesdays and Thursdays, while your child is at home because your child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons, for the duration of your leave.
The Department encourages employers and employees to collaborate to achieve flexibility. Therefore, if employers and employees agree to intermittent leave on a day-by-day basis, the Department supports such voluntary arrangements.If my employer closed my worksite before April 1, 2020 (the effective date of the FFCRA), can I still get paid sick leave or expanded family and medical leave?
No. If, prior to the FFCRA’s effective date, your employer sent you home and stops paying you because it does not have work for you to do, you will not get paid sick leave or expanded family and medical leave but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it is required to close pursuant to a Federal, State, or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.
It should be noted, however, that if your employer is paying you pursuant to a paid leave policy or State or local requirements, you are not eligible for unemployment insurance.If my employer closes my worksite on or after April 1, 2020 (the effective date of the FFCRA), but before I go out on leave, can I still get paid sick leave and/or expanded family and medical leave?
No. If your employer closes after the FFCRA’s effective date (even if you requested leave prior to the closure), you will not get paid sick leave or expanded family and medical leave but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it was required to close pursuant to a Federal, State or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.
If my employer closes my worksite while I am on paid sick leave or expanded family and medical leave, what happens?
If your employer closes while you are on paid sick leave or expanded family and medical leave, your employer must pay for any paid sick leave or expanded family and medical leave you used before the employer closed. As of the date your employer closes your worksite, you are no longer entitled to paid sick leave or expanded family and medical leave, but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because the employer was required to close pursuant to a Federal, State or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.
If my employer is open, but furloughs me on or after April 1, 2020 (the effective date of the FFCRA), can I receive paid sick leave or expanded family and medical leave?
No. If your employer furloughs you because it does not have enough work or business for you, you are not entitled to then take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.
If my employer closes my worksite on or after April 1, 2020 (the effective date of the FFCRA), but tells me that it will reopen at some time in the future, can I receive paid sick leave or expanded family and medical leave?
No, not while your worksite is closed. If your employer closes your worksite, even for a short period of time, you are not entitled to take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it was required to close pursuant to a Federal, State, or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx. If your employer reopens and you resume work, you would then be eligible for paid sick leave or expanded family and medical leave as warranted.
If my employer reduces my scheduled work hours, can I use paid sick leave or expanded family and medical leave for the hours that I am no longer scheduled to work?
No. If your employer reduces your work hours because it does not have work for you to perform, you may not use paid sick leave or expanded family and medical leave for the hours that you are no longer scheduled to work. This is because you are not prevented from working those hours due to a COVID-19 qualifying reason, even if your reduction in hours was somehow related to COVID-19.
You may, however, take paid sick leave or expanded family and medical leave if a COVID-19 qualifying reason prevents you from working your full schedule. If you do, the amount of leave to which you are entitled is computed based on your work schedule before it was reduced.May I collect unemployment insurance benefits for time in which I receive pay for paid sick leave and/or expanded family and medical leave?
No. If your employer provides you paid sick leave or expanded family and medical leave, you are not eligible for unemployment insurance. However, each State has its own unique set of rules; and DOL recently clarified additional flexibility to the States (UIPL 20-10) to extend partial unemployment benefits to workers whose hours or pay have been reduced. Therefore, individuals should contact their State workforce agency or State unemployment insurance office for specific questions about eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.
If I elect to take paid sick leave or expanded family and medical leave, must my employer continue my health coverage? If I remain on leave beyond the maximum period of expanded family and medical leave, do I have a right to keep my health coverage?
If your employer provides group health coverage that you’ve elected, you are entitled to continued group health coverage during your expanded family and medical leave on the same terms as if you continued to work. If you are enrolled in family coverage, your employer must maintain coverage during your expanded family and medical leave. You generally must continue to make any normal contributions to the cost of your health coverage. See WHD Fact Sheet 28A: https://www.dol.gov/agencies/whd/fact-sheets/28a-fmla-employee-protections.
If you do not return to work at the end of your expanded family and medical leave, check with your employer to determine whether you are eligible to keep your health coverage on the same terms (including contribution rates). If you are no longer eligible, you may be able to continue your coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA, which generally applies to employers with 20 or more employees, allows you and your family to continue the same group health coverage at group rates. Your share of that cost may be higher than what you were paying before but may be lower than what you would pay for private individual health insurance coverage. (If your employer has fewer than 20 employees, you may be eligible to continue your health insurance under State laws that are similar to COBRA. These laws are sometimes referred to as “mini COBRA” and vary from State to State.) Contact the Employee Benefits Security Administration at https://www.dol.gov/agencies/ebsa/workers-and-families/changing-jobs-and-job-loss to learn about health and retirement benefit protections for dislocated workers.
If you elect to take paid sick leave, your employer must continue your health coverage. Under the Health Insurance Portability and Accountability Act (HIPAA), an employer cannot establish a rule for eligibility or set any individual’s premium or contribution rate based on whether an individual is actively at work (including whether an individual is continuously employed), unless absence from work due to any health factor (such as being absent from work on sick leave) is treated, for purposes of the plan or health insurance coverage, as being actively at work.As an employee, may I use my employer’s preexisting leave entitlements and my FFCRA paid sick leave and expanded family and medical leave concurrently for the same hours?
During the first two weeks of unpaid expanded family and medical leave, you may not simultaneously take paid sick leave under the EPSLA and preexisting paid leave, unless your employer agrees to allow you to supplement the amount you receive from paid sick leave with your preexisting paid leave, up to your normal earnings. After the first two workweeks (usually 10 workdays) of expanded family and medical leave under the EFMLEA, however, you may elect—or be required by your employer—to take your remaining expanded family and medical leave at the same time as any existing paid leave that, under your employer’s policies, would be available to you in that circumstance. This would likely include personal leave or paid time off, but not medical or sick leave if you are not ill.
If you are required to take your existing leave concurrently with your remaining expanded family and medical leave, your employer must pay you the full amount to which you are entitled under your existing paid leave policy for the period of leave taken. If you exhaust your preexisting paid leave and still are entitled to additional expanded family and medical leave, your employer must pay you at least 2/3 of your pay for subsequent periods of expanded family and medical leave taken, up to $200 per workday and $10,000 in the aggregate, for expanded family and medical leave.If I am an employer, may I use the paid sick leave mandated under the EPSLA to satisfy paid leave entitlements that an employee may have under my paid leave policy?
No, unless your employee agrees. Paid sick leave under the EPSLA is in addition to your employee’s (including Federal Employees’) other leave entitlements. You may not require your employee to use provided or accrued paid vacation, personal, medical, or sick leave before the paid sick leave. You also may not require your employee to use such existing leave concurrently with the paid sick leave under the EPSLA. But if you and your employee agree, your employee may use preexisting leave entitlements to supplement the amount he or she receives from paid sick leave, up to the employee’s normal earnings. Note, however, that you are not entitled to a tax credit for any paid sick leave that is not required to be paid or exceeds the limits set forth under the EPSLA. You are free to amend your own policies to the extent consistent with applicable law.
If I am an employer, may I require my employee to take paid leave he or she may have under my existing paid leave policy concurrently with expanded family and medical leave under the EFMLEA?
Yes. After the first two workweeks (usually 10 workdays) of expanded family and medical leave under the EFMLEA, you may require that your employee take concurrently for the same hours expanded family and medical leave and existing leave that, under your policies, would be available to the employee in that circumstance. This would likely include personal leave or paid time off, but not medical or sick leave if your employee (or a covered family member) is not ill.
If you do so, you must pay your employee the full amount to which he or she is entitled under your existing paid leave policy for the period of leave taken. You must pay your employee at least 2/3 of his or her pay for subsequent periods of expanded family and medical leave taken, up to $200 per workday and $10,000 in the aggregate, for expanded family and medical leave. If your employee exhausts all preexisting paid vacation, personal, medical, or sick leave, you would need to pay your employee at least 2/3 of his or her pay for subsequent periods of expanded family and medical leave taken, up to $200 per day and $10,000 in the aggregate. You are free to amend your own policies to the extent consistent with applicable law.If I want to pay my employees more than they are entitled to receive for paid sick leave or expanded family and medical leave, can I do so and claim a tax credit for the entire amount paid to them?
You may pay your employees in excess of FFCRA requirements. But you cannot claim, and will not receive tax credit for, those amounts in excess of the FFCRA’s statutory limits.
I am an employer that is part of a multiemployer collective bargaining agreement, may I satisfy my obligations under the Emergency Family and Medical Leave Expansion Act through contributions to a multiemployer fund, plan, or program?
You may satisfy your obligations under the Emergency Family and Medical Leave Expansion Act by making contributions to a multiemployer fund, plan, or other program in accordance with your existing collective bargaining obligations. These contributions must be based on the amount of paid family and medical leave to which each of your employees is entitled under the Act based on each employee’s work under the multiemployer collective bargaining agreement. Such a fund, plan, or other program must allow employees to secure or obtain their pay for the related leave they take under the Act. Alternatively, you may also choose to satisfy your obligations under the Act by other means, provided they are consistent with your bargaining obligations and collective bargaining agreement.
I am an employer that is part of a multiemployer collective bargaining agreement, may I satisfy my obligations under the Emergency Paid Sick Leave Act through contributions to a multiemployer fund, plan, or program?
You may satisfy your obligations under the Emergency Paid Sick Leave Act by making contributions to a multiemployer fund, plan, or other program in accordance with your existing collective bargaining obligations. These contributions must be based on the hours of paid sick leave to which each of your employees is entitled under the Act based on each employee’s work under the multiemployer collective bargaining agreement. Such a fund, plan, or other program must allow employees to secure or obtain their pay for the related leave they take under the Act. Alternatively, you may also choose to satisfy your obligations under the Act by other means, provided they are consistent with your bargaining obligations and collective bargaining agreement.
Are contributions to a multiemployer fund, plan, or other program the only way an employer that is part of a multiemployer collective bargaining agreement may comply with the paid leave requirements of the FFCRA?
No. Both the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act provide that, consistent with its bargaining obligations and collective bargaining agreement, an employer may satisfy its legal obligations under both Acts by making appropriate contributions to such a fund, plan, or other program based on the paid leave owed to each employee. However, the employer may satisfy its obligations under both Acts by other means, provided they are consistent with its bargaining obligations and collective bargaining agreement.
Assuming I am a covered employer, which of my employees are eligible for paid sick leave and expanded family and medical leave?
Both of these new provisions use the employee definition as provided by the Fair Labor Standards Act, thus all of your U.S. (including Territorial) employees who meet this definition are eligible including full-time and part-time employees, and “joint employees” working on your site temporarily and/or through a temp agency. However, if you employ a health care provider or an emergency responder you are not required to pay such employee paid sick leave or expanded family and medical leave on a case-by-case basis. And certain small businesses may exempt employees if the leave would jeopardize the company’s viability as a going concern.
There is one difference regarding an employee’s eligibility for paid sick leave versus expanded family and medical leave. While your employee is eligible for paid sick leave regardless of length of employment, your employee must have been employed for 30 calendar days in order to qualify for expanded family and medical leave. For example, if your employee requests expanded family and medical leave on April 10, 2020, he or she must have been your employee since March 11, 2020.Who is a covered employer that must provide paid sick leave and expanded family and medical leave under the FFCRA?
Generally, if you employ fewer than 500 employees you are a covered employer that must provide paid sick leave and expanded family and medical leave. For additional information on the 500 employee threshold. Certain employers with fewer than 50 employees may be exempt from the Act’s requirements to provide certain paid sick leave and expanded family and medical leave.
Certain public employers are also covered under the Act and must provide paid sick leave and expanded family and medical leave. For additional information regarding coverage of public employers.Who is a son or daughter?
Under the FFCRA, a “son or daughter” is your own child, which includes your biological, adopted, or foster child, your stepchild, a legal ward, or a child for whom you are standing in loco parentis—someone with day-to-day responsibilities to care for or financially support a child. For additional information about in loco parentis, see Fact Sheet #28B: Family and Medical Leave Act (FMLA) leave for birth, placement, bonding or to care for a child with a serious health condition on the basis of an “in loco parentis” relationship.
In light of Congressional direction to interpret definitions consistently, WHD clarifies that under the FFCRA a “son or daughter” is also an adult son or daughter (i.e., one who is 18 years of age or older), who (1) has a mental or physical disability, and (2) is incapable of self-care because of that disability. For additional information on requirements relating to an adult son or daughter, see Fact Sheet #28K and/or call our toll free information and help line available 8 am–5 pm in your time zone, 1-866-4US-WAGE (1-866-487-9243).What do I do if my employer, who I believe to be covered, refuses to provide me paid sick leave?
If you believe that your employer is covered and is improperly refusing you paid sick leave under the Emergency Paid Sick Leave Act, the Department encourages you to raise and try to resolve your concerns with your employer. Regardless of whether you discuss your concerns with your employer, if you believe your employer is improperly refusing you paid sick leave, you may call 1-866-4US-WAGE (1-866-487-9243). WHD is responsible for administering and enforcing these provisions. If you have questions or concerns, you can contact WHD by phone or visit www.dol.gov/agencies/whd. Your call will be directed to the nearest WHD office for assistance to have your questions answered or to file a complaint. In most cases, you can also file a lawsuit against your employer directly without contacting WHD. If you are a public sector employee.
What do I do if my employer, who I believe to be covered, refuses to provide me expanded family and medical leave to care for my own son or daughter whose school or place of care has closed, or whose child care provider is unavailable, for COVID-19 related reasons?
If you believe that your employer is covered and is improperly refusing you expanded family and medical leave or otherwise violating your rights under the Emergency Family and Medical Leave Expansion Act, the Department encourages you to raise and try to resolve your concerns with your employer. Regardless whether you discuss your concerns with your employer, if you believe your employer is improperly refusing you expanded family and medical leave, you may call WHD at 1-866-4US-WAGE (1-866-487-9243) or visit www.dol.gov/agencies/whd. Your call will be directed to the nearest WHD office for assistance to have your questions answered or to file a complaint. If your employer employs 50 or more employees, you also may file a lawsuit against your employer directly without contacting WHD. If you are a public sector employee.
Do I have a right to return to work if I am taking paid sick leave or expanded family and medical leave under the Emergency Paid Sick Leave Act or the Emergency Family and Medical Leave Expansion Act?
Generally, yes. In light of Congressional direction to interpret requirements among the Acts consistently, WHD clarifies that the Acts require employers to provide the same (or a nearly equivalent) job to an employee who returns to work following leave.
In most instances, you are entitled to be restored to the same or an equivalent position upon return from paid sick leave or expanded family and medical leave. Thus, your employer is prohibited from firing, disciplining, or otherwise discriminating against you because you take paid sick leave or expanded family and medical leave. Nor can your employer fire, discipline, or otherwise discriminate against you because you filed any type of complaint or proceeding relating to these Acts, or have or intend to testify in any such proceeding.
However, you are not protected from employment actions, such as layoffs, that would have affected you regardless of whether you took leave. This means your employer can lay you off for legitimate business reasons, such as the closure of your worksite. Your employer must be able to demonstrate that you would have been laid off even if you had not taken leave.
Your employer may also refuse to return you to work in your same position if you are a highly compensated “key” employee as defined under the FMLA, or if your employer has fewer than 25 employees, and you took leave to care for your own son or daughter whose school or place of care was closed, or whose child care provider was unavailable, and all four of the following hardship conditions exist:
● your position no longer exists due to economic or operating conditions that affect employment and due to COVID-19 related reasons during the period of your leave;● your employer made reasonable efforts to restore you to the same or an equivalent position;● your employer makes reasonable efforts to contact you if an equivalent position becomes available; and● your employer continues to make reasonable efforts to contact you for one year beginning either on the date the leave related to COVID-19 reasons concludes or the date 12 weeks after your leave began, whichever is earlier.Do I qualify for leave for a COVID-19 related reason even if I have already used some or all of my leave under the Family and Medical Leave Act (FMLA)?
If you are an eligible employee, you are entitled to paid sick leave under the Emergency Paid Sick Leave Act regardless of how much leave you have taken under the FMLA.
However, if your employer was covered by the FMLA prior to April 1, 2020, your eligibility for expanded family and medical leave depends on how much leave you have already taken during the 12-month period that your employer uses for FMLA leave. You may take a total of 12 workweeks for FMLA or expanded family and medical leave reasons during a 12-month period. If you have taken some, but not all, 12 workweeks of your leave under FMLA during the current 12-month period determined by your employer, you may take the remaining portion of leave available. If you have already taken 12 workweeks of FMLA leave during this 12-month period, you may not take additional expanded family and medical leave.
For example, assume you are eligible for preexisting FMLA leave and took two weeks of such leave in January 2020 to undergo and recover from a surgical procedure. You therefore have 10 weeks of FMLA leave remaining. Because expanded family and medical leave is a type of FMLA leave, you would be entitled to take up to 10 weeks of expanded family and medical leave, rather than 12 weeks. And any expanded family and medical leave you take would count against your entitlement to preexisting FMLA leave.
If your employer only becomes covered under the FMLA on April 1, 2020, this analysis does not apply.May I take leave under the Family and Medical Leave Act over the next 12 months if I used some or all of my expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act?
It depends. You may take a total of 12 workweeks of leave during a 12-month period under the FMLA, including the Emergency Family and Medical Leave Expansion Act. If you take some, but not all 12, workweeks of your expanded family and medical leave by December 31, 2020, you may take the remaining portion of FMLA leave for a serious medical condition, as long as the total time taken does not exceed 12 workweeks in the 12-month period. Please note that expanded family and medical leave is available only until December 31, 2020; after that, you may only take FMLA leave.
For example, assume you take four weeks of Expanded Family and Medical Leave in April 2020 to care for your child whose school is closed due to a COVID-19 related reason. These four weeks count against your entitlement to 12 weeks of FMLA leave in a 12-month period. If you are eligible for preexisting FMLA leave and need to take such leave in August 2020 because you need surgery, you would be entitled to take up to eight weeks of FMLA leave.
However, you are entitled to paid sick leave under the Emergency Paid Sick Leave Act regardless of how much leave you have taken under the FMLA. Paid sick leave is not a form of FMLA leave and therefore does not count toward the 12 workweeks in the 12-month period cap. But please note that if you take paid sick leave concurrently with the first two weeks of expanded family and medical leave, which may otherwise be unpaid, then those two weeks do count towards the 12 workweeks in the 12-month period.If I take paid sick leave under the Emergency Paid Sick Leave Act, does that count against other types of paid sick leave to which I am entitled under State or local law, or my employer’s policy?
No. Paid sick leave under the Emergency Paid Sick Leave Act is in addition to other leave provided under Federal, State, or local law; an applicable collective bargaining agreement; or your employer’s existing company policy.
May I use paid sick leave and expanded family and medical leave together for any COVID-19 related reasons?
No. The Emergency Family and Medical Leave Expansion Act applies only when you are on leave to care for your child whose school or place of care is closed, or whose child care provider is unavailable, due to COVID-19 related reasons. However, you can take paid sick leave under the Emergency Paid Sick Leave Act for numerous other reasons.
What is a full-time employee under the Emergency Paid Sick Leave Act?
For purposes of the Emergency Paid Sick Leave Act, a full-time employee is an employee who is normally scheduled to work 40 or more hours per week.
In contrast, the Emergency Family and Medical Leave Expansion Act does not distinguish between full- and part-time employees, but the number of hours an employee normally works each week will affect the amount of pay the employee is eligible to receive.What is a part-time employee under the Emergency Paid Sick Leave Act?
For purposes of the Emergency Paid Sick Leave Act, a part-time employee is an employee who is normally scheduled to work fewer than 40 hours per week.
In contrast, the Emergency Family and Medical Leave Expansion Act does not distinguish between full- and part-time employees, but the number of hours an employee normally works each week affects the amount of pay the employee is eligible to receive.How does the “for each working day during each of the 20 or more calendar workweeks in the current or preceding calendar” language in the FMLA definition of “employer” work under the Emergency Family and Medical Leave Expansion Act?
The language about counting employees over calendar workweeks is only in the FMLA’s definition for employer. This language does not apply to the Emergency Family and Medical Leave Expansion Act for purposes of expanded family and medical leave. Employers should use the number of employees on the day the employee’s leave would start to determine whether the employer has fewer than 500 employees for purposes of providing expanded family and medical leave and paid sick leave.
I’ve elected to take paid sick leave and I am currently in a waiting period for my employer’s health coverage. If I am absent from work on paid sick leave during the waiting period, will my health coverage still take effect after I complete the waiting period on the same day that the coverage would otherwise take effect?
Yes. If you are on employer-provided group health coverage, you are entitled to group health coverage during your paid sick leave on the same terms as if you continued to work. Therefore, the requirements for eligibility, including any requirement to complete a waiting period, would apply in the same way as if you continued to work, including that the days you are on paid sick leave count towards completion of the waiting period. If, under the terms of the plan, an individual can elect coverage that becomes effective after completing the waiting period, the health coverage must take effect once the waiting period is complete.
I am a public sector employee. May I take paid sick leave under the Emergency Paid Sick Leave Act?
Generally, yes. You are entitled to paid sick leave if you work for a public agency or other unit of government, with the exceptions below. Therefore, you are probably entitled to paid sick leave if, for example, you work for the government of the United States, a State, the District of Columbia, a Territory or possession of the United States, a city, a municipality, a township, a county, a parish, or a similar government entity subject to the exceptions below. The Office of Management and Budget (OMB) has the authority to exclude some categories of U.S. Government Executive Branch employees from taking certain kinds of paid sick leave. If you are a Federal employee, the Department encourages you to seek guidance from your respective employers as to your eligibility to take paid sick leave.
Further, health care providers and emergency responders may be excluded by their employer from being able to take paid sick leave under the Act.I am a public sector employee. May I take paid family and medical leave under the Emergency Family and Medical Leave Expansion Act?
It depends. In general, you are entitled to expanded family and medical leave if you are an employee of a non-federal public agency. Therefore, you are probably entitled to paid sick leave if, for example, you work for the government of a State, the District of Columbia, a Territory or possession of the United States, a city, a municipality, a township, a county, a parish, or a similar entity.
But if you are a Federal employee, you likely are not entitled to expanded family and medical leave. The Act only amended Title I of the FMLA; most Federal employees are covered instead by Title II of the FMLA. As a result, only some Federal employees are covered, and the vast majority are not. In addition, the Office of Management and Budget (OMB) has the authority to exclude some categories of U.S. Government Executive Branch employees with respect to expanded and family medical leave. If you are a Federal employee, the Department encourages you to seek guidance from your respective employers as to your eligibility to take expanded family and medical leave.
Further, health care providers and emergency responders may be excluded by their employer from being able to take expanded family and medical leave under the Act.What do I do if my public sector employer, who I believe to be covered, refuses to provide me paid sick leave or expanded family and medical leave?
If you believe that your public sector employer is covered and is improperly refusing you paid sick leave under the Emergency Paid Sick Leave Act or expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act, the Department encourages you to raise your concerns with your employer in an attempt to resolve them. Regardless whether you discuss your concerns with your employer, if you believe your employer is improperly refusing you paid sick leave or expanded family and medical leave, you may call WHD at 1-866-4US-WAGE (1-866-487-9243) or visit www.dol.gov/agencies/whd. Your call will be directed to the nearest WHD office for assistance to have your questions answered or to file a complaint.
In some cases, you may also be able to file a lawsuit against your employer directly without contacting WHD. Some State and local employees may not be able to pursue direct lawsuits because their employers are immune from such lawsuits. For additional information, see the WHD website at: https://www.wagehour.dol.gov and/or call WHD’s toll free information and help line available 8am–5pm in your time zone, 1-866-4-US-WAGE (1-866-487-9243).Who is a “health care provider” for purposes of determining individuals whose advice to self-quarantine due to concerns related to COVID-19 can be relied on as a qualifying reason for paid sick leave?
The term “health care provider,” as used to determine individuals whose advice to self-quarantine due to concerns related to COVID-19 can be relied on as a qualifying reason for paid sick leave, means a licensed doctor of medicine, nurse practitioner, or other health care provider permitted to issue a certification for purposes of the FMLA.
Who is a “health care provider” who may be excluded by their employer from paid sick leave and/or expanded family and medical leave?
For the purposes of Employees who may be exempted from Paid Sick Leave or Expanded Family and Medical Leave by their Employer under the FFCRA, a health care provider is anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, Employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.
This definition includes any individual employed by an entity that contracts with any of these institutions described above to provide services or to maintain the operation of the facility where that individual’s services support the operation of the facility. This also includes anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments. This also includes any individual that the highest official of a State or territory, including the District of Columbia, determines is a health care provider necessary for that State’s or territory’s or the District of Columbia’s response to COVID-19.
To minimize the spread of the virus associated with COVID-19, the Department encourages employers to be judicious when using this definition to exempt health care providers from the provisions of the FFCRA.Who is an emergency responder?
For the purposes of Employees who may be excluded from Paid Sick Leave or Expanded Family and Medical Leave by their Employer under the FFCRA, an emergency responder is anyone necessary for the provision of transport, care, healthcare, comfort and nutrition of such patients, or others needed for the response to COVID-19. This includes but is not limited to military or national guard, law enforcement officers, correctional institution personnel, fire fighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, child welfare workers and service providers, public works personnel, and persons with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency, as well as individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility. This also includes any individual whom the highest official of a State or territory, including the District of Columbia, determines is an emergency responder necessary for that State’s or territory’s or the District of Columbia’s response to COVID-19.
To minimize the spread of the virus associated with COVID-19, the Department encourages employers to be judicious when using this definition to exempt emergency responders from the provisions of the FFCRA.When does the small business exemption apply to exclude a small business from the provisions of the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act?
An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern. A small business may claim this exemption if an authorized officer of the business has determined that:
1. The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
2. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
3. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.If I am a small business with fewer than 50 employees, am I exempt from the requirements to provide paid sick leave or expanded family and medical leave?
A small business is exempt from certain paid sick leave and expanded family and medical leave requirements if providing an employee such leave would jeopardize the viability of the business as a going concern. This means a small business is exempt from mandated paid sick leave or expanded family and medical leave requirements only if the:
● employer employs fewer than 50 employees;
● leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and
● an authorized officer of the business has determined that at least one of the three conditions described in Question 58 is satisfied.
The Department encourages employers and employees to collaborate to reach the best solution for maintaining the business and ensuring employee safety.How do I know if I can receive paid sick leave for a Federal, State, or local quarantine or isolation order related to COVID-19?
For purposes of the FFCRA, a Federal, State, or local quarantine or isolation order includes quarantine or isolation orders, as well as shelter-in-place or stay-at-home orders, issued by any Federal, State, or local government authority that cause you to be unable to work (or to telework) even though your employer has work that you could perform but for the order. You may not take paid sick leave for this qualifying reason if your employer does not have work for you as a result of a shelter-in-place or a stay-at-home order. In the instance where your employer does not have work for you as a result of a shelter-in-place or a stay-at-home order.
When am I eligible for paid sick leave to self-quarantine?
You are eligible for paid sick leave if a health care provider directs or advises you to stay home or otherwise quarantine yourself because the health care provider believes that you may have COVID-19 or are particularly vulnerable to COVID-19, and quarantining yourself based upon that advice prevents you from working (or teleworking).
I am an employee. I become ill with COVID-19 symptoms, decide to quarantine myself for two weeks, and then return to work. I do not seek a medical diagnosis or the advice of a health care provider. Can I get paid for those two weeks under the FFCRA?
Generally no. If you become ill with COVID-19 symptoms, you may take paid sick leave under the FFCRA only to seek a medical diagnosis or if a health care provider otherwise advises you to self-quarantine. If you test positive for the virus associated with COVID-19 or are advised by a health care provider to self-quarantine, you may continue to take paid sick leave. You may not take paid sick leave under the FFCRA if you unilaterally decide to self-quarantine for an illness without medical advice, even if you have COVID-19 symptoms. Note that you may not take paid sick leave under the FFCRA if you become ill with an illness not related to COVID-19. Depending on your employer’s expectations and your condition, however, you may be able to telework during your period of quarantine.
When am I eligible for paid sick leave to care for someone who is subject to a quarantine or isolation order?
You may take paid sick leave to care for an individual who, as a result of being subject to a quarantine or isolation order, is unable to care for him or herself and depends on you for care and if providing care prevents you from working and from teleworking.
Furthermore, you may only take paid sick leave to care for an individual who genuinely needs your care. Such an individual includes an immediate family member or someone who regularly resides in your home. You may also take paid sick leave to care for someone if your relationship creates an expectation that you would care for the person in a quarantine or self-quarantine situation, and that individual depends on you for care during the quarantine or self-quarantine.
You may not take paid sick leave to care for someone with whom you have no relationship. Nor can you take paid sick leave to care for someone who does not expect or depend on your care during his or her quarantine or self-quarantine.Can I take paid sick leave to care for any individual who is subject to a quarantine or isolation order or who has been advised to self-quarantine?
No. You may take paid sick leave under the FFCRA to care for an immediate family member or someone who regularly resides in your home. You may also take paid sick leave under the FFCRA to care for someone where your relationship creates an expectation that you care for the person in a quarantine or self-quarantine situation, and that individual depends on you for care during the quarantine or self-quarantine.
However, you may not take paid sick leave under the FFCRA to care for someone with whom you have no relationship. Nor can you take paid sick leave under the FFCRA to care for someone who does not expect or depend on your care during his or her quarantine or self-quarantine due to COVID-19.When am I eligible for paid sick leave to care for someone who is self-quarantining?
You may take paid sick leave to care for a self-quarantining individual if a health care provider has advised that individual to stay home or otherwise quarantine him or herself because he or she may have COVID-19 or is particularly vulnerable to COVID-19 and provision of care to that individual prevents you from working (or teleworking).
May I take paid sick leave or expanded family and medical leave to care for my child who is 18 years old or older?
It depends. Under the FFCRA, paid sick leave and expanded family and medical leave include leave to care for one (or more) of your children when his or her school or place of care is closed or child care provider is unavailable, due to COVID-19 related reasons. This leave may only be taken to care for your non-disabled child if he or she is under the age of 18. If your child is 18 years of age or older with a disability and cannot care for him or herself due to that disability, you may take paid sick leave and expanded family and medical leave to care for him or her if his or her school or place of care is closed or his or her child care provider is unavailable, due to COVID-19 related reasons, and you are unable to work or telework as a result.
In addition, paid sick leave is available to care for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19. If you have a need to care for your child age 18 or older who needs care for these circumstances, you may take paid sick leave if you are unable to work or telework as a result of providing care. But in no event may your total paid sick leave exceed two weeks.What is a “place of care”?
A “place of care” is a physical location in which care is provided for your child. The physical location does not have to be solely dedicated to such care. Examples include day care facilities, preschools, before and after school care programs, schools, homes, summer camps, summer enrichment programs, and respite care programs.
Who is my “child care provider”?
A “child care provider” is someone who cares for your child. This includes individuals paid to provide child care, like nannies, au pairs, and babysitters. It also includes individuals who provide child care at no cost and without a license on a regular basis, for example, grandparents, aunts, uncles, or neighbors.
Can more than one guardian take paid sick leave or expanded family and medical leave simultaneously to care for my child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons?
You may take paid sick leave or expanded family and medical leave to care for your child only when you need to, and actually are, caring for your child if you are unable to work or telework as a result of providing care. Generally, you do not need to take such leave if a co-parent, co-guardian, or your usual child care provider is available to provide the care your child needs.
My child’s school or place of care has moved to online instruction or to another model in which children are expected or required to complete assignments at home. Is it “closed”?
Yes. If the physical location where your child received instruction or care is now closed, the school or place of care is “closed” for purposes of paid sick leave and expanded family and medical leave. This is true even if some or all instruction is being provided online or whether, through another format such as “distance learning,” your child is still expected or required to complete assignments.
May I take paid sick leave to care for a child other than my child?
It depends. The paid sick leave that is provided under the FFCRA to care for one (or more) of your children when their place of care is closed (or child care provider is unavailable), due to COVID-19 related reasons, may only be taken to care for your own “son or daughter.” For an explanation of the definition of “son or daughter” for purposes of the FFCRA.
However, paid sick leave is also available to care for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19. If you have a need to care for a child who meets these criteria, you may take paid sick leave if you are unable to work or telework as a result of providing care. But in no event may your total paid sick leave exceed two weeksMay I take expanded family and medical leave to care for a child other than my child?
No. Expanded family and medical leave is only available to care for your own “son or daughter.” For an explanation of the definition of “son or daughter” for purposes of the FFCRA.
When am I eligible for paid sick leave based on a “substantially similar condition” specified by the U.S. Department of Health and Human Services?
The U.S. Department of Health and Human Services (HHS) has not yet identified any “substantially similar condition” that would allow an employee to take paid sick leave. If HHS does identify any such condition, the Department of Labor will issue guidance explaining when you may take paid sick leave on the basis of a “substantially similar condition.”
If I am a staffing company, how do I count internal workers and staffed workers under the FFCRA?
Regardless of how you classify or count internal or staffed workers, you must provide paid sick leave and expanded family and medical leave to workers who are your “employees” for purposes of the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act. You may be a joint employer, and if so, you must include in your count all employees on your payroll, even if you provide or refer such employees to other employers.
As an employer, how much do I pay a seasonal employee with an irregular schedule for each day of paid sick leave or expanded family and medical leave that he or she takes?
You may calculate the daily amount you must pay a seasonal employee with an irregular schedule by taking the following steps.
First, you should calculate how many hours of leave your seasonal employee is entitled to take each day. Because your employee works an irregular schedule, this is equal to the average number of hours each day that he or she was scheduled to work over the period of employment, up to the last six months.
Second, you should calculate the seasonal employee’s regular hourly rate of pay. This is calculated by adding up all wages paid over the period of employment, up to the last six months, and then dividing that sum by the number of hours actually worked over the same period.
Third, you multiply the daily hours of leave (first calculation) by your employee’s regular hourly rate of pay (second calculation) to compute the base daily paid leave amount.
Fourth, you should determine the actual daily paid leave amount, which depends on the type of paid leave taken and the reason for such paid leave.
You must pay your seasonal employee the full base daily paid leave amount, up to $511 per day and $5,110 in total, if the employee is taking paid sick leave for any of the following reasons:
● Your employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
● Your employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
● Your employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
You must pay your seasonal employee 2/3 of the base daily paid leave amount, up to $200 per day and $2,000 in total, if your employee is taking paid sick leave for any of the following reasons:
● Your employee is caring for an individual who either is subject to a quarantine or isolation order related to COVID-19 or who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
● Your employee is caring for his or her child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; or
● Your employee is experiencing any other substantially similar condition, as determined by the Secretary of Health and Human Services.
You must pay your seasonal employee 2/3 of the base daily paid leave amount, up to $200 per day and $10,000 in total, if the employee is taking expanded family and medical leave to care for the employee’s child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19-related reasons. Please note that if your seasonal employees are not scheduled to work, for example, because it is the off-season, then you do not have to provide paid sick leave or expanded family and medical leave.May I take paid sick leave or expanded family and medical leave if I am receiving workers’ compensation or temporary disability benefits through an employer or state-provided plan?
In general, no, unless you were able to return to light duty before taking leave. If you receive workers’ compensation or temporary disability benefits because you are unable to work, you may not take paid sick leave or expanded family and medical leave. However, if you were able to return to light duty and a qualifying reason prevents you from working, you may take paid sick leave or expanded family and medical leave, as the situation warrants.
May I take paid sick leave or expanded family and medical leave under the FFCRA if I am on an employer-approved leave of absence?
It depends on whether your leave of absence is voluntary or mandatory. If your leave of absence is voluntary, you may end your leave of absence and begin taking paid sick leave or expanded family and medical leave under the FFCRA if a qualifying reason prevents you from being able to work (or telework). However, you may not take paid sick leave or expanded family and medical leave under the FFCRA if your leave of absence is mandatory. This is because it is the mandatory leave of absence—and not a qualifying reason for leave—that prevents you from being able to work (or telework).
In the instance of a mandatory leave of absence, you may be eligible for unemployment insurance benefits. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.Will DOL begin enforcing FFCRA immediately?
The Department will not bring enforcement actions against any public or private employer for violations of the Act occurring within 30 days of the enactment of the FFCRA, i.e., March 18 through April 17, 2020, provided that the employer has made reasonable, good faith efforts to comply with the Act. If the employer violates the Act willfully, fails to provide a written commitment to future compliance with the Act, or fails to remedy a violation upon notification by the Department, the Department reserves its right to exercise its enforcement authority during this period. After April 17, 2020, this limited stay of enforcement will be lifted, and the Department will fully enforce violations of the Act, as appropriate and consistent with the law.
Does the non-enforcement position mean businesses do not need to comply with the FFCRA from the effective date of April 1, 2020 through April 17, 2020?
No, the FFCRA’s paid leave provisions are effective April 1, 2020. Private sector and public employers must comply with the provisions on the effective date even though the Department has a limited stay of enforcement until April 17, 2020. Once the Department fully enforces the Act, it will retroactively enforce violations back until the effective date of April 1, 2020, if employers have not remedied the violations.
Employee Retention Tax Credit (ERTC) FAQs
What is the Employee Retention Credit?
The Employee Retention Credit is a fully refundable tax credit for employers equal to 50 percent of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees. This Employee Retention Credit applies to qualified wages paid after March 12, 2020, and before January 1, 2021. The maximum amount of qualified wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for an Eligible Employer for qualified wages paid to any employee is $5,000.
Who is an Eligible Employer?
Eligible Employers for the purposes of the Employee Retention Credit are those that carry on a trade or business during calendar year 2020, including a tax-exempt organization, that either:
Fully or partially suspends operation during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; orExperiences a significant decline in gross receipts during the calendar quarter.
Note: Governmental employers are not Eligible Employers for the Employee Retention Credit. Also, Self-employed individuals are not eligible for this credit for their self-employment services or earnings.When is the operation of a trade or business suspended for the purposes of the Employee Retention Credit?
The operation of a trade or business may be partially suspended if an appropriate governmental authority imposes restrictions upon the business operations by limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19 such that the operation can still continue to operate but not at its normal capacity.
Example: A state governor issues an executive order closing all restaurants, bars, and similar establishments in the state in order to reduce the spread of COVID-19. However, the executive order allows those establishments to continue food or beverage sales to the public on a carry-out, drive-through, or delivery basis. This results in a partial suspension of the operations of the trade or business due to an order of an appropriate governmental authority with respect to any restaurants, bars, and similar establishments in the state that provided full sit-down service, a dining room, or other on-site eating facilities for customers prior to the executive order.What is a "significant decline in gross receipts"?
A significant decline in gross receipts begins with the first quarter in which an employer’s gross receipts for a calendar quarter in 2020 are less than 50 percent of its gross receipts for the same calendar quarter in 2019. The significant decline in gross receipts ends with the first calendar quarter that follows the first calendar quarter for which the employer’s 2020 gross receipts for the quarter are greater than 80 percent of its gross receipts for the same calendar quarter during 2019.
Example: An employer’s gross receipts were $100,000, $190,000, and $230,000 in the first, second, and third calendar quarters of 2020, respectively. Its gross receipts were $210,000, $230,000, and $250,000 in the first, second, and third calendar quarters of 2019, respectively. Thus, the employer’s 2020 first, second, and third quarter gross receipts were approximately 48%, 83%, and 92% of its 2019 first, second, and third quarter gross receipts, respectively. Accordingly, the employer had a significant decline in gross receipts commencing on the first day of the first calendar quarter of 2020 (the calendar quarter in which gross receipts were less than 50% of the same quarter in 2019) and ending on the first day of the third calendar quarter of 2020 (the quarter following the quarter for which the gross receipts were more than 80% of the same quarter in 2019). Thus the employer is entitled to a retention credit with respect to the first and second calendar quarters.How is the maximum amount of the Employee Retention Credit Available to Eligible Employers determined?
The credit equals 50 percent of the qualified wages (including qualified health plan expenses) that an Eligible Employer pays in a calendar quarter. The maximum amount of qualified wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for qualified wages paid to any employee is $5,000.
Example 1: Eligible Employer pays $10,000 in qualified wages to Employee A in Q2 2020. The Employee Retention Credit available to the Eligible Employer for the qualified wages paid to Employee A is $5,000.
Example 2: Eligible Employer pays Employee B $8,000 in qualified wages in Q2 2020 and $8,000 in qualified wages in Q3 2020. The credit available to the Eligible Employer for the qualified wages paid to Employee B is equal to $4,000 in Q2 and $1,000 in Q3 due to the overall limit of $10,000 on qualified wages per employee for all calendar quarters.What are "qualified wages"?
Qualified wages are wages (as defined in section 3121(a) of the Internal Revenue Code (the “Code”)) and compensation (as defined in section 3231(e) of the Code) paid by an Eligible Employer to employees after March 12, 2020, and before January 1, 2021. Qualified wages include the Eligible Employer’s qualified health plan expenses that are properly allocable to the wages.
The definition of qualified wages depends, in part, on the average number of full-time employees (as defined in section 4980H of the Code) employed by the Eligible Employer during 2019.
If the Eligible Employer averaged more than 100 full-time employees in 2019, qualified wages are the wages paid to an employee for time that the employee is not providing services due to either (1) a full or partial suspension of operations by order of a governmental authority due to COVID-19, or (2) a significant decline in gross receipts. For these employers, qualified wages taken into account for an employee may not exceed what the employee would have been paid for working an equivalent duration during the 30 days immediately preceding the period of economic hardship.
If the Eligible Employer averaged 100 or fewer full-time employees in 2019, qualified wages are the wages paid to any employee during any period of economic hardship described in (1) and (2) above.Is an Employer required to pay qualified wages to its employees under the CARES Act?
No. The CARES Act does not require employers to pay qualified wages. In addition, Eligible Employers may elect to not claim the credit for the Employee Retention Credit. (The FFCRA does require certain employers to pay sick or family leave wages to employees who are unable to work or telework due to a COVID-19 circumstance. These employers may be entitled to a refundable tax credit for those wages paid, although the employers may elect not to claim the credit.)
Can Eligible Employers claim the Employee Retention Credit for qualified wages paid in March 2020?
Eligible Employers may claim the Employee Retention Credit for qualified wages that they pay after March 12, 2020, and before January 1, 2021. Therefore, an Eligible Employer may be able to claim the credit for qualified wages paid as early as March 13, 2020
May an Eligible Employer receive the Employee Retention Credit for periods after December 31, 2020?
No. The Employee Retention Credit is only available with respect to wages paid after March 12, 2020, and before January 1, 2021.
Against what employment taxes does the Employee Retention Credit apply?
The credit is allowed against the employer portion of social security taxes under section 3111(a) of the Internal Revenue Code (the “Code”), and the portion of taxes imposed on railroad employers under section 3221(a) of the Railroad Retirement Tax Act (RRTA) that corresponds to the social security taxes under section 3111(a) of the Code.
What makes the credit "fully refundable"?
The credits are fully refundable because the Eligible Employer may get a refund if the amount of the credit is more than certain federal employment taxes the Eligible Employer owes. That is, if for any calendar quarter the amount of the credit the Eligible Employer is entitled to exceeds the employer portion of the social security tax on all wages (or on all compensation for employers subject to RRTA) paid to all employees, then the excess is treated as an overpayment and refunded to the employer under sections 6402(a) and 6413(a) of the Code. Consistent with its treatment as an overpayment, the excess will be applied to offset any remaining tax liability on the employment tax return and the amount of any remaining excess will be reflected as an overpayment on the return. Like other overpayments of federal taxes, the overpayment will be subject to offset under section 6402(a) of the Code prior to being refunded to the employer.
Example: Eligible Employer pays $10,000 in qualified wages to Employee A in Q2 2020. The Employee Retention Credit available to the Eligible Employer for the qualified wages paid to Employee A is $5,000. This amount may be applied against the employer share of social security taxes that the Eligible Employer is liable for with respect to all employee wages paid in Q2 2020. Any excess over the employer’s share of social security taxes is treated as an overpayment and refunded to the Eligible Employer after offsetting other tax liabilities on the employment tax return and subject to any other offsets under section 6402(a) of the Code.How does an Eligible Employer claim the refundable tax credit for qualified wages?
Eligible Employers will report their total qualified wages and the related credits for each calendar quarter on their federal employment tax returns, usually Form 941, Employer's Quarterly Federal Tax Return. Form 941 is used to report income and social security and Medicare taxes withheld by the employer from employee wages, as well as the employer’s portion of social security and Medicare tax.
In anticipation of receiving the credits, Eligible Employers can fund qualified wages by accessing federal employment taxes, including withheld taxes, that are required to be deposited with the IRS or by requesting an advance of the credit from the IRS.Can an Eligible Employer paying qualified wages fund its payments of qualified wages before receiving the credits reducing its federal employment tax deposits?
Yes. An Eligible Employer may fund the qualified wages by accessing federal employment taxes, including those that the Eligible Employer already withheld, that are set aside for deposit with the IRS, for other wage payments made during the same quarter as the qualified wages.
That is, an Eligible Employer that pays qualified wages to its employees in a calendar quarter before it is required to deposit federal employment taxes with the IRS for that quarter may reduce the amount of federal employment taxes it deposits for that quarter by half of the amount of the qualified wages paid in that calendar quarter. The Eligible Employer must account for the reduction in deposits on the Form 941, Employer's Quarterly Federal Tax Return, for the quarter.
Example: An Eligible Employer paid $10,000 in qualified wages (including qualified health plan expenses) and is therefore entitled to a $5,000 credit, and is otherwise required to deposit $8,000 in federal employment taxes, including taxes withheld from all of its employees, for wage payments made during the same quarter as the $10,000 in qualified wages. The Eligible Employer has no paid sick or family leave credits under the FFCRA. The Eligible Employer may keep up to $5,000 of the $8,000 of taxes the Eligible Employer was going to deposit, and it will not owe a penalty for keeping the $5,000. The Eligible Employer is required to deposit only the remaining $3,000 on its required deposit date. The Eligible Employer will later account for the $5,000 it retained when it files Form 941, Employer's Quarterly Federal Tax Return, for the quarter.May an Eligible Employer reduce its federal employment tax deposit by the qualified wages that it has paid without incurring a failure to deposit penalty?
Yes. An Eligible Employer will not be subject to a penalty under section 6656 of the Code for failing to deposit federal employment taxes relating to qualified wages in a calendar quarter if:
● the Eligible Employer paid qualified wages to its employees in the calendar quarter before the required deposit,● the amount of federal employment taxes that the Eligible Employer does not timely deposit, reduced by any amount of federal employment taxes not deposited in anticipation of the paid sick or family leave credits claimed under the FFCRA, is less than or equal to the amount of the Eligible Employer’s anticipated Employee Retention Credit for the qualified wages for the calendar quarter as of the time of the required deposit, and● the Eligible Employer did not seek payment of an advance credit by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19, with respect to any portion of the anticipated credits it relied upon to reduce its deposits.
For more information, about the relief from the penalty for failure to deposit federal employment taxes on account of qualified wages, see Notice 2020-22 (PDF).How can an Eligible Employer that is paying qualified wages fund the payment of these wages if the Eligible Employer does not have sufficient federal employment taxes set aside for deposit to cover those payments? Can the employer get an advance of the credits?
Yes. Because quarterly returns are not filed until after qualified wages are paid, some Eligible Employers may not have sufficient federal employment taxes set aside for deposit to the IRS to fund their qualified wages. Accordingly, the IRS has established a procedure for obtaining an advance of the refundable credits.
The Eligible Employer should first reduce its remaining federal employment tax deposits for wages paid in the same calendar quarter by the maximum allowable amount. If the anticipated credit for the qualified wages exceeds the remaining federal employment tax deposits for that quarter, the Eligible Employer can file a Form 7200, Advance Payment of Employer Credits Due to COVID-19, to claim an advance refund for the full amount of the anticipated credit for which it did not have sufficient federal employment tax deposits.
If an Eligible Employer fully reduces its required deposits of federal employment taxes otherwise due on wages paid in the same calendar quarter to its employees in anticipation of receiving the credits, and it has not paid qualified wages in excess of this amount, it should not file the Form 7200. If it files the Form 7200, it will need to reconcile this advance credit and its deposits with the qualified wages on Form 941 (or other applicable federal employment tax return such as Form 944 or Form CT-1), and it may have an underpayment of federal employment taxes for the quarter.
Example: An Eligible Employer paid $20,000 in qualified wages, and is therefore entitled to a credit of $10,000, and is otherwise required to deposit $8,000 in federal employment taxes, including taxes withheld from all of its employees, on wage payments made during the same calendar quarter. The Eligible Employer has no paid sick or family leave credits under the FFCRA. The Eligible Employer can keep the entire $8,000 of taxes that the Eligible Employer was otherwise required to deposit without penalties as a portion of the credits it is otherwise entitled to claim on the Form 941. The Eligible Employer may file a request for an advance credit for the remaining $2,000 by completing Form 7200.May an Eligible Employer receive both the tax credits for the qualified leave wages under the FFCRA and the Employee Retention Credit under the CARES Act?
Yes, but not for the same wages. The amount of qualified wages for which an Eligible Employer may claim the Employee Retention Credit does not include the amount of qualified sick and family leave wages for which the employer received tax credits under the FFCRA.
May an Eligible Employer receive both the Employee Retention Credit and a Small Business Interruption Loan under the Paycheck Protection Program?
No. An Eligible Employer may not receive the Employee Retention Credit if the Eligible Employer receives a Small Business Interruption Loan under the Paycheck Protection Program that is authorized under the CARES Act (“Paycheck Protection Loan”). An Eligible Employer that receives a paycheck protection loan should not claim Employee Retention Credits.
Payroll Tax Deferral FAQs
Who qualifies for a payroll tax deferral?
Unlike the employee retention tax credit (ERTC) (Section 2301 of the CARES Act), the payroll tax deferral is available to all employers regardless of size. Section 2302 of the CARES Act allows employers to defer payment of their share of social security taxes (or portions of SECA or Tier 1 tax attributable to the social security benefit) owed through the end of calendar year 2020.
Due to the Paycheck Protection Program Flexibility Act, employers who have indebtedness forgiven under the Paycheck Protection Program (“PPP”) or Section 1109 of the CARES Act ARE eligible for the payroll tax deferral.When will the deferral be available to employers?
Immediately. The deferral period began as soon as the CARES ACT was signed into law on March 27, 2020 and will end on December 31, 2020. The deferral applies to deposits and payments of the employer's share of Social Security tax that would otherwise be required to be made during the period beginning on March 27, 2020, and ending December 31, 2020. (Section 2302 of the CARES Act calls this period the "payroll tax deferral period.")
The Form 941, Employer's QUARTERLY Federal Tax Return, will be revised for the second calendar quarter of 2020 (April - June, 2020). Information will be provided in the near future to instruct employers how to reflect the deferred deposits and payments otherwise due on or after March 27, 2020 for the first quarter of 2020 (January – March 2020). In no case will Employers be required to make a special election to be able to defer deposits and payments of these employment taxes.How will deferral be available to employers?
Employers should maintain concise records of their tax deferrals and be prepared to pay the sum of their deferred payroll taxes to Treasury when it comes due. Employers should alert company comptrollers, third party payroll providers, and accountants of the deferral.
What deposits and payments of employment taxes are employers entitled to defer if they take the PPP loan?
Section 2302 of the CARES Act provides that employers may defer the deposit and payment of the employer's portion of Social Security taxes and certain railroad retirement taxes. These are the taxes are referred to as the "employer's share of Social Security tax" (sections 3111(a) and 3221(a) of the Internal Revenue Code).
Employers that received a Paycheck Protection Program loan may also defer the deposit and payment of the employer's share of Social Security tax that is otherwise due after the employer receives a decision from the lender that the loan was forgiven.Can an employer that has applied for and received a PPP loan that is not yet forgiven defer deposit and payment of the employer's share of Social Security tax without incurring failure to deposit and failure to pay penalties?
Yes. Employers who have received a PPP loan may defer deposit and payment of the employer's share of Social Security tax that otherwise would be required to be made the same as businesses that did not take a PPP loan.
What are the "applicable dates" by which deferred deposits and payments of the employer's share of Social Security tax must be deposited and paid to avoid a failure to deposit or pay penalty?
The deferred deposits or payments of the employer's share of Social Security tax must be deposited and paid by the following dates (referred to as the "applicable dates") to be treated as timely depositied and paid:
On December 31, 2021, 50% of the deferred amount; andOn December 31, 2022, the remaining 50% amount.Is this ability to defer deposits of the employer's share of Social Security tax in addition to the relief provided in Notice 2020-22 for deposit of employment taxes in anticipation of the Families First Coronavirus Relief Act (FFCRA) paid leave credits and the CARES Act employee retention credit?
Yes. Notice 2020-22 provides relief from the failure to deposit penalty under section 6656 of the Code for not making deposits of employment taxes, including taxes withheld from employees, in anticipation of the FFCRA paid leave credits and the CARES Act employee retention credit.
The ability to defer deposit and payment of the employer's share of Social Security tax under section 2302 of the CARES Act applies to all employers, not just employers entitled to paid leave credits and employee retention credits.Can an employer that is eligible to claim refundable paid leave tax credits or the employee retention credit defer its deposit and payment of the employer’s share of Social Security tax prior to determining the amount of employment tax deposits that it may retain in anticipation of the FFCRA leave credits, the amount of any advance payments of the FFCRA credits, or the amount of any refunds with respect to the FFCRA credits?
Yes. An employer is entitled to defer deposit and payment of the employer's share of Social Security tax prior to determining whether the employer is entitled to the paid leave credits under sections 7001 or 7003 of FFCRA or the employee retention credit under section 2301 of the CARES Act, and prior to determining the amount of employment tax deposits that it may retain in anticipation of these credits, the amount of any advance payments of these credits, or the amount of any refunds with respect to these credits.
Are self-employed individuals eligible to defer payment of self-employment tax on net earnings from self-employment income?
Yes. Self-employed individuals may defer the payment of 50 percent of the Social Security tax on net earnings from self-employment income imposed under section 1401(a) of the Code for the period beginning on March 27, 2020, and ending December 31, 2020. (Section 2302 of the CARES Act calls this period the "payroll tax deferral period.")
Is there a penalty for failure to make estimated tax payments for 50 percent of Social Security tax on net earnings from self-employment income during the payroll tax deferral period?
No. For any taxable year that includes any part of the payroll tax deferral period, 50 percent of the Social Security tax imposed on net earnings from self-employment income during that payroll tax deferral period is not used to calculate the installments of estimated tax due under section 6654 of the Code.
What are the applicable dates when deferred payment amounts of 50 percent of the Social Security tax imposed on self-employment income must be paid?
The deferred payment amounts are due on the "applicable dates" described above, which are:
1. On December 31, 2021, 50 percent of the deferred amount; and
2. On December 31, 2022, the remaining amount.What if an employer remits payroll taxes via an agent under Section 3504 of the Internal Revenue Code or a certified professional employer organization (PPO)?
An employer will be solely liable for the timely payment of the employment taxes before the applicable date, where it directs a third party to defer the applicable tax payments on its behalf. The employer will be on the hook if an agent or certified professional employer organization fails to make payments to Treasury before the applicable date.