How the Families First Coronavirus Response Act Impacts Nonprofits and Their Employees
Whether your nonprofit is overwhelmed with demand for services or you’ve closed doors temporarily, it’s important to keep up with legislation responding to the coronavirus (COVID-19) crisis. The Families First Coronavirus Response Act provides American workers affected by the pandemic with extended sick and family leave benefits.
The new law applies to your nonprofit if you have fewer than 500 employees, although you may be exempt if you have fewer than 50.
Key things to know
There are three important components of the new law:
Paid sick leave
If a staffer is ill, is instructed to be isolated by a physician or government authority or is caring for a sick family member or child whose school has closed, your organization must provide two weeks of paid leave. Pay part-time workers based on their average hours over a two-week period. Benefits are capped at $511 per day and $5,110 total for employees on leave because of their own health issue, or $200 per day and $2,000 total to care for others.
You must provide 12 weeks of job-protected leave for employees who need to take care of a child due to the closure of a school or day care center. This provision updates existing rules under the Family and Medical Leave Act. Employers are now required to pay workers two-thirds of their regular wages, not to exceed $200 per day and $10,000 total. You aren’t required to pay employees during the first 10 days off; however, they may choose to use accrued time off benefits at this time.
Employer payroll tax credits
To help employers pay for time off, the law enables tax credits. You may claim a 100% refundable payroll tax credit on wages associated with paid sick and medical leave and other expenditures associated with health benefit contributions. Additional wages paid to staffers due to the law’s leave requirement aren’t subject to the employer portion of the payroll tax.
Congress has also provided $1 billion in emergency grants to states to process and pay unemployment insurance benefits. If you need to lay off staffers during the extended Coronavirus crisis, this provision can help them manage the financial burden.
If you have questions about how the Families First Act applies to your nonprofit, please contact us to discuss your specific situation.
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