Recent developments related to: (i) SBA loan programs; (ii) FFCRA and (iii) executive orders related to essential businesses
The U.S. Small Business Administration has begun offering low-interest rate loans for working capital to small businesses across the country. SBA loans will likely be a major source for emergency liquidity to many businesses impacted by COVID-19. Local programs have also been announced or are in development. For example, the City of Chicago is establishing a $100 million fund to provide liquidity to small businesses. To be eligible for funding, businesses need to prove more than a 25% revenue decrease in response to COVID-19, employ fewer than 50 employees, and have gross revenues of less than $3 million in 2019. Applicant businesses must also have no pre-existing tax liens or legal judgments and must be able to provide a business address in the City of Chicago or a Chicago business license, tax returns and bank statements, and other information related to the business. The Fund will begin to accept applications here on March 31, 2020. Our team can assist you with if you would like to apply for relief from this fund, any other local fund or an SBA loan.
Families First Coronavirus Response Act
On March 18, the federal government passed this law commonly referred to as FFCRA, to expand employee protections in response to the COVID-19 outbreak (and such protections are expected to remain in place until at least December 31, 2020). All employers of fewer than 500 people must follow FFCRA. While the federal law exempts employers of over 500 people, individual states such as New York and Colorado are also passing legislation expanding FFCRA protections to all employers, regardless of their size (Illinois has not yet passed legislation expanding FFCRA provisions to all employers). If you are unsure as to your obligations under FFCRA, please contact us for further assistance.
Emergency Family and Medical Leave Expansion Act
EFMLEA requires employers with fewer than 500 employees to provide employees with up to 12 weeks of leave for a “qualifying need related to a public health emergency.” This is meant to apply specifically to COVID-19. Note that unlike FMLA, there is no 50-employee requirement. Furthermore, any employee who has worked for the employer for a minimum of 30 days, regardless of the number of hours s/he has worked, is eligible for EFMLEA relief.
EFMLEA requires an employer to provide up to 12 weeks of “Public Health Emergency Leave.” The first 10 days of leave may be unpaid. Employees may, but shall not be required by employers, to use existing sick or vacation time to cover these days and may also be able to utilize new emergency paid sick leave benefits during this period (see below). For any required leave beyond those 10 days, an employer is required to pay the employee 2/3rds of the employee’s regular rate of pay for the number of hours the employee would normally be scheduled to work up to $200 per day or $10,000 total.
An employee is eligible under EFMLEA under the following circumstances:
1. If a public official or health care provider recommends or orders leave because the physical presence of an employee on the job would jeopardize the health of others because of the employee’s exposure to, or exhibition of the systems, of COVID-19 -- the employee must be unable to perform the functions of his or her position and comply with such a recommendation or order to qualify.
2. To care for a family member if a public official or a health care provider makes a determination that the presence of the family member in the community would jeopardize the health of others because of the family member’s exposure to, or exhibition of the systems of, COVID-19.
3. To care for a minor child if the school has been closed or childcare provider is unavailable due to a governmental declaration.
While FMLA has generally required that employers restore employees who take qualified leave to their prior positions, EFMLA makes some exceptions to this requirement.
Emergency Paid Sick Leave Act
EPSLA requires employers with fewer than 500 employees to provide paid sick leave to employees who are unable to work or telework because the employee:
1. is subject to a quarantine;
2. has been advised by a health care provider to self-quarantine;
3. is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
4. is caring for an individual who is subject to a quarantine (or has been advised by a health care provider to self-quarantine);
5. is caring for a child because the school or place of care of the employee’s child has been closed or is unavailable due to COVID-19 precautions; or
6. is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Full time employees are entitled to two weeks (80 hours) of paid sick leave. Part-time employees are entitled to a number of hours equal to the number of hours that they work, on average, over a two-week period. Employees taking paid sick leave under the EPSLA must be paid the greater of their regular rate of pay or the applicable minimum wage rate. An exception exists if the employee is taking EPSLA paid sick leave because of items 4, 5, or 6, above. If so, the employee’s required paid sick leave is two-thirds of the greater of the employee’s regular rate of pay or the applicable minimum wage rate. The EPSLA caps paid sick leave at $511 per day and $5,110 in total for paid sick leave taken on the basis of items 1, 2, or 3, above. If paid sick leave is taken on the basis of items 4, 5, or 6, it is capped at $200 per day and $2,000 in total.
The EFMLEA and EPSLA each provide for a series of refundable tax credits for employers intended to offset the burden of paying qualified paid sick leave that has been placed on employers as a result of the FFCRA.
If compliance with FFCRA would jeopardize your business’s ability to continue operation, case-by-case exemptions may be available. Please contact us for assistance.
COVID-19 Executive Order No. 8 - Illinois Essential Businesses
On March 20, Governor Pritzker of Illinois issued an executive order stating that only certain “essential businesses” in Illinois are permitted to remain open through at least April 7. The following businesses are “essential.”
NOT LEGAL ADVICE
Please be advised that we have provided the information contained here as a courtesy and while we have sought to be as current and accurate as possible we do not represent the accuracy of anything contained here. Nothing contained here should be considered legal advice.