The Side Dish

Finance to Table Education for Operating Your Restaurant

How does the Families First Coronavirus Emergency Response Act affect your restaurant business?

By now you’ve heard the Families First Coronavirus Emergency Response Act mandates sick time pay, and you’re probably wondering how that affects restaurant owners. You’ve been dealt multiple blows in the coronavirus pandemic. First, your business was affected by social distancing. Then state and local governments started asking (and in some places mandating) you stop dine-in service and transition to carry out, delivery and drive thru only. Now, you’re being told you have to pay sick time.

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We feel your pain, and we want to help alleviate it. We’ve combed through the new law and have pulled out some points of clarity we hope will help you plan your next move.

The law guarantees sick leave for those who have COVID-19, are caring for someone that has COVID-19, caring for a son or daughter whose school is closed due to COVID-19 or are quarantined because of Federal, State or local order.  However, this law only applies to employers with less than 500 employees and exempts employers with less than 50 employees if providing the leave “would jeopardize the viability of the business”.  Employers cannot require employees to use other paid leave provided by the employer before using paid sick leave under the Families First Coronavirus Response Act.  Employers with existing sick leave policies must provide paid sick leave under the Families First Coronavirus Response Act in addition to the existing leave available.

If your restaurant is one that falls into the 51-499 employee category, don’t panic. You won’t have to dip into your operational fund to cover the cost of sick time. You’ll receive a tax credit for the full sick time amount. If you don’t have enough in your pre-paid tax account, the IRS will extend a credit against your next payment.

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The Families First Act made temporary changes to the Family and Medical Leave Act (FMLA). FMLA now requires all employers with less than 500 but more than 50 employees (employers with less than 50 employees are exempt if providing the leave “would jeopardize the viability of the business”) to extend up to 12 weeks of job protected leave if they can’t work due to a need for leave to care for a child of an employee if the child’s school or place of care has been closed or if the child care provider is unavailable, due to the COVID-19. The first ten days can be unpaid if the employee does not have sick time or PTO (but the paid sick leave described above would be available if not already taken), but the rest of the leave must be paid at no less than two-thirds the employee’s regular rate of pay but not in excess of $200 per day and $10,000 in the aggregate.

These changes are effective April 2, 2020 through December 31, 2020.

So, the take away here is if you have less than 50 employees and complying would jeopardize the viability of your business or more than 500 employees, this bill doesn’t affect you much. That’s one less thing to worry about so you can focus on how to keep your business running during the shutdown.

Stay tuned for updates on the latest developments regarding the $1.3 trillion dollar bill that is currently being proposed to give cash payments directly to Americans, expand unemployment insurance or some combination of the two.

If you have any questions or concerns, reach out to your Henry+Horne adviser. For more updates and resources during this difficult time, head over to our COVID-19 Updates page.