Two major federal laws passed in March have changed the landscape for Hawai‘i businesses. Emily Marr, assistant general counsel at Hawaii Employers Council, answers important questions about how the new law affects employers and employees and provides useful links.
Q: The federal Families First Coronavirus Response Act, which was signed into law March 18 and takes effect April 1, changes the rules on paid and unpaid leave. What do employers need to know about these changes?
Generally speaking, the FFCRA requires covered employers to provide employees with up to 80 hours of emergency paid sick leave and up to 12 weeks of emergency family leave (10 weeks of which are paid) for employees impacted by the coronavirus pandemic. Employers may take an immediate payroll tax credit for the cost of providing paid leave required under the FFCRA.
Covered employers also need to post a notice to inform employees of their new rights under the FFCRA. The model poster is available on the U.S. Department of Labor’s website.
Private employers with fewer than 500 employees are covered under the FFCRA, as are certain public employers. The FFCRA does not apply to private employers with 500 or more employees. However, certain public employers with 500 or more employees are covered under the FFCRA.
There are some exemptions available to certain covered employers. For example, covered employers with fewer than 50 employees may claim a hardship exemption if the FFCRA will jeopardize the viability of their business. Additionally, employers of health care providers and emergency responders may exclude such employees. The federal Department of Labor has offered guidance for employers trying to evaluate whether they qualify for exemption and whether their employees can be properly excluded, which is available here.
Because the FFCRA took effect April 1, employers must quickly learn the law and update their policies to ensure compliance. Although the U.S. Department of Labor has announced a 30-day nonenforcement period for employers acting in good faith, the best course is for employers to accurately implement the new paid leave as soon as possible.
Q: What are key ways that the federal Coronavirus Aid, Relief and Economic Security Act, signed into law March 27, helps employers and their employees?
The CARES Act supports employers in distress by giving them resources to keep employees on the payroll.
The CARES Act creates a $350 billion program called the Paycheck Protection Program, which provides small businesses with zero-fee loans of up to $10 million to cover payroll and other operating expenses. In addition, small businesses that maintain payroll through the COVID-19 pandemic can receive up to eight weeks of loan assistance. The portion of the loan used for covered payroll costs, mortgage interest, rent and utility costs may be eligible for forgiveness. The Small Business Administration offers more information here about the program, including instructions on how to apply.
The CARES Act also offers numerous tax incentives for employers. For example, the employee retention tax credit will allow employers to claim a credit if their business was fully or partially suspended as a result of a coronavirus-related government order, or if they experienced a 50% or larger reduction in quarterly receipts because of the pandemic. However, employers should be aware that if they use the Paycheck Protection Program, they cannot also claim the employee retention tax credit.
The CARES Act also offers emergency grants and loans to employers needing additional resources. For instance, small businesses may apply for an economic injury disaster loan and receive an emergency advance of up to $10,000. This advance need not be repaid. Apply here.
The U.S. Senate Committee on Small Business & Entrepreneurship has created “The Small Business Owner’s Guide to the CARES Act.” Download the guide here.
Q: What changes in state rules do employers need to know about?
The CARES Act has significantly expanded unemployment benefits. Before the CARES Act, Hawai‘i’s maximum in unemployment benefits was $648 a week for 26 weeks. The Act provides unemployment recipients with an additional $600 a week through July and extends unemployment benefits to 39 weeks. Apply here.
Hawaii Employers Council
HEC offers tailored consulting support to its members who need to understand or take advantage of the new policies. As a community service, HEC is making many of its coronavirus-related webinars and website resources available to all employers, free of charge. Learn more.