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Possible Relief for Employees of Small Businesses Impacted by the Novel Coronavirus

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Note: This article was written on Thursday, March 19, 2020, less than 24 hours after President Trump signed the bill into law. It covers what’s happening on Capitol Hill at this time, but does by no means represent what could happen in the future. This is a fluid situation. Information is constantly changing. Because this affects so many of our clients, friends, and family, we here at Tax Credit Group felt like it was something that needed to be addressed.

The coronavirus (a.k.a. COVID-19) is hurting small businesses and families across the United States and now the federal government is stepping in to try and alleviate some of the pain. On Wednesday evening, President Trump signed the Families First Coronavirus Response Act. It’s an act designed to help small businesses and wage workers deal with the impact of the coronavirus.

Here’s what we know now and what it means to you, your family, and your business.

What is the Families First Coronavirus Response Act?

The bill was created in the House of Representatives after extensive meetings between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin. It is designed to provide paid leave for workers who have been affected by the coronavirus, including those who fall ill themselves and those that have to stay at home to care for a child whose school has closed because of the coronavirus.

Small and medium-sized businesses have approximately 15 days to comply with the act.

There are a couple of important components of this bill that you need to know. First, the relief will not last forever. These are short term solutions aimed at making it possible for America’s workforce to survive a three- or four-week shutdown.

Second, it doesn’t cover ALL wage workers in the United States.

Why the Families First Coronavirus Response Act May Not Help Millions of American Workers

The Washington Post points out that one large group of the American workforce is not mentioned in this bill, employees who work for major corporations with 500 or more employees. Lawmakers are relying on major corporations to “do the right thing” and offer sick leave and paid family leave to their employees during this crisis, but there’s no federal mandate behind it.

Corporations like Walmart, Chipotle, and Starbucks are offering varied leave programs for employees. Because there are no federal standards, these policies are not the same for everyone. While one corporation may offer two weeks of sick pay, another may only offer one week.

The result, while some hourly employees are taken care of, others are left trying to figure out how to earn enough money to care for their families.

Why the Families First Coronavirus Response Act could hurt small businesses

While the Families First Coronavirus Response Act takes great efforts to help the employees of small and midsized companies, it causes problems for those midsized and small businesses. According to The Washington Post, these companies will be required to offer two weeks of paid sick leave and up to 12 weeks of paid family and medical leave for employees affected by the coronavirus who have worked for the company for at least a month.

The businesses will get the money back eventually, but they’ll have to foot the bill until then.

The idea is that the businesses will pay their employees and then receive the money back in the form of a tax credit. So, if a business pays out $10,000 in employee sick and family leave during this time, it will see a dollar for dollar match the next time it files taxes. That means it could be as much as a year if not more before some of these businesses recoup all of their money.

Small Window of Relief for Small Businesses

The bill does allow for some small businesses to apply to be exempt from this requirement, but those businesses must prove that paying would “jeopardize the viability of the business”.

Since this rule has not been tested, we don’t know how lenient or strict federal officials will be with exemptions.

Other Families First Coronavirus Response Act Highlights

According to Forbes, there is more help within the bill for America’s most vulnerable communities.

  • There are specific funds for Women Infants and Children (WIC) and The Emergency Food Assistance Program (TEFAP). The bill also allows for state plans to provide food to families with children that would have received free or reduced-price meals if school was in session.
  • It also provides about 25 million more home-delivered and pre-packaged meals to low-income seniors through the Senior Nutrition Program.
  • It will reimburse people without health insurance for COVID-19 testing and services.
  • The Department of Veterans Affairs will fund COVID-19 testing for veterans.

Small Business Help in Illinois

States are also doing their part to try and alleviate the pain for small businesses. On Tuesday, Illinois Governor J.B. Pritzker announced that he was filing for a federal loan program to help small businesses in Illinois.

According to WGEM, the Governor’s Office has also taken extra steps to try and alleviate the pain for small businesses and wage workers. Among the moves within the office:

  • An executive order to waive the 7-day waiting period that residents normally have to wait to receive unemployment insurance. The office is also working with the federal government to try and extend benefits beyond 26 weeks if the crisis continues.
  • A request to the Illinois Commerce Commission to immediately issue a moratorium on utility shutoffs across the state including energy, telecommunications, and water. As well as a change in the payment process so people are not saddled with debt during this tough time.
  • An effort to expand the services of state food banks. The state has already received a waiver from the federal government to continue handing out meals to children who qualify for free and reduced lunches.
  • A federal waiver has been filed to expand Medicaid coverage.

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