It's been a rough start to the year for everyone, not least for small business. It's tough enough to run a successful business in good times, but when something you can't control comes out of left field and won't leave quickly, trouble can pile up quickly. The World Health Organization has declared a pandemic. Federal and state governments have issued orders one atop the other, at least one state (NY) has been declared a disaster area, and there's potential for more to follow.
That's just the broader picture. For those who run smaller businesses, this outbreak poses other concerns. The first is simply trying to catch up with events and changes in the legal, financial, and regulatory structures. Owners of small firms are usually too busy with day-to-day operations to be prepared for massive disruption. They have fewer resources than larger enterprises to ride out long-term disruption. Stay-at-home orders are making a shambles of normal commerce, income is drying up, and investments are, to put it mildly, performing inconsistently.
The impact of all this on employees is becoming critical. Here are some things you can control and address proactively to lead your business through the crisis.
- Communicate clearly and transparently with your employees. The internet is full of conflicting and often erroneous information with the potential to leave your employees anxious or confused. Communicate any new policies quickly and don't be afraid to emphasize established ones. Consider an information hub where employees can find important information.
- Tell sick employees to stay home. Period. This applies, for the moment, to “essential” businesses that are not closed by government order.
- Check your insurance policies. Review cancellation clauses. Interruptions from COVID-19 may allow suppliers to cancel contracts without penalties. Your business interruption insurance may not apply.
New laws are being passed and revised even as this is being written. A few new federal laws:
Families First Coronavirus Response Act
This bill creates several significant paid leave requirements for employers. Even employers not usually covered by the Family and Medical Leave Act (FMLA) may be required to offer FMLA leave and paid sick time for employees who miss work for coronavirus-related reasons. The Bill expands the FMLA to include a new type of approved leave: public health emergency leave related to the COVID-19 pandemic, when employees must take leave to care for minor children because a school or day care facility is closed because of the COVID-19 public health emergency.
Emergency Paid Sick Leave Act
The Emergency Paid Sick Leave Act (EPSLA) requires employers to provide employees with 80 hours of paid sick leave for certain qualifying coronavirus-related reasons. The Act only applies to employers with fewer than 500 employees. Under the EPSLA, full-time employees are entitled to 80 hours of paid sick time for certain coronavirus-related reasons. Part-time employers are entitled to the average number of hours they would work in a normal two-week period.
Tax Credits for Paid Sick and Paid Family and Medical Leave
To help employers cover the costs of the new Paid Family and Medical Leave and Paid Sick Time requirements, the legislation includes certain tax credit provisions equal to 100% of the qualifying wages paid under the two programs, subject to certain caps and limitations. The credit is taken against payroll taxes owed.
If your business has been hurt by the coronavirus (COVID-19), you may be able to get a loan through the Small Business Administration. SBA provides low-interest disaster loans to help small businesses recover from declared disasters.
We will continue to post updates and guidance as more information is released.