With the outbreak of COVID-19, many people need to take time off without worrying about their financial wellbeing. To address this, the recent Families First Coronavirus Response Act (FFCRA) provides workers with two weeks of paid sick time, and up to 12 weeks of family medical leave.
Thankfully, this benefit extends to both employees and those who are self-employed. These benefits, however, are not permanent. They are only in place until the government declares an end to the current public health emergency. To learn more about how these changes may apply to you, please read below.
I work as a W2 employee for a company with less than 500 employees
The recent legislation requires your employer to provide you two weeks (10 days) of paid sick time. This can be used while you are sick, or if you are caring for someone else. If you need to use this benefit, you should talk to your employer to learn more.
- If you are sick, you will receive 100% of your wages, up to a maximum benefit of $511 per day
- If you are caring for someone else who is sick, you will receive 67% of your wages, up to a maximum benefit of $200 per day.
Note: if you are paid hourly, this is calculated using the average hours you work in a typical two-week period.
Family Medical Leave
If you have a child who’s school or daycare has been closed, your employer must provide you with up to 12 weeks of paid family medical leave to care for that child. The first 10 days are unpaid, but you may use the 10 days of paid sick time to cover this period. After the first 10 days, you will receive 67% of your normal wages, up to a maximum benefit of $200 per day.
I am self-employed or an independent contractor
As a self-employed individual, 1099 earner, or gig economy worker, the idea of paid sick time is probably something new.
The benefit works slightly differently from how a W-2 employee receives paid sick time from an employer. You will receive the benefit in the form of a refundable tax credit. The tax credit offsets the 2020 income tax you owe. If the credit is more than your tax liability, you will receive a refund. This tax credit can be applied when calculating your quarterly estimated tax payments, allowing you to receive an almost immediate benefit.
- If you are sick, you may claim a tax credit equal to 100% of your lost income for a period of 10 days, up to a maximum benefit of $511 per day
- If caring for another person who is sick, you may claim a tax credit equal to 67% of your lost income for a period of 10 days, up to a maximum benefit of $200 per day.
Family Medical Leave
Similar to the sick time benefit, the family leave benefit for self-employed individuals works by providing a refundable tax credit. There is a 10 day unpaid waiting period that applies, but you can use the sick time benefit to cover this. If you have a minor child who’s school or daycare has been closed, you can receive a refundable tax credit equal to 67% of your lost income up to a maximum of $200 per day for 12 weeks.
What if neither of these apply to me?
If you are a Federal employee, you are eligible to take paid sick leave under the Emergency Paid Sick Leave Act. But only some Federal employees are eligible to take expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act.
Unfortunately, employers with more than 500 employees are not required to offer sick time or family medical leave, although the Labor Department estimates that 89 percent of workers at large companies do have access to paid sick time already.
Employers with fewer than 50 employees can also ask permission from the US Secretary of Labor to be exempt.