President Trump has signed into law a multibillion-dollar emergency aid package aimed at helping employees impacted by the coronavirus. The new law provides certain eligible employees with potential coronavirus-related emergency paid sick leave, emergency family and medical leave, and expanded unemployment insurance. The Families First Coronavirus Response Act also includes tax credits for employers to offset the costs of providing such leaves.
NADA hosts webinar on complying with employment laws during a pandemic
The top ten employment-related legal issues, including the new law, were covered in NADA’s webinar on key pandemic-related legal issues and mandates for automobile dealerships. More than 3,000 participants took part in the Running a Dealership During a Pandemic: Legal Issues and Federal Mandates on Thursday afternoon. An archive of the webinar is available here.
“Dealerships should convey to employees, customers and suppliers that they are monitoring the virus outbreak and will take proactive steps as necessary to protect everyone’s health and the business,” said legal expert Rick Warren, a labor attorney with FordHarrison LLP.
Warren walked attendees through the various federal employment laws that impact dealerships who are managing staffing during a pandemic, including the Americans With Disabilities Act (ADA), the Worker Adjustment and Retraining Notification Act (WARN) and the Occupational Safety and Health Act (OSHA), among others.
Dealerships should be aware of the multiple employment laws involved in operating a business in this rapidly changing environment, Warren said. For example, OSHA’s general duty clause requires that dealerships furnish employees with safe and healthy work environment. Since the Center for Disease Control recommends “social distancing” of at least six feet, dealerships should take care to look for ways to configure their workspace to keep employees six feet apart.
Navigating the new temporary mandates for sick pay and family medical leave pays
Warren, who was joined by NADA Executive Vice President Legislative Affairs David Regan and NADA Chief Regulatory Counsel Doug Greenhaus, also gave an overview of the employer requirements in the new federal legislation on mandatory paid and family leave which President Trump signed into law this week. These mandates apply to companies with fewer than 500 employees. This temporary law will expire on December 31, 2020.
The temporary emergency paid sick leave provisions give two weeks of paid sick leave to employees if they are out due to a coronavirus-related issue, including a federal, state or local quarantine or isolation order or if they have the virus. The paid sick leave is in addition to whatever paid sick leave the employer already offers, Warren explained. The amount of the benefit is the lesser of the employee’s regular pay rate, or $511 dollars per day and a total of $5110 per employee. The new law provides dealerships a payroll tax credit equal the lesser of the employee’s regular rate or $511 per day and a total of $5,110. Dealerships can claim this credit by reducing payroll tax deductions. The tax credit also will include the additional cost of maintaining health care for employees who receive this sick leave..
The temporary, expanded family and medical leave provisions gives up to 12 weeks of paid family and medical leave to employees who has been employed at least 30 days if they are unable to work or telework due to the need to care for a child under 18 years of age if that child’s school or daycare is unavailable because of a public health emergency related to COVID-19..
Employees need to provide notice that they will be using FMLA and the first 10 days are unpaid unless employees elect to apply accrued leave, Warren noted. After 10 days, for those employees who qualify, employers must pay the LESSER of two-thirds of regular pay or $200 per day or $10,000 in the aggregate. The dealership can claim a tax credit for the FMLA in the same manner as for the sick pay.
Both provisions are subject to emergency guidance from the Department of Labor and the IRS, which is expected to issue within 15 days after enactment. NADA will file comments asking for clarification on a number of issues and encouraging as much flexibility as possible in implementing these mandates, especially for dealers with fewer than 50 employees who have not previously been subject to the MLA. NADA will send out additional analyses as clarifications become available, as well as an analyses of the implementing regulations upon issuance. Congress intends for the cost of these mandates to be covered by the tax credits, and NADA’s advocacy to the DOL and the IRS will focus on the scope of the new mandates and the ease of claiming the credit so that dealership liquidity and cash flow are not compromised.
Next steps in Congress
NADA recognizes the urgent need for economic assistance and is working closely with Congress and the Administration on the next package of legislative relief to create short-term liquidity for dealerships through expanded loan guarantees and tax provisions that will provide emergency access to cash on hand and working capital.
Earlier this week, NADA, and almost 100 other groups, sent a letter to the President and Congressional leaders highlighting the severe economic burdens on the small business community and calling for needed remedies.
Message from the NADA Chairman
In a special message sent to NADA members on Thursday, NADA Chairman Rhett Ricart outlined the numerous actions that NADA is taking to make sure dealers’ interests are at the forefront of any legislative, regulatory or executive actions.
“Franchised new-car and -truck dealers are essential businesses—for transportation, for the U.S. economy, for millions of American workers, for our first responders, and indeed for the health and well-being of our nation in a time of crisis,” Ricart wrote. “We must, and we will, make sure that everyone is well aware of that reality for as long as we need to.”