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Emergency Nanny Income During a Pandemic

19 March 2020

Summary

Over the last several days, attempts to contain and slow the spread of the novel coronavirus have severely disrupted everyday life in the USA. Worries are running the gamut from, “Where can I find toilet paper?” to “I can’t work, I’m not being paid, how can I pay for toilet paper?” Many workers, including nannies, need a source of emergency income to get through this pandemic.

On Friday March 13 the US House of Representatives passed HR 6201 “Families First Coronavirus Response Act” to address a myriad of immediate concerns for the health and well-being of US citizens. On Wednesday March 18 the Senate passed the act, and the President signed it into law.

Three specific provisions address the income disruptions the coronavirus emergency response is causing. One covers workers who need paid sick leave because they or a family member have contracted coronavirus and the other addresses employer reimbursement for mandatory paid family leave paid. A third covers unemployment benefits to those who lose a job (permanently or temporarily) as a result of coronavirus.

It is vital to recognize that employees must be paid legally, or “on the books,” in order to receive benefits from unemployment insurance or for an employer to be reimbursed for mandatory paid leave provided to employees.

Paid Sick Leave: Emergency Paid Leave Act of 2020

This provision creates an emergency paid leave provision for the following reasons specifically related to the COVID-19 outbreak.

An employer is REQUIRED to provide two weeks of paid sick leave at an employee’s regular weekly pay if your nanny or other worker:

Has a diagnosis of COVID-19;
Is quarantined at the instruction of a health care professional.

An employer is required to provide two weeks of paid sick leave at ⅔ of an employee’s regular weekly pay if your nanny or other worker:

Is caring for another person who has or is quarantined for COVID-19;
Is caring for their child or other dependent who is unable to care for themselves related to the closure of a school or other care facility.

While the bill MANDATES paid sick leave, it also provides for employer reimbursement via a refundable tax credit equal to 100 percent of qualified paid sick leave wages paid by an employer, to be applied against Federal employment taxes (FICA).

Employers who violate this act and do not pay for sick time can be prosecuted under Section 6 of the Fair Labor Standards Act of 1938 (29 U.S.C. 206) as a Wage and Hour violation. The employee may file an unpaid wage claim with their state’s Department of Labor to recover the unpaid wages and damages. (ENFORCEMENT Sec. 5105)

Paid Family Leave: Emergency Family and Medical Leave Expansion Act

Employers are also required to provide up to 12 weeks of paid family leave to employees who must care for a child of the employee if the child’s school or place of care has been closed, or the child-care provider is unavailable, due to COVID-19 related reasons.

After two weeks of unpaid family and medical leave (which can be concurrent with use of paid sick leave above), the employee must be paid no less than 2/3 of their regular pay. Like with the paid sick leave provision, employers can receive reimbursement via a refundable tax credit equal to 100 percent of qualified paid sick leave wages paid by an employer, to be applied against Federal employment taxes (FICA).

Furlough: Emergency Unemployment Insurance Stabilization and Access Act of 2020

Many nannies and other hourly workers will be temporarily laid off due to the coronavirus. To provide income to employees furloughed for this reason, the act provides funding to state unemployment programs to provide unemployment benefits and to enhance program administration.

Further, President Trump issued an executive order directing the US Department of Labor, which oversees and ultimately guarantees all state unemployment insurance programs, to provide guidance to the states outlining flexibility they have during the coronavirus pandemic.

“… federal law permits significant flexibility for states to amend their laws to provide UI benefits in multiple scenarios related to COVID-19. For example, federal law allows states to pay benefits where: (1) An employer temporarily ceases operations due to COVID-19, preventing employees from coming to work; (2) An individual is quarantined with the expectation of returning to work after the quarantine is over; and (3) An individual leaves employment due to a risk of exposure or infection or to care for a family member. In addition, federal law does not require an employee to quit in order to receive benefits due to the impact of COVID-19.” ~ News Release March 12, 2020.

Any employee can make an unemployment claim, whether the employer was paying legally or not. If a claim is filed and the family has not met their tax obligations, both the state and the Internal Revenue Service will pursue the employer for the back taxes and penalties.

Conclusion

While significant and rapid steps have been taken to minimize the economic impact of income disruptions caused by the coronavirus pandemic, it is vital to recognize that employees must be paid legally, or “on the books,” in order to receive benefits from unemployment insurance or for an employer to be reimbursed for mandatory paid leave provided to employees.

HomeWork Solutions is available to assist employers in catching up with 2019 nanny tax obligations to ensure that valued nannies and caregivers are not placed at economic risk during the coronavirus pandemic. HomeWork Solutions will waive fees for preparation of 2019 payroll tax filings for new clients in order to ensure that domestic employees have access to paid sick leave and unemployment benefits. Call HWS at 866.959.7812 or enroll online at HomeWorkSolutions.com and mention “Free 2019” during registration. Continued use of payroll and Tax preparation services for 1 year is required to qualify for this offer.