Physical therapy practices across the country are facing unique working conditions during the COVID-19 pandemic.
Some practices are closed altogether, while others are operating under limited conditions. In either case, the situation is giving way to several employment questions and potential issues. In addition, the federal government has rolled out a stimulus package available to small businesses under certain conditions.
We recently spoke with Scott Leah, an attorney who specializes in employment law, to answer important questions that will help PT owners make sense of handling employment changes during COVID-19.
Two new paid leave types have been introduced by the federal government: paid sick leave and the FMLA (note: the FMLA isn’t new, but the rules surrounding it have been changed during the COVID-19 pandemic).
Paid sick leave provides qualified employees with up to 80 hours of pay if they meet one or more of the following criteria:
There are a few differences to consider when it comes to the amount your employees will receive. In some cases, they’ll be eligible to receive their full salary. Under other circumstances, they’ll get two-thirds of their normal salary. Employees must have been working for you for at least 30 days to be eligible.
There’s a lot we still don’t know regarding this pay—such as how employees can apply for it—and more details will hopefully emerge soon.
There’s also a provision for employers to get a dollar-for-dollar credit on their payroll taxes if they provide this benefit to their employees. Again, there are still a lot of unknowns about getting this tax credit, so it’s a good idea to bring this situation to your accountant. There will probably be a special form to fill out and documentation to provide before taking advantage of the tax credit.
The FMLA has also expanded to accommodate more employees. Historically, most PT practices didn’t have to concern themselves with the FMLA unless they have more than 50 employees in a 75-mile radius.
The FMLA provides up to 12 weeks of paid leave under new circumstances:
The first two weeks are unpaid, while the remaining weeks are at two-thirds of the normal pay. Under the new law, the employee can get paid during the first two weeks using the new paid sick leave (which is 100% or two-thirds of their salary). They can also leverage any existing PTO, vacation, or sick time (although you can’t require they use their PTO).
The amount paid during the FMLA is a refundable tax credit, which is significant for small business owners. This means that if you pay out $1,000 in benefits and owe $750 in taxes, you’ll get a net of $250 back from the government.
Many practices are facing tough decisions in choosing to lay off or furlough employees. These are dire circumstances we’re in, and while you want to do what’s best for your employees that take care of your practice, you also want to do right by your practice.
The government is helping to provide small businesses with funds that can help them avoid both laying off and furloughing staff, including a stimulus package (which we cover in another blog post) and paid leave requirements for employees.
The problem is that many practice owners may not be able to afford to keep all employees on long enough to take advantage of these options. Yes, you get back the money you pay for leave as a tax credit, but you have to be able to front the money first.
In this case, many owners wonder which is more beneficial: layoffs or furloughs?
In a layoff, the employee is no longer working for your company, and they are eligible to collect unemployment. Furloughs allow the employee to remain employed and work on a reduced schedule (even down to zero hours per week). They’re still eligible for the paid leave options and benefits, and they should also be eligible for unemployment compensation. Once the pandemic conditions lift, they can come back to work and handle business as usual.
The one caveat with furloughing employees is to check with your insurance broker to see how many hours an employee needs to work to maintain their benefits coverage. In some cases, reducing them to zero hours may not save their insurance benefits.
Unemployment is largely state-driven, so each state will have its own rules surrounding eligibility for unemployment. In Pennsylvania, the general consensus is that business owners are not eligible for unemployment benefits.
In essence, unemployment is designed for employees, not employers. The idea is that if employers could receive unemployment benefits, then anyone could start up a business, fail, and collect benefits.
An exception would be someone who owns a small portion of a practice that doesn’t have much say in how the business is run from day to day. Alternatively, if you’re a C corp, you may be able to file, as you’re not technically the “owner” of the company. These are rare cases, but they do happen.
However, we’re in unique times, so there’s a possibility that some states may allow small business owners to file for benefits. The best step to take is to work with an employment lawyer who can look at the specific state requirements and help you support your case.
We know these are challenging times to be a practice owner, and we’re committed to helping you get answers to your most complicated questions and navigate new legislation. Join our free Facebook community – Private PT Practices: Standing Up Through Crisis for more resources.