As the coronavirus pandemic continues to impact millions around the world, many in Corporate America are faced with the prospect of taking a break from work for an uncertain period of time. As one might expect, this can have a direct impact on your income and overall financial wellness.
Here are some thoughts on how best to approach the situation:
Make sure you understand your company’s paid and unpaid leave benefits
Most employers offer different types of leave for different situations, from paid family leave and sick leave to leave based on special circumstances. Review your company benefits to prepare better for your time away from work. Your employee benefits portal is a good place to start your research.
Look at your finances today
Take a good look at your current income and expenses to understand how you currently spend your money. Now that you’re aware of your current cash flow, consider how it may change during your time away from work.
Tip: Ayco360—Ayco’s personal financial dashboard—can provide a snapshot of your current spending patterns and makes it easier to plan for your future.1
Consider your options to replace lost income
If your time away from work is expected to last for a while, it makes good financial sense to have backup options to cover your everyday expenses.
- Temporary income sources. The gig economy has opened up a variety of options for supplementary income sources that can help in times like this. From online tutoring to monetizing videos or blogs online, pick a part-time employment opportunity that can plug the gap in your income stream based on your interests and abilities.
- Look at your emergency fund. Emergency funds are intended to help in times like this, if you need to dip into your savings. Traditional advice is to save at least 3-6 months of your living expenses. Consider how comfortable you may be withdrawing some of your balance. Determine the minimum amount you want to keep for other emergencies.
- Borrowing could be an option. You may be tempted to take on some debt to tide you over. If you have Ayco as a benefit through your employer, reach out to a financial coach to review the pros and cons of this approach before you decide.
Plan for taxes
A change to your income will affect your taxes. An Ayco coach can help you understand how your time away from work may impact your federal tax situation. Consider meeting with your tax preparer to discuss the state tax specifics.
Employed by the government or by a company with less than 500 employees?
One of the ways the government has responded to this health crisis is by enacting the Families First Coronavirus Response Act, which was signed into law on March 18, 2020.
Among other provisions like free COVID-19 testing, expanded Medicaid funding and unemployment insurance, a key provision of the Act is emergency paid sick leave for certain individuals affected by the coronavirus and social distancing measures.
Note: The emergency sick leave provisions under this Act are applicable for government employees and employees at companies with 500 or fewer workers. If you work for a larger company, you likely already have paid leave and sick leave benefits available to you.
Who is eligible?
If you’re employed at a company with fewer than 500 workers or are a public sector employee, you are eligible for paid emergency sick leave if you are unable to work (or tele-work) for any of the following reasons:
- You have been quarantined by a federal, state or local order due to the coronavirus outbreak
- Your healthcare provider has advised you to self-quarantine to prevent COVID-19 spread
- You have symptoms of coronavirus and are awaiting medical diagnosis
- You are caring for someone who shows symptoms of COVID-19 or has been quarantined for it
- You have a child/children who are home due to school closures or unavailability of child care options due to the coronavirus outbreak
- You are experiencing any other substantially similar condition specified by Health and Human Services in consultation with the Departments of Treasury and Labor
How much time off do you get?
The Act allows for 80 hours of sick leave for full-time workers and the equivalent of average hours worked over a two-week period for part-time workers. This sick time is available for immediate use, regardless of your tenure at your employer. If your company already offers a sick leave benefit, paid sick time under this provision will be used first.
Your employer cannot require you to use PTO or any another type of leave before availing this emergency sick time. Your job is protected and you’re also protected from workplace discrimination under this Act, if you avail of this sick time off.
How much do you get paid during this time off?
If you’ve taken leave on account of your own sickness, you will be paid your normal wage or the applicable federal, state or local minimum wage, whichever is greater, subject to a cap of $511 per day and $5,110 in aggregate.
If your time off is to care for affected family members, you will be paid at two-thirds of the rate mentioned above, subject to a cap of $200 per day and $2,000 in aggregate. This will also apply if you’re experiencing any other substantially similar condition specified by Health and Human Services in consultation with the Departments of Treasury and Labor.
These provisions will expire on December 31, 2020.
