As previously reported, President Trump signed the Families First Coronavirus Response Act (FFCRA) into law on Wednesday, March 18, 2020. Among its provisions, the FFCRA set out several key mandates that impact employers, including:
- New, separate paid sick leave rights for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19; and
- New, enhanced leave entitlements under the federal Family Medical Leave Act (“FMLA”), including paid leave under FMLA.
Since its passage, employers covered by the FFCRA—those with 500 employees or less—have expressed concerns with the FFCRA, ranging from interpretation of its exemption to financing of the new mandates.
Under the FFCRA, employers are entitled to reimbursement for up to 100% of the cost of wages for such leave, including health insurance costs in the form of payroll tax credits. The credits max out at $511 per day for employees who unable to work because they are in Coronavirus quarantine or self-quarantine or have Coronavirus symptoms and are seeking diagnosis and at $200 per day for employees who are caring for someone with Coronavirus or is caring for a child because the child’s school or child care facility is closed or provider is unavailable due to the Coronavirus. An additional credit is available for health insurance costs for such affected employees during the time they are on leave from work.
Over the past few days, the Internal Revenue Service (IRS) and U.S. Department of Labor (DOL) each issued administrative guidance concerning the mechanics of the tax credits for small and midsized businesses to help cover the cost of providing COVID-19 related paid leave to employees. The highlights include:
- Employers may keep, rather than deposit, the payroll taxes due in an amount equal to the employer’s cost of qualifying sick and childcare leave paid.
- The federal government is offering a way to shorten the waiting time for employers to receive the payroll tax refund. A new refund request form is coming soon that may be filed immediately to cover employer costs of qualified sick or childcare leave if the costs exceed payroll withholdings due. Refunds should be processed within 2 weeks.
- 30-day non-enforcement period for good faith compliance efforts.
The IRS and DOL plan to release additional information on the process for employers to receive an advance payment for the credit. While circumstances remain fluid, we will continue to monitor further proposed legislation and its potential effects on employers.