Department of Labor and Internal Revenue Service Guidance

The Families First Coronavirus Response Act (FFCRA) provides for emergency paid sick leave and expanded family and medical leave benefits for specified reasons related to COVID-19, effective April 1st, 2020, through December 31st, 2020.

The Department of Labor’s Wage and Hour Division (DOL) has published its first round of guidance to address critical questions such as how the 500 employee cap is calculated, how to count hours for part-time employees, how to calculate an employee’s pay taking paid sick leave or expanded family and medical leave, and how to determine whether an employee has been employed for at least 30 calendar days for the purposes of the expanded family and medical leave.

The guidance is provided as a Fact Sheet for Employees, a Fact Sheet for Employers, and a Questions and Answers document.

Posting Requirement

 It’s important to note that FFCRA requires eligible employers to conspicuously post and keep posted a notice provided by the Secretary of Labor. That poster is available here.

For companies operating remotely, an employer may satisfy this requirement by emailing or direct mailing this notice to employees or posting this notice on an employee information internal or external website.

You are not required to post this notice in multiple languages, but DOL is working on translating it into other languages.

Small Business Exemption

Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern. To elect this small business exemption, you should document why your business meets the criteria set forth by DOL, which will be addressed in more detail in forthcoming regulations.

Enforcement

Though the FFCRA becomes effective April 1st, 2020, DOL will observe a temporary non-enforcement period of the FFCRA for the period of March 18th through April 17th, 2020, provided that employers are working in good faith to implement the bill during that time. That bulletin is available here.

Employer Tax Credit and Prompt Payment for the Cost of Providing Leave

According to joint guidance issued by the Treasury, IRS, and DOL, reimbursement will be quick and easy to obtain and will consist of an immediate dollar-for-dollar tax offset against payroll taxes and where a refund is owed, the IRS will send the refund as quickly as possible.

To take advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes.  If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expediated advance from the IRS by submitting a streamline claim form that will be released the week of March 30th.

With regard to reimbursement for employers, the guidance states:

When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees’ share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS.

Under guidance that will be released next week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.

The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.

If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able to file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced next week.

CCM recommends that you provide this guidance, available here, to your accountant.