04/01/2020 by Anne G. Bibeau, Esq.
The U.S. Department of Labor (DOL) issued formal guidance on the application of the FFCRA paid leave on April 1, 2020, the same date that the paid leave requirements went into effect. The previous evening, on March 31, 2020, the IRS issued guidance, including frequently asked questions, on its website. Both agencies addressed questions that have been plaguing employers about emergency paid sick leave (EPSL) and emergency Family and Medical Leave Act (EFMLA) leave since the FFCRA was passed. This article highlights some of the surprises and most important points for employers. We’ve previously posted a summary of the FFCRA paid leave requirements and its notice requirement.
The Employer Must Collect Documentation. In order to claim the tax credit for providing the FFCRA paid leave, the employer must collect documentation from the employee in support of the leave. Both DOL and IRS have provided examples of what is required, depending on the reason the employee is taking leave. At a minimum, the employer will need the employee’s name, the dates of the requested leave, and a statement from the employee that he or she is unable to work or telework for one of the specified reasons permitted under the FFCRA.
Additional documentation is required depending on the reason for the leave. For example, if the employee is subject to a quarantine order or self-quarantine advice, the statement from the employee should include the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine. If the person subject to quarantine or advised to self-quarantine is not the employee, the employee needs to provide that person’s name and his or her relation to the employee. Though the person the employee is caring for does not have to be a relative, there must be some pre-existing relationship “that creates an expectation that the Employee would care for the person if he or she were quarantined or self-quarantined.”
If the leave is to care for a son or daughter whose school or childcare provider is closed due to COVID-19, the employer must also collect the name and age of the child and the name of the school or childcare provider that closed. Significantly, the employee must also provide a written representation that no other person will be providing care for the child during the period for which the employee is receiving the leave. If the child is older than 14 and the employee is taking leave during daylight hours, the employee also has to set forth special circumstances requiring the employee to provide care.
Employers Should Withhold Payroll Taxes. The IRS clarified that employers should withhold the employee’s share of payroll taxes from the paid leave. The employer must still pay its share of Medicare taxes, but it does not have to pay the employer’s share of Social Security taxes on the paid leave. The employer can claim a refundable tax credit for the paid leave (plus allocable qualified medical expenses and the employer’s share of Medicare taxes) against the payroll taxes the employer would otherwise owe on its entire payroll. The employer can immediately offset the paid leave against payroll withholdings, and in certain circumstances, can apply for an advanced refund form the IRS.
Exclusion for Health Care Providers and Emergency Responders. Employers of health care providers and emergency responders may opt to exclude such employees from either the EPSL, EFMLA, or both. The definition of health care provider for this purpose is quite broad, and includes “anyone employed at any doctor’s office, hospital, health care center, clinic, … nursing facility, retirement facility, nursing home, home health care provider, … pharmacy, or any similar institution.” It also covers certain employees of entities that contract with such businesses and entities that provide medical services and products to such businesses.
Intermittent Leave. Employers are not required to provide the EPSL or EFMLA on an intermittent basis, but may do so if both the employer and employee agree.
Limited Exemption for Some Small Business. The DOL has provided some guidance on a limited exemption for businesses with fewer than 50 employees if the FFCRA paid leave would jeopardize the viability of the business as a going concern.
There are a number of other provisions to both sets of guidance. If you have questions about the guidance or need any assistance in interpreting the FFCRA paid leave requirements, the employment law attorneys at Vandeventer Black are available to assist you.
About the Author:
Anne Graham Bibeau focuses her practice on Labor & Employment Law, alternative dispute resolution, commercial litigation, tax litigation, and the emerging hemp industry. She advises clients on the Fair Labor Standards Act (FLSA), discrimination and harassment, the Family and Medical Leave Act (FMLA), disability law, labor relations, employment agreements, and other labor and employment matters. She also serves as an arbitrator and mediator and is an American Arbitration Association (AAA) Employment Law Arbitrator. For more information, please contact Anne at firstname.lastname@example.org.