On April 3, 2020, the IRS has released Form 7200 to claim advance payment of tax credits discussed below.
- IRS FAQ: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs
The Families First Coronavirus Response Act (FFCRA), enacted on March 18, 2020, requires private employers with fewer than 500 employees to provide employees with paid sick leave or extended family and medical leave for specific reasons related to COVID-19.
Effective Date: April 1, 2020, and applies to leave taken between April 1, 2020 – December 31, 2020
ELIGIBLE EMPLOYEES CAN RECEIVE:
- Eighty hours of paid Sick Leave at 100% of an employee’s pay (capped at $511 per day) when the employee cannot work (or telework) because of quarantine or self-quarantine or experiencing COVID-19 symptoms.
- Eighty hours of paid Sick Leave at 2/3 regular pay (capped at $200 per day) to care for an individual subject to quarantine, self-quarantine or experiencing COVID-19 symptoms, or care for a child, under age 18, whose school is closed or daycare provider is unavailable.
- Up to an additional ten weeks of paid Family Leave at 2/3 regular pay (capped at $200 per day) to care for a child whose school is closed or daycare provider is unavailable (employee must be employed for at least 30 calendar days to qualify).
- Part time employees are also eligible for pro-rated benefits.
- To qualify, employees must be employed on April 1, 2020 or later and their employer must have work available that they are prevented from performing (at their normal worksite or virtually) due to one of the qualifying reasons discussed above.
- If employees do not qualify for these benefits they may qualify for unemployment insurance benefits. For additional details on how to apply, visit: Labor & Workforce Development Agency – Benefits for Workers Impacted by COVID-19
- Self-employed individuals are eligible for this benefit and can receive a tax credit on their 2020 tax returns.
- Employers with fewer than 50 employees can opt-out of providing Family Leave for childcare if it would “threaten the viability of the business”.
- Tax Credits– Employers can receive a dollar-for-dollar reimbursement through tax credits up to the daily amounts paid to employees ($511 or $200).
- Employers can use their payroll tax deposits to fund the benefits in lieu of making the deposit with the IRS. Any shortfall will be covered by a refundable credit. Both employee trust fund amounts and employer payroll taxes can be used to fund these new employee benefit payments.
- Payments to employees would not be subject to employer payroll taxes but will be treated as compensation to the employee.
- Employer Notice – Covered employers must post a notice of FFCRA requirements in a noticeable place on the employer’s premises, and due to many employees working remotely, should also send the notice via email and/or post to an internal website.
- Sample notice: FFCRA Poster
- Penalties and Enforcement – The DOL has announced they will observe a temporary period of non-enforcement, as long as the employer has acted “in good faith” to comply with the Act. Enforcement measures will begin April 18, 2020.
The rules of the FFCRA are complex and continuing guidance from the Department of Labor is expected. Additionally, as these new federal rules interact with existing California labor law we advise you to consult with your employment attorney.
DOL sources and additional information: Families First Coronavirus Response Act: Employee Paid Leave Rights & Families First Coronavirus Response Act: Employer Paid Leave Requirements