While COVID-19 continues to attack our nation, businesses face the ongoing struggle with managing workforces and finding a game plan that is morally and fiscally responsible. New programs and laws are constantly being issued and updated which makes compliance matters all the more difficult.
With respect to the Families First Coronavirus Response Act (FFCRA), affecting nearly all private employers with fewer than 500 employees, as well as public employers, the Departments are continually updating existing guidance sources and issuing new ones.
DOL Questions & Answers
Over the past week, the Department of Labor’s Q&As on the FFCRA’s provisions for Emergency Paid Sick Leave Act (EPSLA) and Emergency FMLA Expansion Act (EFMLEA) have been updated and/or modified at least 3 times. Answers which have changed include 7, 15, 16, and 31-33. For the most recent version, see: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
IRS FAQs Relating to Employer Tax Credits
The IRS has now issued guidance on how to calculate the tax credits, how to claim them, how to calculate the allocable health insurance costs, the method used to request advance payment, and what documentation and substantiation requirements must be followed. These tax credits will offset the employers’ required cost to provide FFCRA paid leave, as well as the allocable share of health care costs and the employer’s portion of Medicare. See: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs
With respect to the Families First Coronavirus Response Act (FFCRA), affecting nearly all private employers with fewer than 500 employees, as well as public employers, the Departments are continually updating existing guidance sources and issuing new ones.
DOL Questions & Answers
Over the past week, the Department of Labor’s Q&As on the FFCRA’s provisions for Emergency Paid Sick Leave Act (EPSLA) and Emergency FMLA Expansion Act (EFMLEA) have been updated and/or modified at least 3 times. Answers which have changed include 7, 15, 16, and 31-33. For the most recent version, see: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
IRS FAQs Relating to Employer Tax Credits
The IRS has now issued guidance on how to calculate the tax credits, how to claim them, how to calculate the allocable health insurance costs, the method used to request advance payment, and what documentation and substantiation requirements must be followed. These tax credits will offset the employers’ required cost to provide FFCRA paid leave, as well as the allocable share of health care costs and the employer’s portion of Medicare. See: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs
- Questions 1-19: general information.
- Questions 20-24: determining the amount of the tax credits for Paid Sick Leave.
- Questions 25-30: determining the amount of the tax credits for FMLA Expansion leave.
- Questions 31-36: how to determine the amount of allocable qualified health plan costs.
- Questions 37-43: how to claim the credits.
- Questions 44-46: employer substantiation requirements.
- Questions 47-48: describe time periods (including leave taken before December 31, but paid later).
- Questions 49-51: special issues of taxation and deductibility.
- Questions 52-56: other special issues for employers including interaction with other tax credits, use of third-party payers, etc).
- Questions 57-59: special issues for employees.
- Questions 60-66: self-employed issues.
IRS Advance Tax Credit Form & Instructions
Additionally, IRS tax forms and instructions were released to apply for advance credits in cases where retention of allowed withholdings is not enough to cover the cost of paid leave:
Additionally, IRS tax forms and instructions were released to apply for advance credits in cases where retention of allowed withholdings is not enough to cover the cost of paid leave:
- Employers requesting advance payment of tax credits will file Form 7200: https://www.irs.gov/pub/irs-pdf/f7200.pdf
- The instructions to Form 7200 are found here: https://www.irs.gov/pub/irs-pdf/i7200.pdf
Temporary Regulations
Finally, temporary regulations were released which modify numerous previous FFCRA provisions and shed light on others. See https://www.dol.gov/agencies/whd/ffcra
Finally, temporary regulations were released which modify numerous previous FFCRA provisions and shed light on others. See https://www.dol.gov/agencies/whd/ffcra
On April 1, 2020, the U.S. Department of Labor announced new action regarding how American workers and employers will benefit from the protections and relief offered by the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act, both part of the Families First Coronavirus Response Act (FFCRA).
FFCRA helps the United States combat the workplace effects of COVID-19 by reimbursing American private employers that have fewer than 500 employees with tax credits for the cost of providing employees with paid leave taken for specified reasons related to COVID-19. The law enables employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus. The Department’s Wage and Hour Division administers the paid leave portions of the FFCRA.
- Paid Leave Entitlements
- Employee Eligibility
- Employer Coverage
- Intermittent Leave
- Leave to Care for a Child Due to School or Place of Care Closure or Child Care Unavailability — Interaction between the EPSLA and the EFMLEA
- Leave to Care for a Child Due to School or Place of Care Closure or Child Care Unavailability — Interaction between the EFMLEA and the FMLA
- Employer Notice
- Employee Notice of Need for Leave
- Documentation of Need for Leave
- Health Care Coverage
- Multiemployer Plans
- Return to Work
- Recordkeeping
- Prohibited Acts and Enforcement
- Effect of Other Laws, Employer Practices, and Collective Bargaining Agreements
The regulations further explain and outline circumstances, as well as documentation requirements, for the six (6) qualifying reasons to provide paid sick leave under the EPSLA. Additionally, the regulations set forth options for intermittent leave; how to calculate the average regular rate; updates to many definitions, including son or daughter, school, and place of care; limits on the term “individual” for whom one may provide care; detailed record keeping requirements; as well as numerous other important information.
Employers with fewer than 50 employees should also keep in mind that they may qualify for the small business exemption from the Emergency FMLA Expansion Act and/or the school closure/day care unavailability portion of the Emergency Paid Sick Leave Act. The details of how to qualify are set forth in the regulations. Additionally, employers with under 25 employees may not have to comply with the FMLA job restoration provisions if certain conditions are met.
Employers with fewer than 50 employees should also keep in mind that they may qualify for the small business exemption from the Emergency FMLA Expansion Act and/or the school closure/day care unavailability portion of the Emergency Paid Sick Leave Act. The details of how to qualify are set forth in the regulations. Additionally, employers with under 25 employees may not have to comply with the FMLA job restoration provisions if certain conditions are met.
Here are some takeaways from the regulations:
- EPSLA: Full-time employees are those normally scheduled to work 40 hours per workweek. Anyone working under that is deemed part-time. This will affect the number of hours (80 or less) of paid sick leave required under the EPSLA and the amount of the tax credit an employer is allowed. If an employer provides an employee who works 30 hours a week with 80 hours of paid sick leave, the employer will not receive a tax credit for all 80 hours.
- EPSLA Qualifying Reasons for Paid Sick Leave: Guidance and rationale is provided for the COVID-19 related qualifying reasons to take EPSLA, including discussion of shelter-in-place and stay-at-home orders, employees who are advised to self-quarantine, caring for an individual subject to the above, affirmative steps employees with COVID-19 symptoms such as dry cough or fever must take to seek a diagnosis, and others.
- EPSLA Qualifying Reason: An “individual” for whom an employee cares for due to the COVID-19 reasons as set forth in the FFCRA is restricted to a person with which the employee has a relationship as further described under the regulations.
- Child Care Provider: Child care provider is modified, in part, to include family members, friends or neighbors who regularly care for the child even if they are not compensated or licensed.
- Son or Daughter: Son or daughter is expanded to include children 18 or older who are incapable of self-care due to a mental or physical disability.
- Calculation of Leave and Pay: Formulas and timelines are provided for how to calculate the amount of leave required, the amount of pay, and the average number of hours an employee was scheduled per day, especially for those with varying hours.
- Unable to Work: Further details on how an employee must be unable to work or telework in order to claim FFCRA leave is explained.
- Intermittent Leaves: Expanded information on intermittent leaves and when that may be allowed, which depends on whether the employee is working on-site or teleworking, as well as the reason for leave.
- Exceptions from Employee: The definitions of “health care provider” and “emergency responder” are expanded for purposes of those employees for whom employers can exclude under the EPSLA and EFMLAEA and therefore will not be eligible for FFCRA leave.
- Notice: Notice requirements are provided, including the prohibition of employers asking for more information beyond what is allowed in the temporary regulations.
- Documentation: Detailed documentation requirements are provided depending on the leave requested. This is incredibly important as proper documentation is also required to receive the tax credits.
- Recordkeeping: Recordkeeping obligations are set forth, including that the employer is required to retain all documentation for four years, regardless of whether leave was granted or denied, and regardless if employee’s notice was oral or written. Records must include how the paid leave was calculated, how health insurance was allocated, as well as numerous other information.
- Health Care Coverage: The requirement for employers to maintain health care coverage is described, including the employee’s right to reinstatement of coverage upon returning from leave.
- Intersection of Leave Requirements: Guidance is provided regarding intersection of EPSLA and EFMLEA, EFMLEA and FMLA, as well as paid leave under FFCRA and other available paid time off.
- Return to Work: EFMLEA return to work obligations are set forth.
- Small Business Exemption (Under 50 Employees): The small employer exemption for employers with fewer than 50 employees is set forth, including requirements to qualify. The exemption is only for purposes of EFMLEA and EPSLA leaves relating to schools and place of care closures or where a child care provider is unavailable for COVID-19 reasons.
- Small Business Exemption (Under 25 Employees): Details of when the FMLA job restoration requirements may not apply to an employer with fewer than 25 employees are described.
- Multiemployer Plans: Further information is provided regarding multiemployer plans.
- Effect on Other Laws / Contracts: Provisions regarding the FFCRA’s effect on other laws, employer practices and collective bargaining agreements are set forth, including the sequencing of paid leave.
- Prohibited Acts: FFCRA’s prohibitions as well as enforcement measures under both the EPSLA and EFMLEA are detailed.
Guidance regarding the FFCRA is continually updated and is evolving rapidly; however, this is a general outline of information currently available. It may be prudent for employers to review their handbooks, policies, and plans as well as check administrative procedures and protocol to ensure compliance.
This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.
We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.