The federal government continues to provide additional guidance and rulemaking on the Families First Coronavirus Response Act’s Emergency Paid Sick Leave (EPSL) and Expanded FMLA (E-FMLA) requirements, which went into effect on April 1.
Below are the highlights. To read our initial write-up of the FFCRA, and our summaries of the IRS’s and DOL’s previous guidance, click here.
Is there more information on how to claim the tax credits for providing EPSL and E-FMLA?
Yes! Employers will report the amount of EPSL and E-FMLA (“qualified leave wages”) on their quarterly federal employment tax returns (typically a Form 941).
Employers may receive the tax credit in advance by reducing the amount of federal employment taxes they deposit for that quarter by the amount of the qualified leave wages paid in that quarter.
The IRS provides the following example:
An employer paid $5,000 in qualified leave wages and is otherwise required to deposit $8,000 in federal employment taxes, including taxes withheld from all of its employees, for wage payments made during the same quarter as the $5,000 in qualified leave wages. The employer may keep up to $5,000 of the $8,000 of taxes it was going to deposit, and it will not owe a penalty for keeping the $5,000. The employer is then only required to deposit the remaining $3,000 on its required deposit date. The employer will later account for the $5,000 it retained when it files its Form 941, Employer's Quarterly Federal Tax Return, for the quarter.
What about tax credits for “qualified health plan expenses”?
Tax credits for qualified leave wages may be increased by the amount employers pay to provide and maintain a group health plan (“qualified health plan expenses”) allocable to each type of qualified leave wages. Qualified health plan expenses are properly allocated to EPSL or E-FMLA if the allocation is made on a pro rata basis among covered employees (for example, the average premium for all employees covered by a policy) and pro rata on the basis of periods of coverage (relative to the time periods of leave to which such wages relate).
What form do I use to request advance payment of tax credits?
Form 7200. The form, and instructions for completing it, are available here.
What information do I need to request from an employee to substantiate the tax credits?
Employers need to request the following information in writing in order to substantiate the need for leave:
Additional information is also required for the following:
What records do I need to retain to request the tax credit?
In addition to retaining the information provided by the employee, employers should retain the following documentation:
How long will I need to retain these records?
For four years after the date the tax becomes due or is paid, whichever comes later.
How long are the tax credits available?
The credits are available for EPSL and E-FMLA leave taken between April 1, 2020, through December 31, 2020, even if paid after December 31, 2020.
DOL’S Temporary Rule
Note that the temporary rule is effective as of April 1, but the DOL has noted that the version currently available may vary slightly from the published rule.
Employees may receive EPSL if they are subject to a quarantine or isolation order or are caring for an individual who is subject to quarantine or isolation order. What is a “quarantine or isolation order”?
A quarantine or isolation order includes quarantine, isolation, containment, shelter-in-place, or stay-at-home orders issued by any Federal, State, or local government authority that cause the employee to be unable to work. It also includes instances where the Federal, State, or local government authority has advised categories of citizens (e.g., of certain age ranges or of certain medical conditions) to shelter in place, stay at home, isolate, or quarantine.
An employee is eligible for EPSL if the employer has work available, but the employee cannot perform available work because of such an order.
Employees may receive EPSL if they are advised by a health care provider to self-quarantine. What type of advice does this cover?
An employee qualifies for EPSL if a health care provider advised them to self-quarantine based on a belief that (a) the employee has COVID-19, (b) the employee may have COVID-19, or (c) the employee is particularly vulnerable to COVID-19; and following the advice to self-quarantine prevents the employee from being able to work at the workplace or by telework.
Employees may receive EPSL to care for an individual subject to a quarantine or isolation order or advised by a health care provider to self-quarantine. Does this mean any individual the employee cares for?
No, but the definition of “individual” is broad. “Individual” means an employee’s immediate family member, a person who regularly resides in the employee’s home, or “a similar person with whom the employee has a relationship that creates an expectation that the employee would care for the person if he or she were quarantined or self-quarantined.” It does not include persons with whom the employee has no personal relationship.
How may employers provide notice to employees of the FFCRA?
The FFCRA requires employers to post a notice on its premises, in conspicuous places. Employers may also satisfy this requirement by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website.
What documentation may I request from employees?
The DOL does not require employees to provide all of the information that the IRS requires employers to retain in order to support the tax credit (see above) to be eligible for EPSL or E-FMLA, but it permits employers to deny leave if the employee does not provide all information required to request a tax credit.
Note that for leave taken under the FMLA for an employee’s own serious health condition related to COVID-19, or to care for the employee’s spouse, son, daughter, or parent with a serious health condition related to COVID-19, the normal FMLA certification requirements still apply.
What type of notice may an employer require of the employee’s need to take EPSL or E-FMLA?
Notice may not be required in advance, and may only be required after the first workday (or portion thereof) for which the employee takes EPSL or E-FMLA. After the first workday, the employer may require the employee to follow “reasonable notice procedures.” Generally, the following notice requirements will be reasonable:
Employers may not require employees to provide more information beyond what is needed to support the tax credit when providing notice.
How do I elect the small business exemption?
Employers with fewer than 50 employees may be exempt from having to provide E-FMLA and EPSL Category #5 (leave to care for a child due to the school or childcare provider being closed/unavailable due to COVID-19).
To elect this small business exemption, the employer must document that a determination has been made pursuant to the criteria for the exemption. The employer does not need to submit this documentation, but must simply retain the records in its files.
Does the employee maintain health benefits during EPSL or E-FMLA leave?
Yes. Employers must maintain the employee’s coverage under any group health plan (on the same conditions as coverage would have been provided if the employee had been continuously employed during the entire leave period.
What documentation do I need to retain?
In addition to the documentation required to be maintained to request the tax credits (see above), employers must retain all documentation provided by employees requesting leave, regardless of whether leave was granted or denied. These documents need to be retained for four years.
For more resources and LP's response to COVID-19, visit this webpage.