U.S. DOL and IRS Issue Guidance on the Family First Coronavirus Response Act
DATE: March 29, 2020
TO: Kane Kessler, P.C. Clients
FROM: Kane Kessler, P.C. Labor and Employment Law Department
RE: U.S. DOL and IRS Issue Guidance on the Family First Coronavirus Response Act
As we previously reported by memorandum on March 20, 2020, Congress recently enacted the Family First Coronavirus Response Act (the “FFCRA”), which provides employees with paid sick and childcare leave for certain COVID-19 related reasons capped at either $511 per day or $200 per eligible employee per day depending on the reason for leave. The FFCRA goes into effect on April 1, 2020 and expires on December 31, 2020. Employers with fewer than 500 employees are covered by the FFCRA.
Employers Pay for the Leave and Are Immediately Reimbursed Through Tax Credits
On Friday March 20, 2020, the Internal Revenue Service (“IRS”) and the United States Department of Labor (“DOL”) published a statement explaining that employers can recover 100% of the cost of paid sick and childcare leave under the FFCRA by immediately claiming payroll tax credits. Specifically, 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.
Eligible employers are able to retain an amount of the payroll taxes equal to the amount of qualifying sick and childcare leave that they paid, rather than deposit 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 childcare paid leave, employers will be able 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 is expected to be announced this week. Further, employers will be entitled to an additional tax credit in an amount that will be determined based on costs to employers to maintain health insurance coverage for eligible employees during employees’ leave periods.
You can find the IRS/DOL statement here https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus .
DOL Published Frequently Asked Questions Regarding the FFCRA
The DOL published FAQs regarding the Act, which can be accessed here. https://www.dol.gov/agencies/whd/pandemic/ffcra-questions. Several key aspects of the FFCRA are clarified in the FAQ, including eligibility requirements. Some key points from the FAQ are as follows:
• The FFCRA does not apply to employees who are furloughed or placed on layoff,
• While employees must have worked 30 calendar days for an employer prior to taking child care leave under the enhanced FMLA provisions, there is no tenure requirement for an employee to be eligible for paid sick leave,
• The DOL outlines at Questions No. 58 and 59 information for a small business (less than 50 employees) to apply for an exemption from certain provisions of the Act.
DOL Enforcement Guidance Provides Amnesty until April 17, 2020 to Employers to Comply with the FFCRA
The DOL stated in recent guidance that it will not bring enforcement actions against any public or private employer for violations of the FFCRA occurring within 30 days of the enactment of the FFCRA, i.e., March 18 through April 17, 2020, provided that the employer has made reasonable, good faith efforts to comply with the FFCRA. An employer is deemed to have acted “reasonably” and “in good faith” when all of the following facts are present:
1. The employer remedies any violations, including by making all affected employees whole as soon as practicable,
2. The violations of the FFCRA were not “willful”, and
3. The DOL receives a written commitment from the employer that it will comply with the FFCRA in the future.
The Enforcement Guidance can be found here: https://www.dol.gov/agencies/whd/field-assistance-bulletins/2020-1.
Notice and Posting Requirement under the FFCRA
The DOL published a notice of employee rights under the FFCRA that all covered employers must post and make available to employees. Covered employers must publish the notice in a conspicuous place on their premises by April 1, 2020. An employer may satisfy this requirement by emailing or direct mailing this notice to employees or by posting the notice on an internal or external employee information website. The notice must also be provided to new hires, either by email, direct mail, or by posting the notice on the premises or on an internal or external employee information website. However, according to the DOL, the notice does not need to be provided to recently laid off employees or to job applicants prior to hiring.
There is no requirement that the notice be published in languages other than English. The DOL is working on translating the notice into other languages.
If you have any questions, please do not hesitate to contact David R. Rothfeld, Lois M. Traub, Alexander Soric, Jennifer Schmalz, Robert L. Sacks, Jaclyn Ruocco, Joseph Tangredi, or Brian Polivy.Download Publication