Coronavirus - DOL Regulations for FFCRA
Tuesday, April 7, 2020
Employment Law Alert: April 7th, 2020
Department of Labor Issues Regulations for Families First Coronavirus Response Act;
IRS Issues Guidance on Tax Credits
The Department of Labor (DOL) issued regulations on April 1, 2020, which provided further clarification on what is required under the Families First Coronavirus Response Act (FFCRA). Last week, the IRS also issued guidance on claiming the tax credits. The DOL regulations provide further guidance on the small business exemption, using employer-provided paid time off during Emergency Paid FMLA (EPFMLA), taking Emergency Paid Sick Leave (EPSL) to care for someone else, required documentation, and eligibility for Emergency Paid FMLA for rehired employees.
Small Business Exemption
Employers with fewer than 50 employees may determine that they are exempt from providing EPSL or EPFMLA to employees who need to care for their child whose school or place of care is closed, or whose child care provider is unavailable, due to COVID-19 related reasons.
There is no exemption from providing EPSL for the other five qualifying reasons.
In support of an employer’s decision to deny an employee’s request for EPSL and EPFMLA, an “authorized officer” of the company must determine that:
There is no application process for the Small Business Exemption, and employers do not need the DOL’s approval prior to denying leave. Employers need to document the facts and circumstances that justifying the denial of the leave. Employers should not send any records or documents in support of the employer’s decision to deny leave to the DOL, unless specifically requested to do so by the DOL. The employer should instead retain the records and documents for its own files.
- Providing leave would cause the employer’s expenses and financial obligations to exceed available business revenue and cause the employer to cease operating at a minimal capacity;
- The absence of the employee or employees requesting such leave would pose a substantial risk to the financial health or operational capacity of the employer because of their specialized skills, knowledge of the business, or responsibilities; or
- The employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services the employee(s) requesting leave provide, and these labor or services are needed for the employer to operate at a minimal capacity.
Employer-Provided Paid Time Off During EPFMLA
During the first two weeks of unpaid EPFMLA, employees can use EPSL or any employer-provided paid leave (e.g., PTO, vacation, state required paid sick leave). However, the employer cannot require that an employee use EPSL or any employer-provided paid leave during this two week period.
After the first two week period of EPFMLA, employers can require that employees take additional EPFMLA leave concurrently with any employer-provided paid time off. The employee can also elect to use their employer-provided paid leave concurrently after the first two week period.
Emergency Paid Sick Leave to Care for Someone Else
The DOL regulation provides additional clarification on the meaning of an “individual” who employees may provide care for under EPSL. Employees may take EPSL to care for an “individual” who is subject to a Federal, State, or local quarantine or isolation order or has been advised by a health care provider to self-quarantine related to COVID-19.
Under the regulations, a qualified individual means an employee’s immediate family member, 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.
Furthermore, the employee must have a genuine need to care for the individual to qualify for EPSL.
Employees are required to provide their employer documentation which includes the following information in support of an EPSL or EPFMLA leave:
Employees requesting EPSL when the employee or someone the employee is caring for is subject to a Federal, State, or local quarantine or isolation order must also provide the name of the government entity that issued the order.
- Employee’s name;
- Dates for which leave is requested;
- COVID-19 qualifying reason for leave and written support for such reason;
- Statement representing employee is unable to work or telework because of COVID-19 qualifying reason.
Employees requesting EPSL when the employee or someone the employee is caring for has been advised by a health care provider to self-quarantine must also provide the name of the health care provider who advised the self-quarantine.
When the employee is providing care for someone, the employee also must provide the name of the person who he/she is providing care and that person’s relation to the employee.
Employees requesting EPSL or EPFMLA to care for their child whose school or childcare has been closed or is unavailable must provide the following additional information:
Employers must retain all documentation related to EPSL and EPFMLA leave requests for four years.
- Name and age of child being cared for;
- Name of school, place of care, or childcare provide that is closed or unavailable; and
- Statement representing that no other suitable person is available to care for the child during the period of requested leave.
- If the child is older than fourteen, an additional statement regarding the special circumstances that exist requiring the employee provide care is required.
Employers are not required to provide employees requesting EPFMLA with the documentation required for other types of traditional FMLA leaves (e.g., Notice of Eligibility, Right and Responsibilities).
Employees who are laid off or terminated on or after March 1, 2020 are immediately eligible to take EPFMLA when they have been rehired provided they worked at least 30 of the 60 calendar days prior to being laid off or terminated. Rehired employees, in this case, do not need to work another 30 days before being eligible for EPFMLA leave.
IRS Guidance on Tax Credits
Employers are reimbursed the cost of providing EPSL and EPFMLA leave through refundable tax credits, which are increased by an employer’s share of Medicare tax on and the qualified health plan expenses (i.e., amounts paid or incurred by an employer to provide and maintain group health plans) allocable to the qualified leave wages.
Employers who pay qualified leave wages can retain the following federal employment taxes:
Employers eligible for the tax credit should report qualified leave wages and the credits for each quarter on their federal employment tax form, Form 941 – Employer’s Quarterly Federal Tax Return (https://www.irs.gov/pub/irs-pdf/f941.pdf).
- Federal income taxes withheld from employees;
- Employees’ share of social security and Medicare taxes; and
- Employer’s share of social security and Medicare taxes with respect to all employees.
Employers who pay qualified leave wages before they are required to deposit federal employment taxes in the quarter may reduce the amount of federal employment taxes it deposits by the amount of wages paid. The amount of federal employment taxes not deposited should be documented on Form 941.
Employers whose quarterly employment tax deposits are less than the amount of the tax credit the employer owes are eligible to request an advance by submitting Form 7200 - Advance of Employer Credits Due to COVID-19 (https://www.irs.gov/pub/irs-pdf/f7200.pdf).
Employers must maintain the following documentation and records with regard to the tax credit reimbursement:
Employers need to retain these documents and records and make them available for IRS review for at least four years after the date that the tax becomes due, or is paid, whichever is later.
- Documentation showing the amount of qualified EPSL and EPFMLA wages paid to each eligible employee and qualified health plan expenses that the employer paid.
- Documentation and records related to and supporting each employee’s leave.
- Copies of Completed Forms 7200 submitted to the IRS.
- Copies of completed Forms 941 submitted to the IRS.
- Any other applicable filings the employer submitted to the IRS regarding the tax credit.
Members interested in additional information regarding the tax credits should consult the IRS’s FAQ website: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs.
Please do not hesitate to reach out to UEA's Employment Law Attorneys if you have any questions regarding complying with this new law, need guidance with specific employment or labor laws, or have concerns relating to the potential or actual impacts of the Coronavirus on your workforce.
On Tuesday, April 7th at 10:00 am, UEA will host our next COVID-19 Virus Employer Update Webinar. We'll cover recent COVID-19 laws including emergency paid sick and family leave, unemployment, small business financial assistance, and manufacturing sector maximum hours rules.
We'll continue to offer guidance on specific employment or labor law considerations and discuss the primary impacts of the Coronavirus on your workforce. We'll cover new developments and include an extended question and answer session. Register here
Contact us for more information about these new changes at EmployerHelpline@UnitedEmployers.org or 503.595.2170