The federal government has passed an extension of the Family and Medical Leave Act (FMLA) that mandates small and mid-size employers provide their employees with up to 80 hours of paid sick leave related to COVID-19. And they backed it up with a dollar-for-dollar tax relief provision, as well.
The tax credits, which are just one part of the new Families First Coronavirus Response Act, can be applied immediately and directly to payroll taxes (FICA, Social Security and Medicare) that would normally have been withheld and paid to the IRS during the pay period. If those funds together are not enough to match the dollar-for-dollar cost of qualified sick and child care leave paid, employers will be able to file a request for an accelerated payment from the IRS.
Congress did allow for an exemption to the paid leave mandate for the nation’s smallest businesses, defined as those with fewer than 50 employees, if the business can support its claim that the mandate threatens the viability of the business.
For more on how to file a claim as well as new bankruptcy rules that make it easier for small businesses to file Chapter 11, see the IRS brief here.
Other notable provisions of the of the Families First Coronavirus Response Act (FFCRA) include:
- April 1 start date. Leave taken prior to this date will not be eligible for tax credit relief.
- Sick leave compensable under the act is available only once, not as separate events.
- Some employees will also qualify for up to 12 weeks of FMLA; the first two weeks being emergency leave paid out at 100 percent, the next 10 weeks at two-thirds the employee’s usual pay.
Our HR partner, Capital Associated Industries (CAI), has put together a highly user-friendly resource guide that breaks down the FFCRA and its various rules and provisions, here.