If an employee requests leave related to the current COVID-19 pandemic, you may find yourself wondering what your next steps should be. What documentation should you require from the employee? Will the employee be paid? Are you required to approve the leave request?
If you are an employer with fewer than 500 employees, the leave request likely falls under the Families First Coronavirus Response Act, which provides emergency paid sick leave (of two weeks, up to 80 hours) and expanded FMLA leave (a total of 12 weeks). The following is a recap of what is provided under these Acts. We will also cover what kind of documentation you should maintain to apply for the related employer tax credits (to offset the cost of these leaves).
Emergency Paid Sick Leave
If an employee of a company that employs fewer than 500 employees is unable to work in person or to telecommute for any of the following reasons, they qualify for two weeks (up to 80 hours) of paid sick leave:
- If they are subject to federal, state, or local isolation or quarantine order related to COVID-19;
- If a health care provider advises them that they should self-quarantine as a result of concerns related to COVID-19 (self-quarantining without advice does not qualify);
- If the employee is seeking medical diagnosis as a result of having symptoms of COVID-19;
- If the employee is caring for somebody (not necessarily a family member) who is subject to a federal, state, or local isolation or quarantine due to COVID-19, or who has been advised to self-quarantine by a health care provider as a result of COVID-19, or
- If the employee’s child’s school or care facility has been closed or is unavailable as a result of COVID-19 and the employee needs to care for the child.
Referencing the numbered reasons listed above, employees who need paid sick leave based on reasons Nos. 1, 2, and 3 will be paid their sick leave benefit at the same rate that they are normally paid up, to a maximum of $511 per day and a total of $5,110. Those who need paid sick leave based on the above-referenced reasons Nos. 4 and 5 will be paid their sick leave hours at a rate equal to two-thirds of their normal pay, with a maximum of $200 per day and a total of $2,000.
The Act makes the emergency paid sick time available as of April 2, 2020, and specifically prohibits employers from requiring employees to use other accrued paid leave before using the emergency leave. Any existing paid sick leave or paid time off is separate and apart from the leave provided by the Act and remains with the employee. Additionally, though employers may require reasonable notice of using the emergency paid sick leave, this notice is not required until after the first workday (or part thereof) that is used. The employer is not permitted to make employees provide advance notice before the first day that they take paid sick leave under the emergency measures.
Emergency Expansion of Family Medical Leave Act (FMLA)
The Families First Coronavirus Response Act includes the Emergency Family and Medical Leave Expansion Act (FMLA Expansion Act). This will enable eligible employees to access a federal source of paid leave if they are required to take leave to care for their child due to a COVID-19-related closure of a school or childcare facility.
Who is covered?
The new Emergency Act expands the original FMLA rules, changing the employer threshold to all that employ fewer than 500 employees and expanding who is covered to include all workers who have worked for these employers for a minimum of 30 days. As is true of the paid sick leave act, the Secretary of Labor will be able to take action to exempt organizations with fewer than 50 employees if their business’ viability is threatened by making this leave available. Additionally, certain health care providers and emergency responders may also be exempt.
How much leave are employees eligible for under this act?
Eligible employees may take up to 12 weeks of leave if they can’t work (in person or via telework) because of their care responsibilities for a child or children under 18 years of age whose school or care facility has been shuttered as a result of COVID-19.
The 12-week period will provide compensation after the first 10 unpaid days (though employees can use accrued paid sick or vacation time to provide payment for those 10 days, or the emergency paid sick leave described above).
How is the employee’s pay calculated?
The compensation is calculated at two-thirds of the employee’s normal wages for the number of hours they are regularly scheduled to work, maxing out at $200 per day and a total of $10,000. The program went into effect on April 2, 2020, and though the Act specifies that if the need for leave is anticipated, the employee should provide their employer with “notice of leave, as is practicable;” advanced notice is not required.
Employer Posting Requirements
Employers of fewer than 500 employees must post a notice that advises employees of their rights under the Act. This required posting can be found here.
Tax Credits for Employers
Under the Act, employers that are required to provide the expanded FML would receive a tax credit that covers 100% of the payroll taxes (Social Security and Medicare) owed by the employer on wages paid to the employee for the leave (subject to caps of $200 per employee per day and $10,00 in the aggregate). The amount of the employer’s tax credit is also increased by the portion of the employer’s “qualified health plan expenses” attributable to the leave wages. For this purpose, qualified health plan expenses are amounts paid (or incurred) by the employer to provide a group health plan to the extent excludable from the employee’s gross income (e.g., medical insurance premiums).
As with the Act’s expanded FMLA, employers that are required to provide this paid sick leave would receive a tax credit that covers 100% of the Social Security and Medicare owed by the employer on wages paid to the employee for the sick leave. This credit would be subject to slightly different limits than the tax credit for expanded FMLA described above. Those limits are $511 per employee per day and $5,111 in the aggregate if the sick leave is for the employee’s self-quarantine, and $200 per day or $2,000 in the aggregate if the leave is to care for another individual. The Act allocates $15 million to the IRS to implement tax credits for paid sick and family medical leave.
What documentation is required from the employee requesting leave?
The DOL stated that the employee must provide a signed statement containing:
- The employee’s name;
- The date(s) for which leave is requested;
- The coronavirus-qualifying reason for leave, and
- A statement that the employee can’t work or telework because of this reason.
- An employee must provide the name of the government entity that issued the quarantine or isolation order to which the employee is subject if that is the reason for the paid sick leave;
- An employee seeking leave because he or she is self-quarantined must provide the name of the health care provider making the quarantine recommendation, or
- Someone caring for a person who is quarantined must provide either the government entity that issued the quarantine or isolation order or the name of the health care provider who advised the individual to self-quarantine.
The DOL stated that an individual requesting expanded family and medical leave must provide:
- The name of the child being cared for;
- The name of the school, place of care or childcare provider that closed or became unavailable due to coronavirus reasons;
- A statement representing that no other suitable person is available to care for the child during the period of requested leave, and
- With the care of a child older than 14 during daylight hours, a statement that special circumstances exist requiring the employee to provide care.
The normal FMLA certification rules apply to an employee’s personal serious health condition related to the coronavirus and to the employee’s need to care for a spouse, son, daughter, or parent with a serious health condition. These certifications can be found here.
What documentation is required for an employer to apply for the COVID-19 leave related tax credits?
The IRS issued guidance stating that eligible employers claiming tax credits for qualified leave wages “must retain records and documentation related to and supporting each employee’s leave to substantiate the claims for the credits.”
Such employers also must retain:
- Form 941, Employer’s Quarterly Federal Tax Return;
- Form 7200, Advance of Employer Credits Due to COVID-19, and
- Any other applicable filings made to the IRS requesting the credit.
Note: The documentation required from the employee (above) should substantiate their need for leave, so be sure to maintain this document on file.
Additional documentation that employers claiming tax credits must maintain include:
- Documentation to show how the employer determined the amount of qualified sick- and family-leave wages paid to employees, including records of work, telework, qualified sick leave, and qualified family leave, and
- Documentation to show how the employer determined the amount of qualified health plan expenses that it allocated to wages.
If you have questions specific to your situation, contact the Experts at Henssler Financial:
- Experts Request Form
- Email: email@example.com
- Phone: 770-429-9166
- Join the Conversation in Our Coronavirus Facebook Group