Families First Coronavirus Response Act Part II: More Guidance for Employers

Since the President signed the Families First Coronavirus Response Act (FFCRA) last week, we have received several requests for more information.  Guidance is issued almost daily, and there are still unanswered questions, but here are some new details. 

Overview – Employers with 500 or fewer employees must provide employees with two weeks of paid sick leave and up to 12 weeks of expanded family and medical leave for specified reasons related to COVID-19.  The provisions take effect April 1 and will stay in effect until December 31, 2020.  The conditions that must be met for an employee to qualify for the leave, and how the leave is calculated are detailed here.

Notice – Employers must post a notice informing employees of their coverage under FFCRA.  The Department of Labor released a model notice here. 

The notice must be posted in a conspicuous place where employees frequently visit, such as a lunchroom or break room.  For remote employees, employers may email the notice to them, physically mail it, or post it on an internal or external website. 

Payroll Taxes – Wages paid to employees for paid sick leave or expanded family and medical leave are exempt from the employer portion of FICA taxes.   

Reimbursement – Employers receive 100% reimbursement for leave paid under this Act, in the form of a dollar-for-dollar tax offset against federal payroll taxes.  Health insurance costs are included in the reimbursement. 

Small Business Exemption – Employers with fewer than 50 employees are eligible for an exemption from the requirement to provide leave to care for a child whose school or daycare is closed, if they can demonstrate that by complying, the viability of the business would be threatened.  There is no exemption from the requirement to provide two weeks of paid sick leave under this Act. 

Compliance Assistance – The IRS is easing compliance requirements by instituting a 30-day non-enforcement period for good faith compliance efforts.  Businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes in order to pay the sick leave and family leave required under the Act.  If that is not sufficient to cover the cost, employers can seek an expedited advance from the IRS by submitting a streamlined claim form.  The form should be available next week. 

For example, if the employer pays out $1,000.00 in sick leave wages and their federal tax liability is $2,000.00, they only need to remit $1,000.00 in their tax deposit. 

If the employer pays $2,000.00 in sick leave wages and their federal tax liability is $1,000.00, they do not need to remit their tax payment and can request an additional $1,000.00 from the IRS. 

For more information, see the IRS Coronavirus Tax Relief web page.