By Peter Moser March 22, 2020
Good news – employers will not have to wait long for reimbursement of payments made under the new Families First Coronavirus Response Act (“Act”) which was signed by President Trump on March 18, 2020. On Saturday the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (DOL) issued an announcement containing important new details on implementation of the Act. Click here for Saturday’s announcement.
Key Takeaways From the Announcement Include the Following:
1.Paid Leave Available: As described in more detail in the attached FAQ, the Act allows employees to receive up to 80 hours of paid sick leave and expanded paid child care leave when employees‘ children’s schools are closed or child care providers are unavailable.
2.Employers Reimbursed for 100% of Cost: Employers receive 100% reimbursement for paid leave pursuant to the Act, with health insurance costs included in the credit, and no payroll tax liability.
3.Fast Reimbursement to Employers: Reimbursement will be quick and easy to obtain. An immediate dollar-for-dollar tax offset against payroll taxes will be provided. For example:
a. If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 in taxes that it was going to deposit. The employer would only be required to deposit the remaining $3,000 on its next regular deposit date.
b. If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
The announcement states that where a refund is owed, i.e., where the employer’s leave payments exceed its taxes subject to credit, the IRS will send the refund as quickly as possible.
4.Small Business Exemption if Providing Leave Would Jeopardize Business Continuation: Small businesses with fewer than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would jeopardize the ability of the business to continue. DOL will be providing emergency guidance and rulemaking to clearly articulate this standard.
5.Temporary Non-Enforcement Period: DOL will be issuing a temporary non-enforcement policy that provides a period of time for employers to come into compliance with the Act. Under this policy, DOL will not bring an enforcement action against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply.
For Questions/More Information
For any questions, feel free to reach out to any member of the HRW COVID-19 team.
(Correction: We mistakenly referenced the 2019 Massachusetts minimum wage in the FAQ we circulated on Friday. The version linked here has been corrected to reference the current Massachusetts minimum wage of $12.75 per hour.)