The United States Department of Labor (DOL) has recently released the FFCRA which requires certain employers to provide paid sick leave and expanded family and medical leave to their employees. These guidelines are only available for leave taken between April 1, 2020, and December 31, 2020, and the employee must have been with the company since March 2, 2020. Otherwise, the employee will be eligible for these benefits after 30 days of employment.
The DOL has also provided a summary employee rights poster, that can be found here. The poster must be “posted” by all employers for their employees to see; considering the current world situation, the poster may need to be posted electronically.
Additional guidelines we found important to point out are as follows:
This paid sick leave can be claimed as a payroll tax credit. Employers can reduce their payroll tax deposits by the amount of leave paid. For example, if the payroll tax deposit is $8k but $5k was paid leave, the employer would only be required to deposit $3k in payroll taxes. Employers can claim a refund on Form 941 filed at the end of the quarter.
The paid sick leave is available for up to 80 hours or the “scheduled time” of the employee. For part-time workers, this would cover up to two weeks of their normal schedule.
Applies to employers with less than 500 employees. There is a small business exemption if the employee has less than 50 employees and claims that the payment would jeopardize the viability of the business. The clarifying regulations are likely to be very strict in this regard.
Paid sick leave has caps based on qualifying reasons. Sick leave is capped at $511 per day or $5,110 aggregate per employee. If the leave purpose is to care for a child due to school closure, the employee can receive up to 12 weeks of pay but the pay is capped at 2/3 normal pay or $200 per day.
Appropriate documentation must be provided by employees. The note to the employer must include the employee name, qualifying reason for the leave, statement that the employee is unable to work (including telework, and dates for which leave is requested). Additionally, employees will need to provide a doctor’s note, copy of federal, state, or local quarantine or isolation notice, or notice of school closure.
There are specified rules for reducing pay, laying off employees, or closing your business. Employees with reduced hours for unqualified reasons are not eligible. If an employer closes the business but continues to pay their employees full compensation, this is not deemed a closure. Business closure refers to closing the business and no longer paying or laying off employees.
Cannot combine unemployment and paid leave options. Employees cannot collect unemployment while using any of the paid leave options provided.
30 days to comply. All eligible employers will have 30 days to implement and comply with the new guidelines. We would recommend creating new pay codes to track this paid sick and family leave.
Additionally, California has more options for paid sick leave. Employees can file for unemployment in cases of complete layoff or reduced hours, and the seven-day waiting period is waived. Californians who are sick or quarantined can claim disability with benefits of 60-70% of wages or $50-$1,300 per week.
CARES Act Update: Unemployment insurance will now include an additional $600 per week to recipients of these benefits. The aid will be available to individuals for up to four months. It is still unclear about how the amount or limit will be decided and we recommend visiting the Employment Development Department website to see new details released.
Additional specific information can be accessed by referencing the FFCRA question and answer document as prepared by the United States Department of Labor.
Our team is continually working to keep you apprised of the changing business landscape. If you have any questions, please do not hesitate to reach out to your accountant or Becky Austin at baustin@gccpas.net. You can count on us to be an advisory resource to you during these challenging times.
