The United States Department of Labor (DOL) has issued a detailed memo, in question and answer format, about the paid sick leave and the expanded family and medical leave contained in the recently enacted Families First Coronavirus Response Act (FFRCA), i.e., the second coronavirus (COVID-19) relief legislation. While the memo is mostly about the leave provisions themselves, it does contain some information about the employer tax credits that are based on the leave provisions.
Background. On March 18, the President signed the FFRCA (PL 116-127) intended to ease the economic consequences stemming from the coronavirus disease outbreak by providing family and medical leave and sick leave to employees and providing tax credits to employers and self-employeds who provide the leave. The FFRCA also affects employer-sponsored health plans.
DOL memo provides tax credit information. Here are some of the tax-credit-related information in the DOL memo.
Documentation requirements. An employer that intends to claim a tax credit under the FFCRA for its payment of the sick leave or expanded family and medical leave wages should retain appropriate documentation in its records. It should consult IRS applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit.
With respect to employees that take expanded family and medical leave to care for their child whose school or place of care is closed, or whose child care provider is unavailable, due to COVID-19, an employer may require the employees to provide it with any additional documentation in support of such leave, to the extent permitted under the certification rules for conventional Family Medical Leave Act (FMLA) leave requests. For example, this could include a notice that has been posted on a government, school, or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care, or child care provider.
Payments to employees that exceed paid leave provisions of FFRCA. An employer may pay its employees in excess of FFCRA requirements. But it cannot claim, and will not receive tax credit for, those amounts in excess of the FFCRA's statutory limits.