On April 1, 2020, the Department of Labor (DOL) posted a temporary rule relating to the paid leave requirements in the Families First Coronavirus Response Act (FFCRA). The temporary regulations expand on the question and answer guidance provided by DOL to date and confirmed that employees must give notice to their employers of the need to take leave and must provide supporting documentation for requests for paid sick leave and emergency family and medical leave. The IRS also provided FAQ guidance on the refundable tax credits for the paid leave benefits.
Here are some updated FAQs to help employers comply with the FFCRA paid leave requirements:
If employees are forced to stay home because of a shelter in place order are entitled to use emergency paid sick leave?
Generally, no. According to the DOL guidance (see Questions 23-25), if a business closes because of a shelter in place order, employees are not entitled to emergency paid sick leave benefits, but instead may apply for unemployment benefits.
However, if an employer remains open during a shelter in place order, and an employee is required to stay home for the legally protected, COVID-related reasons and the employee cannot perform his/her job duties from home, then emergency paid sick leave is availble.
What is the difference between a furlough and a layoff?
From a legal perspective, the terms furlough, lay off, and reduction-in-force do not have different meanings and are interchangeable. However, many employers use the term furlough to mean placing an employee on a temporary, unpaid cessation of work with the intention that the employee will be recalled to work when the pandemic subsides. The term layoff often used to mean termination of the employment relationship. A reduction-in-force is often used to describe any employee layoff that is part of a larger set of layoffs.
Are furloughed, laid off, or terminated employees entitled to paid leave under the FFCRA?
No, and the answer doesn’t matter whether the furlough, layoff, workforce reduction or other termination was implemented before, on, or after the effective date of the FFCRA. The DOL has made clear that employees who have been furloughed, laid off, or terminated are not entitled to paid leave under the FFCRA. Employers can suggest to those employees they may apply for unemployment benefits.
If an employer provided its employees with paid leave prior to April 1, 2020, is it entitled to claim the tax credit for the amounts provided?
What about the exception for health care providers?
The DOL guidance explains that “health care provider” has two different meanings for FFCRA purposes:For purposes of an employee’s eligibility for emergency paid sick leave due to advice from a “health care provider” to self-quarantine, the DOL indicates that such advice must come from a licensed doctor of medicine, nurse practitioner, or other health care provider as defined under the FMLA.
- For purposes of an employee’s eligibility for emergency paid sick leave due to advice from a “health care provider” to self-quarantine, the DOL indicates that such advice must come from a licensed doctor of medicine, nurse practitioner, or other health care provider as defined under the FMLA.
- For purposes of determining which “health care providers” may be exempted from the FFCRA paid leave benefits, the new DOL guidance says that nearly any employee who is employed by a medical provider, or an entity that contracts with a medical provider, or an entity that provides supplies to medical providers may be exempt.
Despite this dramatic expansion, the DOL advises employers to be “judicious” when applying the expansive definition to exempt health care providers, and make exemption decisions on an individualized, case-by-case basis by considering whether certain employees are genuinely needed at work.
How do employers document FFCRA leave?
Private sector employers are eligible for a tax credit equal to 100% of the paid leave they provide to employees under the FFCRA. The DOL has made clear that employers may require employees to submit documentation establishing their need for leave.
According to the DOL, appropriate documentation to support EFMLA leave “may include a notice of closure or unavailability from [the] child’s school, place of care, or child care provider, including a notice that may have been posted on a government, school, or day care website, published in a newspaper, or emailed to [the employee] from an employee or official of the school, place of care, or child care provider.”
The IRS goes further and indicates that in order to substantiate eligibility for a tax credit – whether for EFMLA leave or EPSL leave – the employer must obtain from the employee a written request stating:
- The employee’s name;
- The date or dates for which leave is requested;
- A statement of the COVID-19 related reason the employee is requesting leave and written support for such reason; and
- A statement that the employee is unable to work, including by means of telework, for such reason.
And the IRS gets even more specific than that.
In the case of a leave request based on a quarantine order or self-quarantine advice, the statement from the employee should include:
- The name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine; and
- If the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee.
- In the case of a leave request based on a school closing or child care provider unavailability, the statement from the employee should include:
- The name and age of the child (or children) to be cared for;
- The name of the school that has closed or place of care that is unavailable; and
- A representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave and, with respect to the employee’s inability to work or telework because of a need to provide care for a child older than fourteen during daylight hours, a statement that special circumstances exist requiring the employee to provide care.
Is any additional documentation required for an employer to claim the tax credit?
According to the DOL, if an employer intends to claim the tax credit, the employer must retain “appropriate documentation” to support the leave. And again, the IRS provides specificity, stating that the employer must create and maintain for at least four years after the later of the date the tax becomes due or is paid the following documentation:
- Documentation to show how the employer determined the amount of qualified sick and family leave wages paid to employees that are eligible for the credit, including records of work, telework and qualified sick leave and qualified family leave.
- Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages. See FAQ 31 (“Determining the Amount of Allocable Qualified Health Plan Expenses”) for methods to compute this allocation.
- Copies of any completed Forms 7200, Advance of Employer Credits Due To COVID-19, that the employer submitted to the IRS.
Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that the employer submitted to the IRS (or, for employers that use third party payers to meet their employment tax obligations, records of information provided to the third party payer regarding the employer’s entitlement to the credit claimed on Form 941).