Demystifying FFCRA & COVID-19

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On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was signed into law. This new law will be in effect April 1, 2020 until December 31, 2020. Two aspects of this law affects employers, namely the Emergency Paid Sick Leave (EPSL) and Emergency FMLA Expansion Act (EFMLEA).

The Department of Labor also created an excellent summary of the new FFCRA requirements and a thorough FAQ page.

How do we apply the new law to someone who is high risk, has concerns about contracting the disease, and wants to stay home? Does this fall under the emergency FMLA paid or unpaid portion?

This employee may be eligible for two weeks of the Emergency Paid Sick Leave (EPSL) if they are unable to work (or telework) and they have a documented autoimmune disorder or condition where their health care provider has recommended that they self-quarantine to avoid COVID-19.

The Emergency FMLA Expansion Act (EFMLEA) only covers employees unable to work due to caring for their children under 18 years old due to their school or child care provider being unavailable due to COVID-19 precautions.

How does the new FFCRA law apply to someone who hasn’t been diagnosed, but may have been in contact with someone who might have COVID-19 and want to stay home and self quarantine?

To be eligible for EPSL, the employee must provide documentation of a medical provider advising them to stay home due to exposure to someone who might have been ill with COVID-19. To receive EPSL when experiencing symptoms, they must provide documentation that they are actively seeking medical diagnosis.

What documentation do employees need to submit for FFCRA?

If your employees take EPSL, you must require them to provide you with appropriate documentation in support of the reason for the leave, including: the employee’s name, qualifying reason for requesting leave, statement that the employee is unable to work, including telework, for that reason, and the date(s) for which leave is requested.

Documentation of the reason for the leave will also be necessary, such as the source of any quarantine or isolation order, or the name of the health care provider who has advised you to self-quarantine. For example, this documentation may include a copy of the Federal, State or local quarantine or isolation order related to COVID-19 applicable to the employee or written documentation by a health care provider advising the employee to self-quarantine due to concerns related to COVID-19.

If your employees take leave covered under EFMLEA, you must require them to provide you with appropriate documentation supporting their leave, just as you would for conventional 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. This requirement also applies when the first two weeks of unpaid leave run concurrently with EPSL taken for the same reason.

If you intend to claim a tax credit under the FFCRA for wages paid under EPSL and EFMLEA, you should retain all these documentation in your records. You 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.

Can employees take EPSL if they think they have symptoms for COVID-19, or only if they receive a diagnosis? If the latter, do we need to collect the certification paperwork from medical providers to get the tax credit?

All employees, including those in San Francisco and California, can take EPSL if they are experiencing symptoms of COVID-19 but they would need to provide documentation that they are seeking medical diagnosis. The time taken to seek medical diagnosis can be covered by EPSL. The employee does not need to be certified to have COVID-19 for the employee to receive EPSL.

If the employee is indeed ill with COVID-19 and will need to take the remaining time available under EPSL, your company should then ask for the documentation from the medical provider and retain it in your records. You 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.

How do we report the qualified wages to the IRS in order to receive sick and FMLA expansion credits?

Employers should report the qualified wages when they file their quarterly payroll tax returns in the form 941 series with the IRS.

How do I use my payroll taxes to pay for the cost of qualified sick and childcare leave?

In the standard system, employers are required to withhold from their employees’ paychecks federal income taxes and the employees’ share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941) with the IRS.

Employers can now use and retain an amount of payroll taxes equal to the amount of EPSL and EFMLEA benefits paid to eligible employees, rather than deposit them to the IRS. The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.

What if my company doesn’t have enough payroll taxes to cover the cost of qualified sick and child care leave?

If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced by the IRS.

Do we need to add the 80 hours sick leave on the employee PSL bank on April 1st, or can we do it as needed?

Employees need to meet the EPSL qualifying reasons to receive the two weeks of paid leave benefits. Therefore, we recommend only adding the paid sick leave time as needed. The time taken under EPSL should not be combined with the employee’s regular sick leave hours because your company would need to track the actual EPSL time taken to file for the 100% tax refundable credit.

Do privately held companies backed by venture capital have to measure their employee headcount differently?

There is no specific guidance for privately held companies backed by venture capital. There is existing regulatory guidance under the FMLA (at 29 C.F.R. § 825.104) about when two related companies should be considered as a single employer for purposes of the FMLA. The “integrated employer test” is used to determine when multiple companies should be treated as a single employer; factors considered in determining whether two or more entities are an integrated employer include common management, interrelation between operations, centralized control of labor relations, and degree of common ownership/financial control.

In addition, employers should consider whether they jointly employ a particular individual because current FMLA regulations provide that employees jointly employed by two employers must be counted by both employers, whether or not maintained on one of the employer’s payroll, when determining employer coverage and employee eligibility. See 29 C.F.R. § 825.106 for more information about the joint employment test currently used under the FMLA. As noted above, however, employers should err on the side of caution when attempting to use these principles to avoid coverage under the EFMLEA.

I understand the FFCRA is for businesses with less than 500 employees. Who is included in this headcount? Do we need to include our international headcount in this number?

Your company is considered a covered employer if you have less than 500 employees in the United States, including any territories or possession of the United States. International employees should not be included in this headcount.

To determine your headcount, you should include full time employees; part time employees; employees on leave; temporary employees who are jointly employed by you and another employer (regardless of whether the jointly-employed employees are maintained on only your or another employer’s payroll); and day laborers supplied by a temporary agency (regardless of whether you are the temporary agency or the client firm if there is a continuing employment relationship).

Workers who are independent contractors under the Fair Labor Standards Act (FLSA), rather than employees, are not considered employees for purposes of the 500-employee threshold.

Do you recommend having Payroll set up FFCRA codes to track who and how much employers have been paid related to FFCRA?

Yes, we recommend Payroll setting up FFCRA codes to track the EPSL and EFMLEA leave benefits that have been paid out to qualified employees. You will also need to ensure that you require documentation and retain them for your IRS tax refund.

How has Sparrow updated their processing procedures related to the new laws?

Sparrow is keeping a watchful eye as states continue to roll out support services in response to COVID-19. As experts in leave management, we’re able to easily incorporate COVID-19 related logistics and paperwork into our streamlined process. This includes EFMLEA/FFCRA tracking, alerts for updated emergency state regulations, payroll calculations, and state/federal benefits paperwork.

Will Sparrow help manage FFCRA leaves? How does this work?

Yes, Sparrow will help manage FFCRA leaves.

Once the HR team adds the employee to the Sparrow dashboard and introduces them, your assigned Product Specialist will arrange an onboarding call with the employee. During the call, we will talk through the employee’s FFCRA rights and determine their eligibility for EPSL, EFMLEA and other state/third party insurance benefits. We will also assist your HR and Payroll team by obtaining the appropriate documentation, tracking their leave dates, and providing the employee’s benefit calculations and personalized payroll plan.