The Families First Coronavirus Response Act (the “FFCRA”), signed by President Trump on March 18, 2020, provides small and midsize employers refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing paid sick and family leave wages to their employees for leave related to COVID-19.
The FFCRA gives businesses with fewer than 500 employees (“Eligible Employers”) funds to provide employees with paid sick and family and medical leave for reasons related to COVID-19, either for the employee’s own health needs or to care for family members. Workers may receive up to 80 hours of paid sick leave for their own health needs or to care for others and up to an additional ten weeks of paid family leave to care for a child whose school or place of care is closed or child care provider is closed or unavailable due to COVID-19 precautions. The FFCRA covers the costs of this paid leave by providing small businesses with refundable tax credits. Certain self-employed individuals in similar circumstances are entitled to similar credits.
The IRS recently issued detailed guidance on these refundable tax credits. One thing to note is that, in order to obtain tax credits for paid leave taken by employees, employers must obtain and retain written statements and documentation to support the need for leave. Employers should therefore consider using FFCRA-tailored leave request forms that seek the required information.
FGMC attorneys are monitoring federal legislative and other developments related to the COVID-19 pandemic. We are available to help your small business navigate these dynamic, complex issues.