Update – Paid Leave Law (March 24, 2020) FFCRA Payroll Tax Credit — Easing the Burden for Employers
On March 18, 2020, the President signed the Families First Coronavirus Response Act (FFCRA). This legislation changes the way employers handle Paid Leave Time and Paid Time Off during the coronavirus pandemic. The law will go into effect on April 1, 2020, and aims at helping ease the burden of employers having to adhere to the new law (FFCRA).
Employers covered by the Families First Coronavirus Response Act (the Act) may now take advantage of the special tax credits designed to reimburse them for providing coronavirus-related leave to their employees. Although the effective date has not been determined, but will be no later than April 1, 2020, the tax credits are available immediately.
How will the Payroll Tax Credit help your business, and does your business qualify?
Do you meet the qualifications?
The Act covers private employers with fewer than 500 employees and more than 50.
Businesses with fewer than 50 employees will be eligible for exemptions from the leave requirements relating to school closings or unavailability of childcare services.
It also covers several public employers, regardless of size.
Important benefits under the Act are not available to employees who have been furloughed, laid off, or placed on leave for economic reasons, even if those economic reasons are tied to the coronavirus pandemic.
How can it help your business?
Businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes to take immediate advantage of the paid leave credits.
If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week. Leave amounts and corresponding tax credits are subject to daily caps.
Employers may also take a tax credit for the amount of the employer's qualified health plan expenses. These funds will be properly allocated to the employee's coronavirus-related leave under the Act.
Important to Note:
Businesses with fewer than 50 employees will be eligible for exemptions from the leave requirements relating to school closings or unavailability of childcare services.
There will be a 30-day temporary non-enforcement period for businesses to come into compliance with the Act, as long as the employer has “acted reasonably and in good faith to comply.”
We encourage you to read the full announcement carefully, which can be found here: IRS Updates.
BlueFire HR is committed to helping our clients navigate through these ever-changing HR challenges. We will continue to publish updates as they become available. We are available to answer any questions pertaining to employee relations issues during the crisis and beyond.
