The Families First Coronavirus Response Act (FFCRA) launched last month, temporarily expanding paid sick and FMLA leave for employees of businesses with headcounts of fewer than 500 as part of the national COVID-19 response. The follow-up CARES Act provided payroll tax credits for employers to offset the cost and impact of the leave expansion.
The quick but piecemeal rollout of legislation has created some confusion as to how employees should declare their eligibility/need for leave and what documentation trail needs to exist to ensure employers are eligible for tax credits.
In this post we’ll cover:
- What conditions or situations justify paid leave under the FFCRA
- What documentation employees should submit as part of an application for leave
- What documentation employers need to maintain to qualify for tax credits
Clarifying Who is FFCRA Leave Expansion Eligible
The FFCRA establishes three specific situations in which an employee working for a business with 499 or fewer employees qualifies for two weeks of paid sick leave at their regular rate, up to $5,110:
- If the employee is subject to a federal, state, or local quarantine or isolation order
- If the employee has been advised by a healthcare provider to self-quarantine
- If the employee is experiencing symptoms associated with COVID-19 and seeking a medical diagnosis
The act also establishes three other scenarios in which an employee working for a business with 499 or fewer employees qualifies for two weeks of paid sick leave at two-thirds (2/3) their regular rate, up to $2,000:
- If an employee is caring for an individual subject to a quarantine or isolation order
- If an employee is experiencing any substantially similar condition identified by the HHS
- If an employee is caring for a child whose school or daycare is closed or unavailable due to COVID-19
Finally, the act also provides extended family leave for situations in which schools or childcare facilities remain closed beyond the two weeks of leave above. During that 10-week period, employees earn two-thirds (2/3) their regular rate, up to $10,000 (in addition to the $2,000 from their two initial weeks of leave).
Documentation Requirements for Employees Requesting Leave
The DOL did not codify any single approach to transitioning employees toward COVID-19 leave, instead saying that employees should file their request as soon as possible and follow reasonable documentation procedures as soon as practical. Here are the specific pieces of information/documentation the DOL stipulates employees must provide:
In their signed request for leave, employees must provide:
- Their full legal name (as it appears on IRS records)
- Their qualifying reason for leave (from the above list)
- A clear statement that their illness or responsibilities prevent them from working from home during this time
- Their anticipated date for return
If the employee is requesting leave due to a quarantine order, they must also provide:
- The name of the government entity who issued the order
If an employee is requesting leave because a healthcare provider has instructed them to, they must also provide:
- The name of the healthcare provider
If an employee is requesting leave to care for a child without school or daycare, they must provide:
- The child’s full legal name as it appears on school rosters
- The name of the school, childcare facility, or provider who is closed or unable to provide care due to COVID-19
- A clear statement that they are the only option to provide care for this child at this time
As long as you’re requiring, collecting, and maintaining the above documentation, you and your employees are compliant in the eyes of the DOL.
What About a Doctor’s Note?
Generally speaking, a doctor’s note is the gold standard for medical leave and should be provided in COVID-19-related ADA accommodation requests. However, the DOL is not requiring one as part of their leave documentation procedure, in part because the strain of the pandemic is putting on the medical community.
That means if an employee believes they have COVID-19 or needs to care for someone who does, waiting to get a doctor’s note could actually put more of your employees at risk. That’s why the best guidance for now is to keep your application protocol relatively straightforward and stick to the DOL’s documentation requirements.
Documentation Requirements for Tax Credits
While the DOL’s documentation requirements are crucial to executing the FFCRA correctly, the IRS’ documentation requirements are equally important to getting the payroll tax credits available to help your business weather this storm.
In order to maintain eligibility for your tax credits, you must maintain:
- IRS Form 7200
- IRS Form 941
- Any other documentation related to filing for credits with the IRS
- Documentation of how you calculated FMLA/sick leave pay for employees
- Documentation of how you determined the amount of qualified health plan expenses that you allocated to wages
In terms of documentation from your employees, the IRS’ requirements are extremely similar to the DOL’s, but there are a few key differences, specifically involving childcare scenarios.
The IRS requires documentation of the following information for employees requesting leave under the FFCRA to care for a child or children whose school(s) or place(s) of childcare are closed due to COVID-19:
- The full name of each child as they appear on school rosters
- The name of the school, childcare facility, or provider no longer able to provide childcare due to COVID-19
- A clear statement that they are the only option to provide care for this child at this time
- In the case of a child over 14 who would only be alone during daylight hours, employees should provide a statement explaining the special circumstances that require childcare
Takeaways
The goal of the FFCRA is to protect individuals and families across America during the COVID-19 pandemic. The CARES Act backs up the FFCRA by providing businesses with the tax credits they need to make the considerable leave expansion feasible. Getting those credits requires documentation of the right information, however.
Remember:
- There is no official leave documentation process for the DOL, but they do require a few specific pieces of information
- The IRS has slightly stricter requirements for documentation of childcare-related leave
- IRS forms 7200 and 941 are essential to receiving your tax credits
- Be ready to explain how you calculated wages for employees on leave and determined your health plan expenses