COVID-19: Immediate Relief To Help Businesses Offset The Cost Of Paid Leave Under The Families First Coronavirus Response Act
Posted March 21, 2020

On March 20, 2020, the Treasury, IRS and Labor announced an immediate plan regarding tax credits and advances to help small and midsize businesses quickly recover the cost of providing coronavirus-related leave to employees as required under the Families First Coronavirus Response Act.

Small and mid-sized employers can begin taking advantage of refundable payroll tax credits to immediately and fully reimburse the costs of providing coronavirus-related leave to employees. The goal is to enable employers to keep their employees on payroll while protecting employees who need leave.

Under the Families First Coronavirus Response Act, effective April 2, 2020, eligible employees can receive up to 80 hours of paid sick leave for qualifying conditions as well as expanded paid child care leave under FMLA. LightGabler provided further details regarding these upcoming benefits in our prior legal update, available on our website here.

Under the Act, employers will receive 100% reimbursement for paid leave. Heath insurance costs are included in the credit, and self-employed individuals receive the credit as well. Despite these anticipated credits, the new legislation caused widespread concern for businesses already struggling to continue operations in the current crisis.

Fortunately for employers, providing paid leave will be less of a burden than originally anticipated. Immediate payroll tax relief is available, and government agencies have assured employers that reimbursement will be fast and easy to obtain. As noted in the published guidance:

  • An immediate dollar-for-dollar tax offset against payroll taxes will be available.
  • Where a refund is owed, the IRS has committed to sending the refund as quickly as possible.
  • Where the payroll tax credits are not enough to cover the cost of leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form to be released this week.
  • Employers with fewer than 50 employees will be eligible for an exemption from the leave requirements in cases where the viability of the business is threatened.

Further information will be forthcoming in the next week as additional regulations and guidance is published by the relevant government agencies in advance of the legislation's April 2 effective date. For now, employers can feel encouraged that they will not be forced to advance paid leave to employees while waiting until year-end for relief. Employers should be able to access immediate offsets, refunds and advances designed to facilitate their ability to provide paid leave as required by the Act, thus providing protection to businesses along with individual benefits.

Additional information about this tax relief can be found here, and LightGabler will keep you informed as further information is published in the next week.

For further questions or legal assistance with COVID-19 issues specific to your company, contact the employment attorneys at LightGabler.

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