Category: Paid Sick Leave

Sick & Family Leave Acts – Summary

Posted on | by Frank Infurchia

Greetings from home!

In the last few weeks with all of the tax deadlines extended, what has typically been ‘tax season’ for all of us has quickly morphed into coronavirus response and mitigation.  We have been researching and learning about the new paid leave acts, tax credits, stimulus packages, SBA loans and the no-interest CT bridge loans.  In addition, we have been taking continuing education and attended town-hall conference calls with our state representatives and the SBA in order to pass along pertinent information to you.

This is another one of a many-part series of communications you will receive from us regarding new tax benefits and mitigation opportunities that may be available.  Please share this information with others.

This post will focus solely on the Families First Coronavirus Response Act; specifically, the two parts of this act which provide no-cost to employer paid sick, medical and family leave to employees though tax credits claimed on payroll tax returns.  You can click the below links to see our limited analysis regarding these new acts.

Emergency Paid Sick Leave Act

Emergency Family and Medical Leave Expansion Act

Paid Sick, Emergency Family and Medical Leave for Self-Employed

 

 

Self Employed – Paid Leave Acts

Posted on | by Frank Infurchia

Paid Sick Leave

A self-employed individual is eligible for the credit if he or she would be entitled to receive paid sick leave under the EPSLA if the individual were an employee of an employer (other than himself or herself)

For eligible self-employed individuals who —

  1. Are subject to a federal, state, or local quarantine order related to COVID-19,
  2. Have been advised by a health care provider to self-quarantine due to concerns related to COVID-19, or
  3. Experience symptoms of COVID-19 and seek diagnosis

The qualified sick leave equivalent is capped at the lesser of $511 per day or 67% of the average daily self-employment income for the taxable year per day

An eligible self-employed individual is eligible for a paid sick leave credit if he or she:

  1. Is caring for a family member who is suffering from the coronavirus, or
  2. Is caring for a child whose school or place of care has been closed due to the coronavirus, or
  3. The individual himself or herself is experiencing any symptoms that are substantially similar to the symptoms of the coronavirus

The qualified sick leave amount is capped at the lesser of $200 per day 67% of the average daily self-employment income for the taxable year per day.  Individuals are limited to those days in which the individual is unable to work for reasons that would entitle him or her to leave under the EPSLA.

Family and Medical Leave

Eligible self-employed individuals are those who would be entitled to receive paid family leave under the EFMLEA if the individual were an employee of an employer (other than himself or herself).  The equivalent amount is capped at the lesser of $200 per day or 67% of the average daily self-employment income for the taxable year per day, including only those days that the individual would be entitled to receive paid leave under the EFMLEA

Tax credits for self employed

The Families First Coronavirus Response Act allows for self employed individuals to claim refundable tax credits equal to 100% of eligible qualified sick leave and family and medical leave.  Presumably, the tax credits will be claimed on the 2020 Form 1040, unless the IRS announces accelerated procedures to claim the credits.  Substantiation will likely be required although there is no guidance yet regarding what will be needed.  Taxpayers may be able to reduce their quarterly estimated tax payments by the amount of their eligible credit in order to effectively receive the benefit.  As more guidance is released, we will keep you informed.

Emergency Family and Medical Leave Expansion Act

Posted on | by Frank Infurchia

Families First Coronavirus Response Act limited analysis

Two provisions which apply specifically to employees, employers and the self-employed.

  1. The Emergency Paid Sick Leave Act (EPSLA) and
  2. The Emergency Family and Medical Leave Expansion Act (EFMLEA)

 Emergency Family and Medical Leave Expansion Act

Effective 4/2/2020, EFMLEA requires employers with fewer than 500 employees to provide employees with up to 12 weeks of leave for a “qualifying need related to a public health emergency” and to return the employee to work at the end of the leave.  A qualifying need means that an employee is unable to work or telework because the employee needs leave to care for a son or daughter under the age of 18 whose school or place of care has closed or whose childcare provider is unavailable, because of an emergency with respect to COVID-19 declared by a federal, state, or local authority.  Eligible employees must have worked for a minimum of 30 days with the employer.

Under the EFMLEA, the first 10 days of the employee’s leave may consist of unpaid leave, however, an employee may choose to substitute any accrued paid leave such as vacation, personal, medical, or sick leave for such unpaid leave.  Or, if an employee qualifies for both this (the EFMLEA) and Emergency Paid Sick Leave, the employee may use the Emergency Paid Sick Leave during the first 10 days of the EFMLEA leave that would normally be unpaid.

Following the 10-day grace period an employer must provide paid leave to the employee for each additional day of leave.  The rate of pay for such paid leave is calculated based on a rate of not less than two-thirds of the employee’s regular rate of pay and the number of hours the employee would otherwise normally be scheduled to work but is capped for each employee at two-thirds of regular pay rate up to $200 per day or $10,000 in the aggregate per employee.

EFMLEA tax credits

Employers paying family and medical leave wages under the EFMLEA may claim a 100% refundable credit against the employer’s share of payroll tax for each employee, limited to two-thirds of regular pay rate up to $200 per day up to a total of $10,000 per employee plus a pro rata share of the employer’s qualified health plan expenses.  This credit will be claimed on quarterly payroll tax returns Form 941.  It remains to be seen if employers can reduce their normal federal tax deposits for the amount of the credit or if they will be able to request an accelerated credit refund in lieu of the payroll tax credit.  We expect the IRS to release guidance on this shortly.

Emergency Paid Sick Leave Act

Posted on | by Frank Infurchia

Families First Coronavirus Response Act limited analysis

Two provisions which apply specifically to employees, employers and the self-employed.

  1. The Emergency Paid Sick Leave Act (EPSLA) and
  2. The Emergency Family and Medical Leave Expansion Act (EFMLEA)

 Emergency Paid Sick Leave Act (EPSLA)

Effective on April 2, 2020 provides that employers with less than 500 employees provide up to two weeks or 80 hours of paid and unpaid public health emergency leave through 12/31/20.  This act takes precedence over existing employer policies provided by the employees and applies to all employees with no eligibility period.  This act applies to both full and part time employees (up to 80 hours for full time employees and average hours worked in a two week period for part time employees).

EPSLA provides that employers must pay an employee his or her regular pay rate for 80 hours over a two-week period subject to a maximum of $511 per day and $5,110 in total if the employee falls under any one of the following three criteria:

  1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19
  2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
  3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis

If an employee falls under any one of the reasons below (4, 5, or 6) the employer must pay two-thirds of the regular pay rate up to $200 per day ($2,000 in total) in sick leave for 80 hours over a two-week period:

  1. The employee is caring for an individual who is subject to an quarantine or isolation order as described in (1) or has been advised to self quarantine as described in (2)
  2. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed or the childcare provider of such son or daughter is unavailable due to COVID-19 precautions
  3. The employee is experiencing any other substantially similar condition specified by the secretary of health and human services in consultation with the secretary of the treasury and the secretary of labor

EPSLA tax credits

 This act allows an employer to claim a refundable tax credit on Form 941 (quarterly payroll tax returns) in an amount equal to 100% of the qualified sick leave paid for each quarter plus a pro-rata share of the employers qualified health plan expenses (capped at $511/ day for 1-3 and $200/day for 4-6).  It remains to be seen if employers can reduce their normal federal tax deposits for the amount of the credit or if they will be able to request an accelerated credit refund in lieu of the payroll tax credit.  We expect the IRS to release guidance on this shortly.