The U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced that small and midsize employers (fewer than 500 employees) can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their workers. This act of relief is provided by the Families First Coronavirus Response Act, in which was signed by President Trump on March 18, 2020. Whether for their own health needs or to care for family members, this Act will allow employers to keep their employees on their payrolls while also ensuring that are not forced to choose between their paycheck and the public health measures needed to combat the virus.
- Employees receive up to 80 hours of paid sick leave and expanded paid childcare leave related to Covid-19.
- Employers receive 100% reimbursement, including: Health insurance costs, no payroll tax liability, and self-employed individuals receive an equivalent credit in pursuant to the Act.
- Part-time employees will also be eligible for prorated emergency paid sick leave based on the average number of hours worked in a two-week period.
- Reimbursements are quick and easy to obtain.
- Small businesses with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school closed, or childcare is unavailable in cases where the viability of the business is threatened.
- Requirements subject to 30-day non-enforcement period of good faith compliance efforts.
To take immediate advantage of the Act’s paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not enough to cover the cost, employers can seek an expedited advance from the IRS by submitting a streamlined claim form.