Tax Credits for Employers, Part 1- Employee Sick Pay

Tax Credits for Employers, Part 1- Employee Sick Pay

The Families First Coronavirus Response Act (FFCRA) includes provisions that help employers provide paid sick leave to employees. 

Starting 4/2/20, and subject to some limitations and exceptions, employers with fewer than 500 employees must provide both paid and unpaid public health agency emergency leave to certain employees through December 31, 2020.  Many of these payments will be eligible for payroll tax credits to offset the costs. 

Some important points:

  • This leave takes precedence over existing sick leave policies, and may be used in addition to any paid sick leave currently provided.
  • All employees are covered with no eligibility period.
  • Employers must pay an employee his or her regular pay rate for 80 hours over a two week period subject to maximums.  The following categories are included:
    • Employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19.
    • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
    • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  • Employees falling under any of the 3 categories below are eligible for a reduced benefit of up 2/3 of their regular pay up to $200 per day ($2,000 in total) in sick leave for 80 hours over a two week period:
    • The employee is caring for an individual meeting the criteria in the previous section.
    • The employee is caring for a son or daughter of such employee if the school or daycare is closed or unavailable due to COVID-19 precautions.
    • The employee is experiencing any substantially similar condition as may outlined later.
  • This applies to full and part time employees.
    • Full time employees are entitled to take up to 80 hours of leave.
    • Part time employees are entitled to leave based on average number of hours worked in a given 2 week period.
  • Employer credits- Employers may take a refundable tax credit equal to the amount of qualifying sick leave paid.
    • This credit is claimed against the employer’s portion of social security taxes.

The U.S. Department of Labor has released a fact sheet for employees, a fact sheet for employers, and FAQs related to this bill. 

Bill Krizner from The Krizner Group has provided a template to document employees requesting leave under the sick pay portion of this statute.

Further guidance will be forthcoming.  If you have any questions about qualifying for the tax credit, please don’t hesitate to contact our office.