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By: Jeffrey A. Hord
On Friday, the Internal Revenue Service and U.S. Department of Labor issued an announcement regarding the timing of reimbursement by the federal government to employers for paid emergency leave and expanded FMLA leave required under the new Families First Coronavirus Response Act (“FFCRA”). This guidance (available here) represents an important step towards providing employers with greater clarity as to how and when their businesses can obtain tax relief relating to the cost of providing Coronavirus-related leave to employees.
As we covered in this Blog last week, the FFCRA requires private employers with fewer than 500 employees to provide paid sick leave and paid family leave for certain individuals impacted by the COVID-19 pandemic. Understandably, small businesses have been extremely anxious about the financial burden of complying with these new requirements, particularly during this time of economic uncertainty and unrest. For this reason, the FFCRA created a series of refundable tax credits for employers providing paid emergency sick leave or paid FMLA leave. As written, however, the FFCRA left unanswered many key questions regarding the process for obtaining these credits, the timing of subsequent reimbursement, and so on.
In Friday’s announcement, the DOL and IRS made clear that employers can begin to “take immediate advantage” of these tax credits by retaining and accessing funds that they would otherwise pay to the IRS in payroll taxes. Here are some of the “key takeaways” highlighted in the announcement:
This announcement is sure to give some comfort to employers worried about how they would cover paid leave mandates without knowing when they might be reimbursed for those substantial costs. Cash flow concerns have already caused many businesses to make difficult furlough and termination decisions; hopefully, this guidance will help employers navigate through this unprecedented time.
FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Labor & Employment, Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.
You can also contact your FMG relationship partner or email the team with any questions at firstname.lastname@example.org.
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 See Emergency Family and Medical Leave Expansion Act, Section 3104.