Dinse Brief: New Employer Paid Leave Laws Discussion

The U.S. Department of Labor, the U.S. Department of Treasury and the Internal Revenue Service issued a joint press release to address the employer paid leave obligations contained within the recently enacted Families First Coronavirus Response Act, namely the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act.

Key Points

• Employers will receive a tax credit to reimburse them 100% for any paid leave they provide to their employees under the requirements of these new laws. Eligible employers are entitled to an additional tax credit that will be determined on the basis of the employer’s costs to maintain health insurance coverage for any eligible employees during the leave period.

• The agencies announced prompt payment for the costs of providing paid leave. Specifically, eligible employers who pay qualifying paid leave under the FMLA Expansion Act or the Emergency Paid Sick Leave Act will be able to retain an amount of payroll taxes equal to the amount of qualifying paid leave, rather than deposit them with the IRS.  The payroll taxes available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes for all  If there are not sufficient payroll taxes to cover the cost of the paid leave, employers will be able to file a request for an accelerated payment, which the IRS expects to process within two weeks, or less.   Further guidance will be released this week.

• Small businesses with fewer than 50 employees will be eligible for an exemption from the paid leave requirements when the need for leave is caused by school closings or child care unavailability and where those requirements would jeopardize the ability of the business to continue. The DOL will be providing clear guidance on this exemption standard.

• The DOL will issue a temporary non-enforcement policy to provide employers a period of time to come into compliance with the obligations of the paid leave laws. During this time period, the DOL will not bring an enforcement action against any employer for violations of these laws, so long as the employer has acted reasonably and in good faith to comply with its obligations.

The press release can be found here: https://www.dol.gov/newsroom/releases/osec/osec20200320.

For more information, or for assistance with other employment-related questions pertaining to the COVID-19 pandemic, please contact: Amy McLaughlin (amclaughlin@dinse.com), Karen McAndrew (kmcandrew@dinse.com) or Kendall Hoechst (khoechst@dinse.com).