Families First Coronavirus Response Act: Updated Guidance, IRS FAQs on Documentation and Tax Credits

The Department of Labor (DOL) and Internal Revenue Service (IRS) continue to release guidance in the wake of the Families First Coronavirus Response Act (FFCRA). The latest is a DOL temporary rule.

While it doesn’t introduce any new concepts, it does provide further clarification for some of the requirements which are summarized below. Additionally, the IRS has given us more details regarding the tax credits and documentation employers should request. That guidance can be found in Q#44 through #46 here.

The definition of “son” or “daughter” for purposes of both Paid Sick Leave and Expanded FMLA includes children under the age of 18 as well as children age 18 or older incapable of self-care because of a mental or physical disability. IRS provided guidance with regards to documentation for this scenario, which includes a statement describing special circumstances for the employee’s inability to work or telework because of a need to provide care for a child older than fourteen during daylight hours. Reference the IRS link above, Question 44.

For purposes of both Paid Sick Leave and Expanded FMLA, both the “joint employer” and “integrated employer” tests under the FLSA and FMLA, respectively, apply when determining the number of employees for a private employer.

A government quarantine or isolation order (which may include a “shelter in place” order) triggers a right to Paid Sick Leave only if the employer continues to make work or telework available to the employee, but the employee cannot work due to the government order (e.g. order requires certain age groups or individuals with a particular condition to stay home and telework is not available). Paid Sick Leave is not available if the employer reduces hours or shuts down the business to comply with the order.

Affected employers are not required to provide Paid Sick Leave or Expanded FMLA to “health care providers” or “emergency responders”, both of which are defined very broadly to include most employees of entities involved in providing or facilitating medical care. That being the case, employers choosing to provide the paid leave in accordance with the FFCRA are eligible to claim the refundable tax credits to offset the costs of providing such paid leave.

Small employers (those with <50 employees) may qualify for an exemption and not be required to provide Paid Sick Leave or Expanded FMLA for employees who request leave to care for a child due to COVID-19 related school or daycare closure if the employer documents that it meets certain criteria. But the exemption is available only to employees whose absence would cause a hardship and meets the criteria set forth by the DOL; it does not permit a small employer to avoid providing paid leave to all employees who request leave for a qualifying reason.

The standard paperwork generally required for an employee requesting leave protected under the standard FMLA (e.g. notices of eligibility, rights and responsibilities) is NOT required for Expanded FMLA. An employer will be in compliance so long as the documentation requirements set forth by the DOL and the IRS specifically for purposes of claiming the refundable tax credits is followed.

The term “group health plan” for purposes of determining what coverage must continue to be made available to employees during Paid Sick Leave and Expanded FMLA, as well as determining which costs may be included when claiming the refundable tax credit, is defined broadly to include most coverage providing medical care, including group health insurance, prescription drug coverage, health FSAs, HRAs, and dental and vision coverage.

Even with the additional guidance now available from the DOL, employers may struggle to understand exactly when paid leave is required under the FFCRA.

When attempting to apply the rules to specific facts and circumstances, including when and how much paid leave may be required, we strongly recommend that employers coordinate such efforts with their local HR or employment law counsel.

The DOL’s temporary rule can be found here.

About Michelle Cammayo

Michelle Cammayo has more than 13 years of Employee Benefits experience specializing in all lines of health and welfare benefits. Today, Michelle works closely with clients and partners to provide guidance in areas of the law including ERISA, HIPAA, COBRA, FMLA and PPACA. She also oversees the Compliance Department at Bolton & Company to ensure we are helping our clients manage and eliminate risk with regards to employee benefit compliance.

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