March 19, 2020Share:
Yesterday, the President signed a bill that increases funding for testing and extends paid sick leave to employees all over the country affected by the pandemic.
The new law requires employers with fewer than 500 employees to provide paid sick leave to employees who are:
• forced to stay home due to quarantining or
• to care for a family member (“qualified paid sick leave”) or to care for a child if the school or place of care is closed (“qualified family leave”).
The bill compensates employers and the self-employed for this paid leave in the form of a tax credit.
In the case of sick leave wages paid by an employer to an employee, the employer receives a refundable credit against its share of Federal payroll taxes. The credit can be claimed on a quarterly basis, equal to 100 percent of the amount of sick leave wages paid under the new law. The amount of the credit is limited to $200 per day. However, the credit is increased to $511 per day if the employee is on leave because he or she:
• is subject to a federal, state or local quarantine or isolation order related to COVID-19;
• has been advised by a health care provider to self quarantine due to concerns related to COVID-19; or
• is experiencing symptoms of COVID-19 and seeking a medical diagnosis
The amount of total hours of paid sick leave is limited by the new law and the payroll tax credit is limited to 10 days of wages.
For family leave wages paid by an employer, a separate refundable payroll tax credit applies, with different limitations. The 100 percent credit against the employer’s share of the payroll tax is limited to $200 per day, up to an aggregate of $10,000.
The new law provides numerous requirements, limitations and definitions relating to the application of the mandate, as well as the credit. These provisions are all temporary. The credits are applicable from the date selected by the Secretary of the Treasury (April 1) until December 31, 2020.
The Secretary of Labor is to issue guidelines to assist employers in complying with the credit.
We will provide further information regarding complying with the new law as it becomes available.
Please contact our office if you have specific questions.
Updated 3.26.2020 at 11:00 AM