Dear Valued Client,

As we continue to monitor Coronavirus (COVID-19) developments closely, the health and well-being of our clients and their employees is of utmost importance to us.

Recently, our federal government has enacted the Families First Coronavirus Response Act, which will require employers with fewer than 500 employees to provide paid leave to employees who are impacted by COVID-19 and offer tax credits to employers that do so. This law takes effect on April 1, 2020.

Here is what you need to know about Sick and Family Paid Leaves:

Generally, the Act provides that covered employers must provide to all employees:

• Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
• Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19

A covered employer must provide to employees that it has employed for at least 30 days up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.

Here is what you need to know about the Payroll Tax Credit:

Employers will be entitled to a refundable credit for 100% of qualified wages paid to an employee under this plan. (Including the cost of providing health insurance coverage for an employee during the employee’s emergency leave period)

Employers will be able to take immediate advantage of the available credits by retaining the funds they otherwise would be required to use for payroll tax withholdings.

• For example, if your payroll for the period yielded an IRS tax liability of $4,000 and you paid 1 employee who was on leave a total of $1,000 in wages that period then your IRS tax liability would be automatically reduced to $3,000 for that payroll. 

If there are not sufficient payroll taxes to cover the employer’s costs for providing pay covered by the Act, employers will be able to file a request for an accelerated refund of their payroll taxes from the IRS, which the IRS expects to process within two weeks or less.

Here is what we are doing:

Our office is currently closed to the public but we are still working as hard as ever to ensure no interruptions to your payroll service.

We are currently updating our system to conform with the payroll tax credit provisions detailed within the Act.

We will provide you with any necessary posters or documents required for your business as it relates to payroll and your employees.

• Attached you will find the Employees Rights poster that you are required to post in your places of business where all employees have access to it. If your business is one where employees do not have a central location to go to you must send it to each employee individually.

This is a very fluid situation but we will be here to answer your questions as they arise. Thank you again for your assistance and understanding during this trying time for us all.

Stay safe and healthy,

The Outsourced CFO Solutions team