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COVID-19 PAID LEAVE: DOL AND IRS PROMISE PROMPT REIMBURSEMENT TO EMPLOYERS
Last week Congress imposed an obligation upon employers with less than 500 employees to provide paid leave. The law is scheduled to take effect on April 2, 2020. On March 20, 2020 the U.S. Department of Labor (ÒDOLÓ) and the Internal Revenue Service (ÒIRSÓ) issued an update outlining how employers will be reimbursed for what could be a crippling expense for smaller businesses. The reimbursement includes wages and the cost of medical benefits.
To cushion the blow, the DOL and IRS promise that employers will be able to Òretain and access funds that they would otherwise pay to the IRS in payroll taxes.Ó If the amount withheld is not sufficient to cover the cost of paid leave, employers can seek an Òexpedited advanceÓ from the IRS. The details as to how employers will withhold monies or the mechanics of submitting a claim should be released this week by regulations that the agencies are expected to issue.
Employers may seek exclusion from the paid sick leave and emergency FMLA requirements if they employ less than 50 employees and if providing paid leave will result in their ÒviabilityÓ being Òthreatened.Ó Absent is any information as to what a small employer must show to satisfy this standard. The regulations scheduled to be issued this week should provide information regarding this key point.
The two types of paid leave are as follows:
80 hours of paid leave if the employee is ill with COVID-19 or due to childcare issues due to shut down or to care for an individual subject to quarantine.
Leave of up to 12 weeks if a childÕs daycare or school is closed or childcare provider is unavailable due to COVID-19. The first ten days of this leave is unpaid. After the first ten days, the employee is entitled to 2/3 pay for ten weeks up to $1,000 per week. (The employee may elect to use accrued paid time off or vacation pay to receive wages during the first ten days).
Expect to receive further pronouncements from the DOL and IRS as the agencies work on regulations this week. The firmÕs employment attorneys are monitoring this issue and will continue to update you on new developments. If you have questions, please contact PLDO Partner Matthew C. Reeber at 401-824-5105 or mreeber@pldolaw.com or PLDO Principal William E. O’Gara at 401-824-5117 or wogara@pldolaw.com.
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