Tag Archives: paid leave

The American Rescue Plan Act of 2021: What’s in it for Employers?

*Save the Date! Complimentary webcast on March 23rd at noon CST: American Rescue Plan: What Employers Must Know Now

Contributed by Rebecca Bush and Kelly Haab-Tallitsch, March 11, 2021

Almost one year after the enactment of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and with the second extension of pandemic unemployment assistance about to expire for millions of workers on March 14, 2021, the American Rescue Plan Act of 2021 (the “Act”) was signed into law by President Biden on Thursday afternoon, March 11, 2021. 

The estimated cost of the Act is $1.9 Trillion, with $1,400 Recovery Rebate checks for each qualifying individual, the extension of supplemental unemployment benefits through September 6, 2021, as well as billions in new or additional relief for various industries, such as education, transportation and infrastructure, aviation/airlines, health care, shuttered venues, restaurants, and state and local governments.

Several provisions of the Act are potentially available for employers of various sizes across all industries. Some key non-industry specific provisions are set forth below.

Premium Assistance for Cobra Continuation Coverage for Individuals and Their Families

Remember the COBRA Subsidy implemented years ago where individuals had 85% of their premiums covered? The Act invokes similar assistance for individuals. However, this time the amount covered for individuals is set at 100%. It generally applies to premiums due related to coverage periods from April 1, 2021 through September 30, 2021. Employers will be required to notify employees about the availability of the premium assistance and the expiration date. The Secretary of Labor is required to produce model notices, with the initial model notice of availability to be provided within 30 days of the Act’s enactment. The 100% premium subsidy will be reimbursed to employers through their quarterly payroll tax returns.

Extension of Employee Retention Credit

The Employee Retention Credit was recently extended and amended as part of the Consolidated Appropriations Act of 2021 (enacted during the last week of December 2020). The Act further extends the availability of the credit for wages paid through December 31, 2021.  As a reminder, we explained the prior expansion to the Employee Retention Credit previously.

Extension of Tax Credits ONLY for Paid Leave under the FFCRA

In the last round of stimulus legislation, the tax credit for paid leave under the Families First Coronavirus and Response Act (“FFCRA”) was extended through March 30, 2021.  However, the extension was not mandatory and maximum leave allowances were not reset, meaning an individual that had already exhausted available amounts in 2020 was not entitled to further time off regardless of whether an employer continued to make the leave available on a voluntary basis. We previously explained the extension in a recent blog post.

Employers that are contemplating, or already, providing paid time off for employees to obtain the vaccine, now potentially have assistance funding that leave. The American Rescue Plan extends the availability of the tax credits for paid sick or family leave through September 30, 2021, and the maximum amount of tax credits that an employer can claim for each employee will reset on April 1, 2021.  This reset allows an employee who exhausts the maximum leave through March 31, 2021 to be able to utilize additional FFCRA leave on April 1, 2021 through September 30, 2021, provided the employer continues to voluntarily allow the use of FFRCA leave. In addition, two new permitted reasons for paid sick leave are added where: (1) an “…employee is seeking or awaiting the results of a diagnostic test, for, or a medical diagnosis of, COVID 19 and such employee has been exposed to COVID-19 or the employee’s employer has requested such test or diagnosis;” and (2) “the employee is obtaining immunization related to COVID-19 or recovery from any injury, disability, illness, or condition related to such immunization…”  

Optional Expansion of Limits under Dependent Care Flexible Spending Account Plans

Employers that offer dependent care flexible spending account plans may increase the maximum deferrals under the plan to slightly more than double the normal deferral limit. This is for the 2021 plan year only. This translates to a maximum deferral for a married couple in the amount of $10,500 and $5,250 for an individual.

For further information, register to attend SmithAmundsen’s complimentary webcast on March 23rd at noon CST: American Rescue Plan: What Employers Must Know Now

Time for Employers that Were Subject to FFCRA Leave to Send Corrected W-2s?

Contributed by guest author Joe Demko, February 2, 2021

The pen lies on the tax form W-2 Wage and Tax Statement. The time to pay taxes

2020 was certainly a unique year for employers and employees. This includes complications with wage reporting. 

Most employers have issued wage reports to their employees by the January 31st deadline and prior to the publication of this alert. These employers must now determine whether they are required to issue corrected Form W-2s.

Thanks to the Families First Coronavirus Response Act (FFCRA) (which required employers with fewer than 500 employees to provide paid sick and family leave for certain COVID-related reasons) certain employees received paid sick leave when unable to work and paid family leave to take care of a son or daughter in the event of a school closure or their child care provider was unavailable due to COVID-19. These payments are counted as wages. 

The IRS has released guidance on the requirement that employers report qualified paid sick and family leave wages provided under the FFCRA. See IRS Notice 2020-54. Unfortunately, this guidance was not incorporated into the instructions for Form W-2.  As a result, many employers likely misreported leave payments and must send corrected Form W-2s to their employees.

Reporting qualified leave wages on Form W-2.

Qualified sick and family leave wages must be reported in Boxes 1, 3 (up to the social security wage base), and 5 of Form W-2.  In addition, employers must separately report in Box 14 of Form W-2 or on a separate statement the amounts it paid to the employee for the various forms of FFCRA leave:

  • The total amount of qualified Emergency Paid Sick Leave wages paid while  the employee was quarantined or experiencing symptoms and seeking a diagnosis, when applicable, using the following or similar language: “sick leave wages subject to the $511 per day limit”;
  • The total amount of qualified Emergency Paid Sick Leave wages paid  while the employee was caring for someone else, when applicable, using the following or similar language: “sick leave wages subject to the $200 per day limit”; and
  • The total amount of qualified Emergency Family and Medical Leave Expansion Act leave wages paid using the following or similar language: “emergency family leave wages”.

If the employer opts to provide a separate statement to report qualified sick or family leave wages, it must be provided with the employee’s Form W-2 in the same manner (paper vs. electronic) and time as the W-2.


Most employers would likely have incorporated FFCRA wages in Boxes 1, 3 and 5 as the payments were issued to employees through the regular payroll process. However, separately delineating the exact amount of FFCRA wages paid in Box 14 (which is primarily for informational purposes) is important where an individual is self-employed. With the specific FFCRA wages delineated in Box 14, it is easier for the IRS and the taxpayer to ensure an individual does not collect duplicative FFCRA benefits.

Federal Court Significantly Changes the FFCRA and Uncertainty Abounds

Contributed by Suzanne Newcomb, August 5, 2020

gavel on white background

As our readers know, the Families First Coronavirus Relief Act (FFCRA) requires employers with less than 500 employees to provide paid leave to employees who are unable to work (or telework) for a variety of COVID-related reasons (including caring for children not in school due to COVID) though December 31, 2020. On April 6, the U.S. Department of Labor (DOL) issued a final rule implementing the FFCRA. Shortly thereafter, the State of New York filed suit claiming the regulations unduly restrict employees’ right to paid leave. This week a federal judge in the Southern District of New York struck down portions of the DOL’s regulations, finding the DOL exceeded its authority. Specifically, the court invalidated the work availability requirement, much of the health care provider exception, the employer consent requirement for intermittent leave, and employers’ right to require documentation in advance of leave. All remaining parts of the DOL regulations are unaffected by the ruling. Because the case was decided under the Administrative Procedures Act, the ruling could apply nationwide (although the Judge did not address the reach of the ruling specifically).  

Work Availability Requirement. The DOL regulations make clear that an employer need only provide paid leave if it has work available for the employee. If there is no work for the employee to do, they are not entitled to paid leave, even if they would otherwise qualify. The ruling struck down the work availability requirement finding it had no basis in the language of the FFCRA itself, leaving employers to wonder whether they might be obligated to pay furloughed workers.   

Health Care Provider Exception. The FFCRA excludes “health care providers” from the universe of employees eligible for leave but, beyond medical doctors, left it to the DOL to define “health care providers.” The DOL defined the term very broadly to include essentially anyone working in the health care space (including, for example, receptionists, janitors, IT personnel). The court concluded the DOL overstepped its bounds and struck down the DOL’s broad definition of “health care providers”). However, it is unclear to which employees the health care provider exception applies because the Judge did not elaborate.

Intermittent Leave Only with Employer’s Consent. The DOL regulations allow eligible employees to take FFCRA leave intermittently where there is no risk that the employee might spread the virus to others (to take care of children at home due to school closings) but only if the employer agrees. The court agreed that limiting the use of intermittent leave was grounded in preventing the spread of COVID and therefore reasonable. However, the court then concluded that requiring employer consent had no basis in the statute, thus paving the way for employees to take intermittent leave over their employer’s objection.

Requiring Documentation Before Leave. The DOL regulations allow an employer to require an employee to provide documentation of the reason for the leave, the duration of the leave, and the authority for the quarantine order (if applicable). The court stated that to the extent these documentation requirements are preconditions to taking leave, they are invalid. Employers can require documentation, but cannot require employees to provide anything more than notice prior to commencing leave.  

What Does All This Mean for Me? The DOL will likely appeal the ruling. However, we do not yet know whether the court of appeals will halt application of the decision while the case works its way through the appeals process. It is also possible that the DOL will revise its regulations in response to the decision. Also, the Judge did not address the reach of the ruling specifically because the State of New York did not seek a nationwide injunction. For now, employers are cautioned not to rely on the provisions the court struck down without first carefully analyzing the situation with trusted employment counsel.   

Can Employers Use Existing Paid Leave Benefits to Offset Emergency Paid Sick Leave under the FFCRA?

Contributed by Suzanne Newcomb and Brian Wacker, March 27, 2020

On March 18, President Trump signed into law the Families First Coronavirus Response Act (FFCRA). A component of the FFCRA is the Emergency Paid Sick Leave Act (EPSLA), which requires covered employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to the COVID-19 corona virus starting April 1. 

Generally, EPSLA requires covered employers to provide all employees with two weeks (up to 80-hours) of paid sick leave at the regular rate of pay when the employee is unable to work because he/she is quarantined pursuant with governmental or doctor’s orders and/or experiencing COVID-19 symptoms and seeking a medical diagnosis. Additionally, if the employee is unable to work due to a bona fide need to care for someone else under quarantine, or a child whose school is closed for COVID-19 related reasons, then the employer is required to provide two weeks of paid sick leave at the rate of two-third (2/3) the employee’s regular rate of pay.

The question, however, for many employers is whether any employer provided, or local/state government mandated, paid sick leave policy or other paid time off (PTO) benefits can be used to meet the EPSLA mandate and if not, whether an employer can require employees to first use previously earned/accrued sick leave prior to availing themselves of this new ESPLA benefit. 

The answer to both questions is NO. The EPSLA states that an employer “may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick time.” The EPSLA does not expressly state paid sick leave in this limitation, but newly published guidance from the DOL clarifies that paid sick leave and expanded family medical leave under the FFCRA is in addition to employees’ preexisting leave entitlements. Accordingly, earned/accrued sick leave or other paid leave existing prior to April 1, 2020 cannot be used to offset or substitute for the mandates under the FFCRA.

Of course, existing employer provided, or local/state government mandated, paid sick leave or other PTO benefits can be used to cover absences that occur prior to April 1st or to extend the period of paid leave beyond FFCRA mandates. Employers may also choose to allow (but cannot require) employees receiving 2/3 pay under FFCRA’s paid sick leave or paid family and medical leave provisions to use existing paid leave to supplement the 2/3 pay up to the amount of the employee’s normal earnings.

Counting to 500 Under the Families First Coronavirus Response Act

Contributed by Peter Hansen, March 26, 2020

a 3d human character a question mark

As many of you know, employers with 500 or more employees are exempt from the Emergency Family and Medical Leave Expansion and the Emergency Paid Sick Leave provisions of the Family First Coronavirus Response Act (FFCRA). Now that the Department of Labor (DOL) released FAQs regarding the FFCRA, we know a bit more about how the DOL will count employees for the purpose of meeting the 500 employee threshold – including that it will apply the Fair Labor Standards Act’s (FLSA) joint-employer analysis and the Family and Medical Leave Act’s (FMLA) integrated employer test in making that determination. Now seems like as good a time as any for a brief refresher on the two tests.

FLSA Joint Employer Analysis

Under the FLSA, separate companies may become joint employers of an employee if both companies exercise control over the same employee. For example, say two companies benefit from an individual’s work but only one company designates the individual as their employee. To determine whether the two companies are the individual’s joint employer, the DOL would consider whether the second company exercises significant control over the employee’s work, including whether the second company:

  • hires or fires the employee;
  • supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • determines the employee’s rate and method of payment; and
  • maintains the employee’s employment records.

Employers with 500 or more employees under the above FLSA joint employer analysis are not subject to either the FFCRA’s paid sick leave or paid FMLA leave provisions.

FMLA Integrated Employer Test

Under the FMLA, separate companies may be considered to be part of a single employer if they are an “integrated employer,” determined by considering the following factors:

  • The companies share common management;
  • The companies’ operations are interrelated;
  • The companies share control of labor relations; and
  • The companies share common ownership and/or financial control

Employers with 500 or more employees under the FMLA’s integrated employer test are not subject to the FFCRA’s paid FMLA leave provision – but, unless they have 500 or more employees under the FLSA’s joint employer analysis, may still be subject to the paid sick leave provision.

Each of the above tests are complicated, and the FFCRA remains subject to pending DOL guidance and regulations. As a result, any employers with questions or concerns regarding their joint employer or integrated employer status – or anything else relating to the FFCRA – should consult with counsel.

US DOL Releases FAQs re: the Families First COVID-19 Act (FFCRA) – April 1st Effective Date

Contributed by Julie Proscia, March 25, 2020

scales of justice and gavel on orange background

On March 24, 2020, the Department of Labor (DOL) released the much anticipated FAQs regarding the Family First Coronavirus Response Act (FFCRA). The DOL’s FAQs offer clarification on some of the more pressing questions that have been on employers’ minds. Of particular note is information relating to the counting of employees, commencement of the leave and compilation of the leave. Of major significance is that the FFCRA will become effective on April 1, 2020 (not April 2nd) and it is not retroactive (and, any benefits provided by employers now through March 31, 2020 cannot be counted towards the FFCRA in any way).

Highlights of the FAQs include:

Effective Date

The effective date of the FFCRA, which includes the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act is April 1, 2020, and applies to leave taken between April 1, 2020 and December 31, 2020.

Counting Employees – How and when do you get to 500 – for purposes of paid sick leave and new FMLA mandates?

As a private sector employer you meet the 500 employee count threshold if at the time that the employee’s leave is to be taken, you employ under 500 full-time and part-time employees within the United States, which includes any state of the United States, the District of Columbia, or any territory or possession of the United States. When counting employees, employers should include employees on leave; temporary employees who are jointly employed by you and another employer (regardless of whether the jointly-employed employees are maintained on only your or another employer’s payroll); and day laborers supplied by a temporary agency (regardless of whether you are the temporary agency or the client firm if there is a continuing employment relationship). Workers who are independent contractors under the Fair Labor Standards Act (FLSA), rather than employees, are not considered employees for purposes of the 500-employee threshold.  Further, where a corporation has an ownership interest in another corporation, the two are separate employers (with separate employee counts) unless they are joint-employers as analyzed under the FLSA.  The FLSA’s joint-employer analysis will dictate coverage under the new emergency paid sick leave mandate.  Also, two or more entities are separate employers unless they meet the “integrated employer test” under the FMLA.  If two or more entities are deemed “integrated” under the FMLA, then the employees of the integrated entities should be counted as one employer (combining the employee counts) for purposes of the new FMLA mandate.

Overtime Hours are included when calculating pay

When calculating the average pay under the FFCRA, the Emergency Family and Medical Leave Expansion Act requires employers to pay an employee for hours the employee would have been normally scheduled to work even if that is more than 40 hours in a week, as such this would include regularly scheduled overtime.

Please note, the Emergency Paid Sick Leave Act only requires that paid sick leave be paid up to 80 hours over a two-week period. The example given is as follows: an employee who is scheduled to work 50 hours a week may take 50 hours of paid sick leave in the first week and 30 hours of paid sick leave in the second week. In any event, the total number of hours paid under the Emergency Paid Sick Leave Act is capped at 80. This determination will change if the employee’s schedule varies from week to week. These amounts are subject to the daily and weekly caps as set forth in the FFCRA.

Leave is Not Duplicative

When answering the question of whether or not an employee may take 80 hours of paid sick leave for their personal self-quarantine and then another amount of paid sick leave for another reason provided under the Emergency Paid Sick Leave Act, the DOL clarified that this was not permissible.  Rather eligible employees may take up to two weeks—or ten days—(80 hours for a full-time employee, or for a part-time employee, the number of hours equal to the average number of hours that the employee works over a typical two-week period) of paid sick leave for any combination of qualifying reasons. However, the total number of hours for which an employee will receive paid sick leave is capped at 80 hours under the Emergency Paid Sick Leave Act.

Interplay of Expanded FMLA

The DOL further clarified the interplay that can occur when employees are home with their child(ren) because their school or child care provider is closed or unavailable and whether or not they get paid sick leave, expanded family and medical leave, or both. Individuals in this scenario may be eligible for both types of leave, but only for a total of twelve weeks of paid leave. Eligible employees may take both paid sick leave and expanded family and medical leave to care for their child(ren) whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons. The Emergency Paid Sick Leave Act provides for an initial two (2) weeks of paid leave. This period covers the first ten workdays of expanded family and medical leave, which are otherwise unpaid under the Emergency and Family Medical Leave Expansion Act unless the employee elects to use existing vacation, personal, or medical or sick leave under the employer’s policy. After the first ten workdays have elapsed the employee will receive 2/3 of their regular rate of pay for the hours they would have been scheduled to work in the subsequent ten weeks under the Emergency and Family Medical Leave Expansion Act (up to $200 per day and $10,000 total).

Small Employer Exemption

Employers with less than 50 employees can attempt to justify why compliance with the mandates would jeopardize the viability of the business by documenting the reasons.  The DOL will be issuing more guidance specific to this process in the coming days/weeks.  At this time, such employers should be in contact with competent legal counsel to discuss this option.

While the FAQs answer some of the pressing questions, more clarification will emerge with the release of the regulations.  The interplay between the FFCRA and existing state and local leave laws is a complex issue that must be analyzed prior to the determination of any leave. Because of the complexity and evolving nature of the issues it is always advisable to consult with counsel when implementing or denying leaves under the FFCRA.

What to Do When Your Employees Are Scared to Come to Work?

Contributed by Rebecca Dobbs Bush, March 24, 2020

For the first few months of 2020, we watched COVID-19 spreading in other countries as if it were some sort of science experiment that would never reach the U.S.  Now, with reported cases in 50 states and confirmed community spread in numerous locations throughout the U.S., we frighteningly watch the numbers increase. But how do we deal with our fears? Is fear a reason not to come to work when your job simply does not otherwise allow you to work from home? It’s important for employers to be the voice of reason amidst the panic and not feel bad for doing so.

Business needs to be able to survive this temporary era of self-isolation and sheltering in place in order for the economy to rebound when this passes. This interest is a critical one and can’t be entirely disregarded when balancing the need to slow the spread of COVID-19 and flatten the curve.

In fact, the CDC recognizes the need to balance these interests in, “15 Days to Slow the Spread:” 

Work or engage in schooling FROM HOME whenever possible.

IF YOU WORK IN A CRITICAL INFRASTRUCTURE INDUSTRY, as defined by the Department of Homeland Security, such as healthcare services, and pharmaceutical and food supply, you have a special responsibility to maintain your normal work schedule. You and your employers should follow CDC guidance to protect your health at work.

In other words, while we need to make every effort to distance, quarantine and disinfect during this period, each individual also has a social responsibility to help make sure the economy is not completely shut down and people are taken care of. It’s also imperative for the industries supporting those specifically mentioned by the CDC as “critical infrastructure” such as banking, shipping, etc. to continue operations at some level. Some positions just aren’t capable of being done from home.

To clarify, employers should be flexible with sick leave policies. After all, in order to make sure business can continue to operate, we need to make sure essential workplaces remain safe. This means erring on the side of caution when someone feels ill. Being flexible with your sick leave policy does not translate to making the time available for any reason at all. The new paid leave act  only references certain reasons and specific employers that are required to offer paid leave. If an employee simply does not want to come in (and is not otherwise able to telecommute), they are not entitled to paid time off nor provided with job security if they make that choice.

This is not to say that employees braving the front lines and recognizing their social responsibility and the need to continue to report to work should not be rewarded. There are numerous ways to recognize the challenges your employees are facing, and it’s important to do so during this difficult time. For more information on how to structure additional payments in the most advantageous way for tax purposes see our previous post, “Tax Breaks for Qualified Disaster Relief Payments to Employees.”