Client Alerts

DOL and IRS Issue Additional FFCRA Leave and Tax Credit Documentation Guidance

By: William D. Edwards, Stephanie E. Harley and Jonathan R. King

About: Employment & Labor

April 6, 2020 – The U.S. Department of Labor (“DOL”) has issued its temporary rule (“Regulation”) implementing the leave provisions of the Families First Coronavirus Response Act (“FFCRA”). The leave provisions of the FFCRA include the Emergency Family and Medical Leave Expansion Act (“EFMLEA”) and the Emergency Paid Sick Leave Act (“EPSLA”). The Regulation expands existing DOL guidance that was issued prior to the April 1, 2020 effective date for the EFMLEA and EPSLA.

The Internal Revenue Service (“IRS”) has also published “COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs” (“FAQ”). Among other things, the FAQ provides guidance to employers regarding the documentation and information that an employer may require from an employee who requests leave under the EFMLEA and EPSLA. The IRS’s guidance is important because it sets forth the documents and information employers need to substantiate their claims for paid leave tax credits, and it permits employers to obtain documentation and information from employees that is not in the DOL’s Regulation.

DOL Regulation

The DOL Regulation provides more detail than the guidance issued by the DOL shortly after the FFCRA was passed into law. We encourage employers to read the Regulation carefully. Here is a summary of the new Regulation:

Although the Regulation provides much needed guidance for employers, there are still many unanswered questions, including:

IRS Guidance Regarding Documentation from Employees to Claim Tax Credits

The IRS’s FAQ provides guidance to employers regarding documentation and information that employers are required to obtain from employees for purposes of substantiating tax credit eligibility for qualified leave wages. The information includes, but is not limited to, a statement of the COVID-19 related reason the employee is requesting leave, written support for such reason, and a statement that the employee is unable to work or telework for such reason. The IRS also requires the following:

The FAQ also sets forth the records employers should create and maintain to substantiate eligibility for tax credits, including, but not limited to, documentation to show how the employer determined the amount of qualified sick and family leave wages paid to employees that are eligible for the credit, including records of work, telework, and qualified sick leave and family leave.

We recommend that employers incorporate the IRS required documentation and information into their EFMLEA and EPSLA leave request forms and any written notices to employees about employee obligations to notify employers of their need for leave and to submit supporting documentation prior to taking leave.

Although the DOL Regulation and IRS FAQ will help employers navigate their obligations under the EFMLEA and EPSLA, there are still a number of questions that remain unanswered and issues that remain unresolved. Until the DOL or IRS weigh in again, employers should make reasonable and good faith efforts to comply with the EFMLEA and EPSLA based on currently available guidance and seek legal counsel when necessary.

The DOL Wage and Hour Division continues to update the FFCRA Q&A on its “COVID-19 and the American Workplace” website. Although the DOL has issued the implementing Regulation, employers should continue to consult the website and review the FFCRA Q&A for supplemental guidance and information.

Ulmer’s Employment & Labor Practice Group is available 24/7 to provide strategic advice and counseling to employers navigating the COVID-19 crisis. Please reach out to our attorneys if you have any questions. To view more of Ulmer’s useful client alerts, webinars, and resources regarding COVID-19, please click here.

The information provided in this client alert speaks only to the information and guidance we have available as of the date of publication and is subject to change. We will continue to follow further issued guidance and regulations and endeavor to post those updates via our website. Please continue to follow these updates at ulmer.com. This legal update was created by Ulmer & Berne LLP, and is not intended as a substitute for professional legal advice. Receipt of this client alert, by itself, does not create an attorney client relationship. For any questions, or for further information, please contact William D. Edwards at wdedwards@ulmer.com, Stephanie E. Harley at sharley@ulmer.com, or Jonathan R. King at jking@ulmer.com.