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DC Tax Flash: DOL Issues Formal Guidance on Paid Leave

Tax Alert

The Department of Labor (DOL) today issued temporary regulations regarding the paid leave provisions enacted by the Families First Coronavirus Response Act (FFCRA, P.L. 116-127). The new law provides certain businesses with fewer than 500 employees tax credits to grant paid leave to employees, either for the employee's own health needs or to care for a family member. This provision is authorized to be in effect for the remainder of this year.

As listed in today's rulemaking, the temporary regulations cover the following major areas:

  • 826.20 Paid leave entitlements
  • 826.21 Amount of Paid Sick Leave
  • 826.22 Amount of Pay for Paid Sick Leave
  • 826.23 Amount of Expanded Family and Medical Leave
  • 826.24 Amount of Pay for Expanded Family and Medical Leave
  • 826.25 Calculating the Regular Rate under the FFCRA
  • 826.30 Employee Eligibility for Leave
  • 826.40 Employer Coverage
  • 826.50 Intermittent Leave
  • 826.60 Leave to Care for a Child Due to School or Place of Care Closure or Child Care Unavailability – Intersection between the EPSLA and the EFMLEA
  • 826.70 Leave to Care for a Child Due to School or Place of Care Closure or Child Care Unavailability – Intersection of the EFMLEA and the FMLA
  • 826.80 Employer Notice
  • 826.90 Employee Notice of Need for Leave
  • 826.100 Documentation of Need for Leave
  • 826.110 Health Care Coverage
  • 826.120 Multiemployer Plans
  • 826.130 Return to Work
  • 826.140 Recordkeeping
  • 826.150 Prohibited Acts and Enforcement under the EPSLA
  • 826.151 Prohibited Acts and Enforcement under the EFMLEA
  • 826.152 Filing a Complaint with the Federal Government
  • 826.153 Investigative Authority of the Secretary
  • 826.160 Effect on Other Laws, Employer Practices, and Collective Bargaining Agreements

The 124-page text of the regulations is posted here

A DOL press release announcing the rules is posted here.

DOL will post a pre-recorded webinar on the rules on April 3, 2020. It will be posted at the following site: www.dol.gov/agencies/whd/pandemic.

The following summary is excerpted from the temporary regulations:

Executive Summary

On March 18, 2020, President Trump signed into law the FFCRA, which creates two new emergency paid leave requirements in response to the COVID-19 global pandemic. Division E of the FFCRA, "The Emergency Paid Sick Leave Act" (EPSLA), entitles certain employees to take up to two weeks of paid sick leave. Division C of the FFCRA, "The Emergency Family and Medical Leave Expansion Act" (EFMLEA), which amends Title I of the Family and Medical Leave Act, 29 U.S.C. 2601 et seq. (FMLA), permits certain employees to take up to twelve weeks of expanded family and medical leave, ten of which are paid, for specified reasons related to COVID-19. On March 27, 2020, President Trump signed into law the Coronavirus Aid,Relief, and Economic Security Act, Public Law 116-136 (CARES Act), which amends certain provisions of the EPSLA and the provisions of the FMLA added by the EFMLEA.

In general, the FFCRA requires covered employers to provide eligible employees up to two weeks of paid sick leave at full pay, up to a specified cap, when the employee is unable to work because the employee 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 COVID-19 symptoms and seeking a medical diagnosis. The FFCRA also provides up to two weeks of paid sick leave at partial pay, up to a specified cap, when an employee is unable to work because of a need to care for an individual subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; because of a need to care for the employee's son or daughter whose school or place of care is closed, or whose child care provider is unavailable, due to COVID-19 related reasons; or because the employee is experiencing a substantially similar condition, as specified by the Secretary of Health and Human Services. The FFCRA also requires covered employers to provide up to twelve weeks of expanded family and medical leave, up to ten weeks of which must be paid at partial pay, up to a specified cap, when an eligible employee is unable to work because of a need to care for the employee's son or daughter whose school or place of care is closed, or whose child care provider is unavailable, due to COVID-19 related reasons.

The FFCRA covers private employers with fewer than 500 employees and certain public employers. Small employers with fewer than 50 employees may qualify for an exemption from the requirement to provide paid leave due to school, place of care, or child care provider closings or unavailability, if the leave payments would jeopardize the viability of their business as a going concern.

Under the FFCRA, covered private employers qualify for reimbursement through refundable tax credits as administered by the Department of the Treasury, for all qualifying paid sick leave wages and qualifying family and medical leave wages paid to an employee who takes leave under the FFCRA, up to per diem and aggregate caps, and for allocable costs related to the maintenance of health care coverage under any group health plan while the employee is on the leave provided under the FFCRA. For information on the tax credits, see https://www.irs.gov/forms-pubs/about-form-7200; see also https://www.irs.gov/pub/irs-drop/n- 20-21.pdf. For more information on the COVID-19 related small business loans, see https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.

The CARES Act amended the FFCRA by providing certain technical corrections, as well as clarifying the caps for payment of leave; expanded family and medical leave to certain employees who were laid off or terminated after March 1, 2020, but are reemployed by the same employer prior to December 31, 2020; and provided authority to the Director of the Office of Management and Budget (OMB) to exclude certain Federal employees from paid sick leave and expanded family and medical leave.

The FFCRA grants authority to the Secretary to issue regulations for certain purposes. In particular, sections 3102(b), as amended by section 3611(7) of the CARES Act, and 5111(3) of the FFCRA grant the Secretary authority to issue regulations "as necessary, to carry out the purposes of this Act, including to ensure consistency" between the EPSLA and the EFMLEA. The Department is issuing this temporary rule to carry out the purposes of the FFCRA. These new paid sick leave and expanded family and medical leave requirements become effective on April 1, 2020 and expire on December 31, 2020.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Office of Information and Regulatory Affairs (OIRA) designated this rule as a "major rule," as defined by 5 U.S.C. 804(2).


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