COVID-19 Payroll Information
Employers are Required to Provide Paid Leave to Eligible Employees
Employers with less than 500 employees are required to provide Paid Leave to current eligible employees. Employers with less than 50 employees can claim exemption from paying out the Extended Family Leave portion of the FFCRA for employees caring for children due to school or daycare closing if it would jeopardize the viability of the business as a going concern.
Additionally, Employers are required to post notice of Employee Paid Leave Eligibility in the workplace. You can download the PDF of this notice right from our website here: FFCRA Poster
Payroll Tax Credit
The Payroll Tax Credit intended to assist employers with paying for these benefits will come in the form of a reduction in Federal 941 taxes (Federal Withholding, Social Security and Medicare Tax). Once the IRS releases full guidance on this, our payroll system will be updated to reduce the federal tax impound for your payroll by the amount of these benefits paid. If your tax credit exceeds the current federal taxes due, the IRS will send a reimbursement directly to the employer.
There is still no explanation of how to apply for a reimbursement, but we will update you when that information is released by the IRS.
Qualified Reasons for Leave
Qualified Reasons for paying out Sick Leave or Extended Family Leave are limited to those employees:
Subject to a Federal, State, or local quarantine or isolation order related to COVID-19 *see note below*
Advised by a health care provider to self-quarantine related to COVID-19
Experiencing COVID-19 symptoms and is seeking a medical diagnosis
Caring for an individual subject to an order described in (1) or self-quarantine as described in (2)
Caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19
Experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
*Note: The definitions of "Quarantine" and "Isolation" are explained by the Department of Health and Humans Services HERE
The US Department of Labor updated their guidance and information to specify that the Sick Leave and Extended Family Leave provisions are effective on April 1st and apply to leave taken between April 1, 2020 and December 31, 2020. This means that there will be no tax credits for leave taken by employees outside of this time frame.
US Department of Labor
United States Congress
Amount of Paid Leave
The Department of Labor explains exactly how much each eligible employee is entitled to in their Employer Fact Sheet here: LINK
Credit for Employer Paid Health Insurance
There is an additional tax credit available to employers to cover the pro-rated cost of health insurance for covering the employees during the time of paid leave. You can use the annual cost and divide it by 52 to find the weekly rate, and then use the weekly rate divided by 5 to calculate daily if necessary. We (Evolution) cannot calculate this figure for you as we have no way of verifying correct employer costs in terms of your group health insurance. You should work with your insurance agent if you are unsure of your employer health insurance costs for each employee.
If you wish to take this credit, you will have to calculate and report the pro-rated amount for any eligible employees to us.
How to Manage Paid Leave in YOUR Payroll
These are enormously complicated changes and the IRS has not yet released guidance for handling these payments and tax credits in payroll. We are a part of the consortium that is working directly with the IRS to help determine how to record, report and calculate these payroll changes. As soon as we have specific instructions they will be provided.
Employers will be responsible for identifying eligible employees and providing instructions to Evolution Payroll Services on who, when and how much the employees need to be paid, as well as in which classification the employees fall. We are unable to determine the employees that are eligible on our own, but we will handle all of the required payroll calculations, pay limits and reporting. It is still unknown whether payroll services, accountants and reporting agents will have any role in applying for additional tax credits beyond what is able to be used in offsetting payroll taxes.