May 22, 2020
Now that businesses are reopening and recalling employees, some employees will be requesting paid leave pursuant to the Families First Coronavirus Relief Act (FFCRA). Businesses need to know what documentation they can and cannot request from employees requesting leave, and what documentation the business should maintain.
Documentation To Be Provided By The Employee
The U.S. Department of Labor (DOL) and Internal Revenue Service (IRS) provide that to utilize the tax credit to cover the expense of providing paid leave under the FFCRA, FFCRA leave must be properly documented. Documentation requirements can be found in Section 826.100 of the DOL regulations and in IRS guidance.
Employers are required to maintain the following records for each FFCRA leave:
- Regardless of the reason for FFCRA leave, a statement signed by the employee containing the following information:
- The employee’s name;
- The date(s) for which leave is requested;
- The COVID-19 qualifying reason for leave and written support for such reason; and
- A statement representing that the employee is unable to work or telework because of the COVID-19 qualifying reason.
- Depending on the reason for FFCRA leave, the following additional documentation:
- If the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19, the employee must provide the name of the government entity that issued the order.
- If the employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19, the employee must provide the name of the healthcare provider who advised the employee to self-quarantine.
- If the employee is experiencing symptoms of COVID-19 and seeking medical diagnosis, then no other documentation is required.
- If the employee is caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19 or who has been advised by a healthcare provider to self-quarantine, the employee must provide: (i) the name of the individual being cared for; (ii) the individual’s relation to the employee; and (iii) the name of the government entity or healthcare provider that required or advised the individual to quarantine.
- If the employee is caring for a son or daughter due to a COVID-19-related school or care center closure, or care provider unavailability, the employee must provide: (i) the name and age of the child being cared for; (ii) the name of the school, place of care, or child care provider that closed or became unavailable due to COVID-19; and (iii) a statement that no other suitable person is available to care for the child during the period of requested leave. If the child for whom the employee is caring for is over the age of fourteen, the employee must also state that special circumstances exist requiring the employee to provide care during daylight hours.
Employers should limit their inquiry into the employee’s reasons for FFCRA leave to the above documentation, aside from any further guidance issued by the DOL or IRS.
Under Section 826.100, proper documentation must be provided by the employee, and leave can be denied if documentation is not provided. If an employee provided oral statements to support his or her request for leave, the employer is required to document and retain such information. All documentation must be maintained for at least four years, regardless of whether leave was granted or denied.
Additional Documentation To Be Maintained By The Employer
In addition to the above information from employees, employers must collect the following information from their own records for each FFCRA leave, regardless of the reason for leave:
- Documentation showing how the employer determined the amount of qualified sick and family leave wages paid to employees who are eligible for the tax credit, including records of work, telework, qualified sick leave, and qualified family leave.
- Documentation showing how the employer determined the amount of qualified health plan expenses that the employer allocated to wages. (See IRS FAQ 31, Determining the Amount of Allocable Qualified Health Plan Expenses, https://www.irs.gov/newsroom/covid-19-related-tax-credits-determining-the-amount-of-allocable-qualified-health-plan-expenses-faqs, for methods to compute this allocation.)
- Copies of any completed Forms 7200, Advance of Employer Credits Due To COVID-19, that the employer submitted to the IRS.
- Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that the employer submitted to the IRS (or, for employers that use third-party payers to meet their employment tax obligations, records of information provided to the third-party payer regarding the employer’s entitlement to the credit claimed on Form 941).
- Any other documents needed to support the employer’s request for tax credits pursuant to IRS applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit.
Employers must keep all records of employment taxes for at least four years after the date the tax becomes due or is paid, whichever comes later. Employers do not need to provide this documentation to the IRS when seeking the tax credit, but all records should be available for IRS review.
- The full text of the DOL’s FFCRA regulations, including documentation requirements, can be found here: https://www.govinfo.gov/content/pkg/FR-2020-04-06/pdf/2020-07237.pdf.
- FAQs relating to the DOL’s regulations can be found here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.
- IRS guidance regarding how to substantiate eligibility and periods of time for which tax credits are available can be found here: https://www.irs.gov/newsroom/covid-19-related-tax-credits-how-to-substantiate-eligibility-and-periods-of-time-for-which-credits-are-available-faqs#substantiate_eligibility.
- FAQs relating to the IRS’s requirements can be found here: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs.
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