Last week, President Trump signed into law the Families First Coronavirus Response Act (“FFCRA”), which requires employers with fewer than 500 employees to provide employees expanded family and medical leave and paid sick leave benefits for Coronavirus-related reasons.  The FFCRA creates for certain private employers a refundable paid sick leave credit and paid child care leave credit that are intended to immediately and fully reimburse these employers, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.

On March 20, 2020, the Internal Revenue Service (IRS) and Department of Labor (DOL) jointly issued News Release IR-2020-57 to provide preliminary guidance on how eligible employers can begin taking advantage of the two refundable credits under the FRCRA.  According to this guidance, and additional forthcoming guidance, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.  The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes concerning all employees, not just those to whom the employer provides the qualified paid leave.  If these amounts are not sufficient enough to cover the cost of qualified paid leave, the employer will be able file a request for an accelerated payment from the IRS.

The announcement provides the following helpful example to illustrate how the refundable credit will work in practice:

If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.  If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.

The agencies’ announcement states that the DOL will be issuing a temporary 30-day non-enforcement policy, during which time the DOL will not commence any enforcement action against any non-compliant employer if the employer has acted reasonably and in good faith to comply with the FFCRA.

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Photo of Marc T. Finer Marc T. Finer

Marc Finer is the Chair of the Tax Practice Group.  He is also the Chair of the Firm’s Pro Bono Committee. Marc provides effective and innovative federal tax, multistate tax and business planning solutions for corporations, partnerships, limited liability companies, investment entities and…

Marc Finer is the Chair of the Tax Practice Group.  He is also the Chair of the Firm’s Pro Bono Committee. Marc provides effective and innovative federal tax, multistate tax and business planning solutions for corporations, partnerships, limited liability companies, investment entities and individuals. He regularly advises clients on federal, state and local income, compliance and reporting tax issues from operating businesses and investments.

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Salvatore G. Gangemi is a Partner in the Litigation Department of Murtha Cullina and a member of the Labor and Employment Practice Group. He advises clients with respect to state, federal and local employment laws. In addition, he litigates matters involving misappropriation of trade secrets, restrictive covenants, breach of employment contract, fiduciary duty, and other work-related common law claims. Sal also counsels clients on day-to-day issues involving workplace management and administration, including requests for reasonable accommodation for disabilities, for family and medical leave, and wage and hour issues.  He conducts employment law training on a variety of topics, including sexual harassment prevention and wage/ hour compliance.  He also drafts employment policies and agreements, and assists clients in auditing worker classification practices and policies both in the context of the Fair Labor Standards Act and state laws governing independent contractor determinations.

Photo of Patricia E. Reilly Patricia E. Reilly

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Patricia E. Reilly, Chair of the Labor and Employment Practice Group, is an experienced litigator who represents clients in a wide range of cases including, employment discrimination and related torts, non-compete and restrictive covenants, wage and hour, breach of contract, unfair trade practices, and business disputes. In addition to maintaining a thriving litigation practice, Tricia counsels clients on a variety of employment-related issues including hiring, firing, and discipline; wage and hour; state and federal FMLA; sexual harassment investigations and prevention; Title IX; pregnancy and disability accommodation; and avoidance of employment discrimination liability.

Tricia is listed as a leading Labor and Employment Lawyer in Chambers USA.  She is listed in Best Lawyers in America®, and in 2017, Best Lawyers in America® recognized her as “Lawyer of the Year”, New Haven, Litigation – Labor and Employment. Tricia is a member of the American Bar Association, the Connecticut Bar Association and the New Haven County Bar Association.  She received her B.A. from Wesleyan University and her J.D. from University of California, Berkeley School of Law.