Payroll Tax Credits for Required Paid Leave – COVID 19

H.R. 6021
This week a new bill, H.R. 6021, was passed by Congress and signed by the President late Wednesday, March 18, 2020 in response to COVID-19. The bill’s many provisions include tax credits to employers who pay sick leave or family leave to employees who miss work due to coronavirus reasons.

Emergency Paid Family Leave
A portion of H.R 6021 temporarily expands current family and medical leave laws and provides payroll tax credits to employers. Under the portion titled Emergency Family and Medical Leave Expansion Act (EFMLEA), employers with fewer than 500 employees are required to provide public health emergency leave under the Family and Medical Leave Act (FMLA), P.L. 103-3. Employers with less than 50 employees can be exempted. The new employer payroll tax credits (subject to certain limitations) equal 100% of the qualified family leave wages paid by the employer beginning with a date to be designated by Treasury through December 31, 2020. The payroll tax credits will not apply to federal, state or local government employers. Eligible self-employed individuals may qualify for a refundable credit against income tax for qualified paid family leave equivalent amounts.

Emergency Paid Sick Leave
Under the portion titled Emergency Paid Sick Leave Act (EPSLA), employers with fewer than 500 employees are required to provide up to 80 hours of paid sick time through the end of this year if the employee can’t work because they are quarantined or self-quarantined or have COVID-19 or are caring for someone for the same reasons or if the employee is caring for children whose school had been closed due to COVID-19. Employers with less than 50 employees can be exempted. The new employer payroll tax credits (subject to certain limitations) equal 100% of the qualifying sick leave wages paid by the employer beginning with a date to be designated by Treasury through December 31, 2020. The payroll tax credits will not apply to federal, state or local government employers. Eligible self-employed individuals may qualify for a refundable credit against income tax for qualified sick leave equivalent amounts.