April 27, 2020
The New Jersey Business & Industry Association (NJBIA) published an article entitled
“What Employers Need to Document for Paid Leave Tax Credits”
by Steve Wilson last week which I would like to share with you today. It provides important information that you need to know to ensure that you properly document situations regarding your employees on the Family and Medical Leave Act (FMLA) and the Families First Coronavirus Relief Act (FFCRA).
Employers have been required to provide paid leave and Family and Medical Leave Act job protections to certain employees impacted by COVID-19 since April 1. The U.S. Department of Labor (DOL) gave employers a grace period to acclimate themselves to the new requirements, but that ended last Monday.
As with any government program, it is not enough for employers to follow the regulations, they must be able to prove that they have complied. During a webinar Thursday, attorney Adam Gersh of Flaster Greenberg PC and HR Support Specialist Judy Sailer of Primepoint HRMS & Payroll offered some tips on how employers can and should document their compliance.
“You need to absolutely be documenting every conversation, every email, every phone call that you have,” Sailer said. “You have to ensure that we as HR professionals and business owners are doing it correctly.”
The two presenters were talking specifically about the expanded job-protected leave under FMLA and emergency paid leave for most businesses with fewer than 500 employees. Employers who have not already done so should familiarize themselves with the programs’ requirements, which were enacted as part of FFCRA.
According to Sailer, documentation for any employee taking leave needs to include both the date the request was made and the dates the leave will be taken. After all, the leave programs are not retroactive, so any leave taken prior to April 1 does not count under FFCRA.
It is also critical to document the reasons for the leave, particularly if it is going to be paid leave, Gersh said.
“Employers are entitled to take a payroll tax credit for the paid leave they provide,” Gersh said. When employers go to pay their quarterly FICA payroll taxes, they will receive a printout of the amount they have contributed to paid leave and they will be able to deduct that amount from the taxes they owe.
“But we also need this documentation in the event of an audit,” Gersh said.
Paid leave and FMLA related to coronavirus are only available to employees who have contracted the virus, are under quarantine because they were exposed, or are caring for a family member with the disease. It is also available for parents who are forced to care for a child who is home.
Sailer noted there are some pitfalls when it comes to documenting the reasons for leave. If the leave is to care for a child, Sailer said employers need to document the name of the child, the school or place of care that has been closed or cannot accept the child due to coronavirus restrictions.
This documentation needs to include a statement from the employee that no other person can care for this child, which is one of the program’s requirements. She said it is important that employees understand they cannot have grandparents or other family members who are available in order to qualify for the leave for childcare.
“We need to document that so that we’re not saying that this person is off because they have to take care of their child when that’s not really what the situation might be,” Sailer said.
We will share more details as they become available. Please visit our
COVID-19 Resource Page
for more updates.
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. Rich Higgins, CPA, managing principal – New Jersey office can be contacted at
Richard.Higgins@MCC-CPAs.com
. I can be reached at
Marty.McCarthy@MCC-CPAs.com
. As always, we are happy to help.
Stay safe,
Marty McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
