• Division C – Emergency Family and Medical Leave Expansion Act
  • Division E – Emergency Paid Sick Leave Act
  • Division G – Tax Credits for Paid Sick and Paid Family Medical Leave

Effective April 1, 2020, two new refundable payroll tax credits will be available to both small and midsize employers. The goal of which is to provide immediate and fully reimbursable, dollar-for-dollar credit for the cost of providing Coronavirus-related leave to employees.

Eligible Employees

Employers will have to provide up to 80 hours of paid sick leave benefits if an employee falls in one of the following categories:

    1. Has been ordered by the government to quarantine or isolate because of COVID-19.
    2. Has been advised by a health care provider to seek self-quarantine because of COVID-19.
    3. Has symptoms of COVID-19 and is seeking a medical diagnosis.
    4. Is caring for someone who is subject to a government quarantine or isolation order or has been advised by a health care provider to quarantine or self-isolate.
    5. Need to care for a son or daughter whose school or childcare service is closed due to COVID-19 precautions.
    6. Is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the secretaries of Labor and Treasury.

Paid Leave and Paid Sick Leave Credit

Based upon the category under which an eligible employee, the Divisions of the Act dictate how much an employee has to be paid and the related credit an employer is entitled.

Categories 1-3:

  • Paid Leave
    • Two weeks (up to 80 hours) of paid sick leave
    • 100% of the employee’s pay or minimum wage, whichever is greater
  • Paid Sick Leave Credit
    • 100% of the employee’s regular rate of pay, UP TO
      • $511/day and $5,110 in the aggregate for a total of 10 days.

Categories 4-6:

  • Paid Leave
    • Two weeks (up to 80 hours) of paid sick leave
    • 66% (two-thirds) of the employee’s pay or minimum wage, whichever is greater
  • Paid Sick Leave Credit
    • 66% (two-thirds) of the employee’s regular rate of pay, UP TO
      • $200/day and $2,000 in the aggregate for a total of 10 days.

Additional paid leave and/or paid sick leave credit

  • Category 5 (school or childcare services closed)
    • Employees in some instances may receive up to an additional 10 weeks of expanded paid family and medical leave at 66% (two-thirds) of their regular pay.
    • Employers may receive a credit of 66% (two-thirds) of their employee’s regular pay, capped at $200/day or $10,000 in the aggregate up to 10 weeks
  • Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for eligible employees during the leave period.
  • Small Business Exception – small business with fewer than 50 employees will be eligible for an exemption from the leave requirements relating to school closing or childcare unavailability where the requirements would jeopardize the ability of the business to continue. (Additional information is expected to be released by the Dept of Labor in the near future)

Employees w/Varying Schedule Hours

  • Average number of hours scheduled per day over the 5-month period ending on the date one which the employee takes such leave.
  • If employee did not work over the past 6 months, based upon reasonable expectation of average hours worked per day when hired.

Part-time Employees

  • Number of hours entitled will be equal to the number of hours that such employee works, on average over a 2-week period.

Self-Employed Individuals

  • Eligible self-employed individuals are those who:
    • regularly carry on any trade or business, and
    • would be entitled to receive paid leave during the taxable year pursuant to the Act if the individual were an employee of an employer (other than themselves)
  • Self-employment individuals will receive an equivalent paid sick leave credit as employer’s with employees. That being based upon the category for the reason of leave.

Reimbursement of Paid Sick Leave Credit

  • Immediate dollar-for-dollar tax offset against payroll taxes.
    • Employers will retain an amount of payroll taxes (including both employee withholdings and employer matching contributions) equal to the amount of qualifying sick and childcare leave they have paid.
  • Additional refunds owed can be requested through submitting a streamlined claim, which will be available in the coming week.
  • Note – if the amount of payroll tax offset is greater than the amount paid for sick and childcare leave, the excess will be remitted to the IRS in the similar fashion as payroll taxes were remitted previously.

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And remember, together we will prevail through.

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