ADP, payroll services provider, provided a summary of the law on their website. The summary is meant for all industries and companies of all sizes from a number of employees standpoint. We would recommend reading the full summary via link below.
We have highlighted below the items that may pertain specifically to our clients who are dental practices. Typically, these are dental practices that have 3 to 10 employees.
Beginning of ADP Summary:
The Families First Coronavirus Response Act (FFCRA; “The Act”) was signed into law on March 18, 2020, and generally requires employers with less than 500 employees to provide a certain amount of paid sick and paid leave to employees affected by COVID-19, and provides affected employers with a corresponding employment tax credit.
Which Employers Are Affected?
Generally, the legislation affects private-sector employers with under 500 employees. The Department of Labor (DOL) will issue regulations to exempt small businesses with fewer than 50 employees from requirements, if such requirements would jeopardize the viability of the small business.
(DJ Note: We’ll need to wait on DOL regulations to assess which practices are exempt.)
Notices
Employers must post a notice of the requirements. DOL is to publish a model notice within seven days of enactment.
Emergency Paid Sick Leave Act
Employers with 500 or fewer employees and government entities must offer Emergency Paid Sick Leave under the Act to all employees, regardless of how long they have been employed by the employer. Paid sick leave applies to employees who are unable to work (or telework) and who meet any of the following conditions:
- Subject to a quarantine related to COVID-19;
- Advised to self-quarantine related to COVID-19;
- Experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- Caring for an individual who is subject to quarantine;
- Caring for a son or daughter if the school or child-care provider is closed;
- Any other substantially similar condition as specified by HHS.
Full-time employees are entitled to take up to 80 hours of paid sick leave. Part-time employees are entitled to the “number of hours equal to the number of hours that such employee works, on average, over a 2-week period.” For employees with variable work schedules, the determination of hours to be paid is based on the average hours the employee was scheduled per day over the six-month period ending on the date on which the employee takes such leave, including hours for which the employee took leave of any type. If the employee does not have six-months of work history with the employer, hours are based on “the reasonable expectation of the employee at the time of hiring of the average number of hours per day that the employee would normally be scheduled to work.”
FLSA Regular Rate of Pay Applies
Paid sick leave is capped at $511 per day (and a total of $5,110) for employees in categories 1-3 above, and two-thirds of wages up to $200 per day (and a total of $2,000) for employees in categories 4-6 above. Employers may pay amounts over such limits, but the tax credit is limited to those amounts. In addition, the aggregate number of days available to an individual is limited to 10 for 2020.
Paid Family Leave and Paid Sick Leave Tax Credits
Under the Act, all non-governmental employers with less than 500 employees are allowed a credit against employer Social Security tax liability equal to 100 percent of the qualified sick leave wages paid by the employer, subject to the limits discussed above.
The credit is increased by specified health expenses (e.g., employer-paid health plan premiums), but limited to qualified health plan expenses that are excluded from employees’ income as coverage under an accident or health plan.
The tax credit effectively offsets (reduces) the amount of federal employment taxes that must be deposited with the IRS, usually within a few days of the payroll date. This is intended to provide the funds needed to pay sick and family leave benefits under the Act. However, in some cases, such as complete closure of a business, the Treasury Department and IRS will process claims for advance payments of the tax credit.
Effective Dates and Non-Preemption
The bill takes effect within 15 days of enactment, i.e., no later than April 2, 2020. The paid sick and paid family leave provisions, and tax credits created by FFCRA, will sunset effective December 31, 2020.
End of ADP article summary.
These are only highlighted points from the full article published by ADP payroll service provider. Please read the article in full via the link provided above.
If payroll payments are made as per above requirements, the tax credits probably will be applied through the payroll tax return Form 941. Please communicate with your payroll service provider for further details.
Please call at 512-497-4946 or email us at info@bholacpa.com for further question. We are only answering questions from current clients.