Covid-Leave Guidance, Tools Overlap by Design, Officials Say (1)

Frequently asked questions were an invaluable tool for employers that needed information about rapid-fire rulemaking and evolving guidance that shaped the federal pandemic response, government agency officials said March 15.

The online postings and virtual forums became an information thoroughfare for a remote workforce, the Labor Department, and the Internal Revenue Service to engage around Families First Coronavirus Response Act (FFCRA) provisions. Similar resources also may become the arteries for guidance for the American Rescue Plan Act of 2021 (H.R. 1319).

Major Undertaking

The Labor Department held its first virtual town hall seminar for employers two days after the FFCRA (Pub. L. 116-127) was enacted March 18, 2020, said Helen Applewhaite, director of the Labor Department’s Division of the Family and Medical Leave Act and Other Acts.

The agency was simultaneously moving from mainly on-site investigations and on-site work to nearly 100% staff teleworking, she said at the American Payroll Association’s online Capital Summit.

“From the date of enactment to the publication of the regulations was about two weeks to the day,” Applewhaite said. “That’s unprecedented. It normally takes months, if not years, to publish the full range of regulations under laws that get enacted.”

In that case, the agency just did not have that luxury, Applewhaite said. “Not only was it a time-limited legislation that came with an expiration date, it was also something that the public needed very rapidly” to ensure that employers knew how to apply the new provisions and that employees were aware of new protections, she said.

The regulations had to be written quickly for them to be of value, she said, noting that about 61 million employees were to be eligible for leave under FFCRA provisions.

The agency estimated that it responded to about 95% of the hundreds of thousands of phone calls that it received in the first weeks of the FFCRA’s implementation to ensure that answers were provided on how the law would apply.

Triage Techniques

Virtual presentations, frequently asked questions, and Field Assistance Bulletins became vital conduits for the Labor Department to provide updated guidance, along with extensive radio and television public service announcements conducted in English and Spanish.

During the period from the FFCRA’s enactment to Dec. 31, 2020, which was the last day the paid leave requirements of the FFCRA were in effect, the department published 105 FAQs to its website, Applewhaite said.

Field Assistance Bulletins advised agency offices how to apply certain provisions of the law, such as a June 26 bulletin that addressed whether closure of summer camps might qualify for qualified sick leave wages or qualified family leave wages under the FFCRA, Applewhaite said. Updates to the frequently asked questions and bulletins with links to relevant regulations and affected laws were posted to the department’s website, she said.

The department’s website, which typically has about 500,000 visitors per week, recorded more than 6 million visits one week at the height of the FFCRA response and has surpassed 64 million views since the FFCRA was passed, Applewhaite said.

Many questions about FFCRA paid leave have focused on school closings, unavailable child-care providers, or summer camp, Applewhaite said. Questions about situations related to different quarantine orders and state recommendations, including quarantining after travel, also were received, she said.

Cross-Referencing by Design

Sydney Gernstein, employment-tax branch chief with the IRS Office of Chief Counsel, said Labor Department FAQs were cross-referenced to strong acclaim. “We have cross-referenced them a lot,” he said.

“We have to know what the [Labor Department] is saying to know what we’re saying, so that’s been fantastic, but we have also been issuing numerous frequently asked questions,” Gernstein said.

The IRS, which Gernstein said was blindsided after Covid-19 changed the world seemingly overnight, had to implement changes on the fly, especially regarding the FFCRA. The FAQs were a major tool to provide the agency’s latest thinking and quick responses to issues as they arose, he said.

The overlap between Labor Department and IRS guidance was by design, Gernstein said. The way the two credits for qualified leave wages work is that they incentivize employers to provide Covid-19 paid leave by covering the cost of the leave. The employment tax credits piggybacked off the labor agency’s rules, he said.

The IRS communicated its interpretation of the FFCRA with regard to the tax credits through a variety of channels, from formal guidance, such as Internal Revenue Bulletins, forms, instructions, and publications, to forums such as calls with the payroll community, Gernstein said.

The two credits for qualified leave wages have refundable and nonrefundable elements, Gernstein said.

Under the FFCRA, the credits originally could be claimed for qualified leave wages paid for leave from April 1, 2020, to Dec. 31, 2020. Under the COVID-related Tax Relief Act of 2020, which was enacted as part of the 2021 Consolidated Appropriations Act, the credits also can be claimed for qualified leave wages paid for leave from Jan. 1, 2021, to March 31, 2021.

Employers generally may reduce employment tax deposits in anticipation of claiming the credits, Gernstein said, noting that IRS guidance provides relief from normal failure-to-deposit penalties for this purpose.

Tax-Related Changes Ahead

Several significant tax-related changes occurred under the American Rescue Plan of 2021, which was enacted March 11, Gernstein said.

The ARPA’s provisions regarding the two qualified leave credits apply prospectively with respect to qualified leave wages paid for periods of leave from April 1, 2021, to Sept. 30, 2021, Gernstein said. They do not apply substantively to wages paid for periods through March 31, 2021, which are governed by previous rules.

Although the FFCRA’s requirements for paying qualified leave wages to eligible employees no longer apply, employers still can claim the qualified leave credits based on qualified leave wages that were voluntarily paid as if the requirements were still in effect.

Employers also can now claim the paid sick leave credit for periods when an employee is unable to work or telework because they are receiving testing for Covid-19 or they are absent when receiving a Covid-19 vaccination under the American Rescue Plan Act of 2021, in addition to claiming the credit for the same scenarios that paid sick leave could be taken under the FFCRA, Gernstein said. The same daily and aggregate paid sick leave credit limits of $200 or $511 per day apply, depending on the reason for leave, he said.

For paid sick leave, the tax credit amount was capped at $511 per employee per day if leave was for quarantining reasons and at $200 per employee per day if leave was to care for a quarantined person or for qualifying child-care reasons. For paid family leave, the tax credit amount also was capped at $200 per employee per day, up to a maximum aggregate amount for all calendar quarters of $10,000 per employee under the FFCRA. The total amount of qualified family leave wages that may be counted toward the associated credit rose to $12,000 from $10,000 per employee under the ARPA.

The nonrefundable portion of the credits applies against the employer share of Medicare tax under the ARPA, rather than the employer share of Social Security tax as was the case under the FFCRA, Gernstein said.

The leave wages that employers pay employees under the ARPA are subject to the employer share of Social Security tax and the employer share of Medicare tax, Gernstein said.

But now, under the ARPA, employers can include the employer portions of Social Security tax and Medicare tax assessed on qualified leave wages within the total amounts of their credits for qualified leave wages.

Another major change is that the credits not only include applicable qualified health plan expenses but certain benefits provided under collectively bargained agreements, including eligible defined-benefit contributions and eligible apprenticeship program contributions, Gernstein said.

Nondiscrimination requirements also exist in the ARPA, “which makes sense if you think about it because now the leave is not mandatory,” allowing employers to pick and choose leave recipients, Gernstein said. “There are provisions in the law that prevent the employer from providing [leave] in a way that discriminates” in favor of highly compensated employees, he said.

A number of provisions in the ARPA also detail how the paid leave credits interact with other credits, including the Work Opportunity Credit and the employee retention credit, Gernstein said.

(Updated throughout to clarify language and context.)