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Update: Worker Paid Leave & COVID-19 Tax Credits for Select Employers

Paid Sick Leave for Workers

For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child-care leave when employee’s children’s schools are closed or child-care providers are unavailable. The Act will help the United States combat the financial strain employers are incurring as a result of the COVID-19 pandemic.

American businesses with fewer than 500 employees will receive funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public-health measures needed to combat the virus.

Key Takeaways

Paid Sick Leave for Workers

  • For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child-care leave when employee’s children’s schools are closed or child-care providers are not available.

Complete Coverage

  • Health insurance costs are also included in the credit.
  • Employers face no payroll tax liability.
  • Self-employed individuals receive an equivalent tax credit.
  • Employers receive 100% reimbursement for paid leave pursuant to the Act.

Fast Funds

  • An immediate dollar-for-dollar tax offset against payroll taxes will be provided.
  • Where a refund is owed, the Internal Revenue Service (IRS) will send the refund as quickly as possible.
  • Reimbursement will be quick and easy to obtain.

Small Business Protection

  • Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed or child care is unavailable in cases where the viability of the business is threatened.

Easing Compliance

  • Requirements subject to 30-day non-enforcement period for good-faith compliance efforts.

To take advantage of the paid-leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek and expedited advance from the IRS by submitting a streamlined claim form that will be released later this week.

For more information

Visit Coronavirus Tax Relief for more information on these tax credits and COVID-19 relief.

As we continue to navigate through these challenging times, Walton is closely monitoring all developments associated with COVID-19 relief and keeping our clients and partners abreast of important updates, so be sure to stay tuned.

As always, should you have any questions, please feel free to contact us.


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Families First Coronavirus Response Act — Signed into Law

H.R. 6201 — Enacted this Week

The “Families First Coronavirus Response Act” (H.R. 6201) was signed into law by President Donald Trump on March 18, 2020. The bill is intended to provide immediate relief to Americans financially impacted by the COVID-19 crisis.

Overview of Relief Bill

FMLA Expansion for COVID-19

The Act amends the FMLA to allow an employee who is unable to work (or telework) to take leave due to a need to care for the employee’s son or daughter (under 18 years of age) if the child’s elementary or secondary school or place of care has been closed, or the child-care provider is unavailable, due to a “public-health emergency.” A public-health emergency means an emergency with respect to COVID-19 declared by a federal, state, or local authority.

Unlike the original bill, the closure of the child’s school or child care facility is the only reason allowed under the added FMLA provisions, and the only reason allowed for paid leave under the FMLA.

Paid Sick Leave for COVID-19

The Act also adds a paid sick-leave obligation. Employers with fewer than 500 employees must immediately make available 80 hours of paid sick leave for full-time employees (or the equivalent of the average number of hours over two weeks for part-time employees) for the following reasons (which are slightly different than the original bill):

  1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19.
  2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
  3. The employee is experiencing symptoms of COVID-10 and seeking a medical diagnosis.
  4. The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).
  5. The employee is caring for their son or daughter if the school or place of care of the son or daughter has been closed, or the child-care provider is unavailable due to COVID-19 precautions.
  6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor.

Amount of Pay

Under the FMLA provisions, when leave is needed due to a school or day-care closure, the employer can provide the first 10 days of leave unpaid, then subsequent absences for this reason must be paid at 2/3 the employee’s regular rate of pay. The Act includes a cap of $200 per day and $10,000 in aggregate. If the first 10 days are unpaid, an employee may elect to substitute any accrued vacation leave, personal leave, or medical/sick leave for the unpaid leave.

Paid sick leave is paid at the employee’s regular rate for a use described in paragraph (1), (2), or (3); and 2/3 of an employee’s regular rate for a use described in paragraph (4), (5), or (6). Paid sick leave is also capped: $511 per day and $5,110 in the aggregate for a use described in paragraph (1), (2), or (3); and $200 per day and $2,000 in the aggregate for a use described in paragraph (4), (5), or (6).

Effective Date

Both the proposed FMLA changes and the proposed sick leave take effect no later than 15 days after enactment and would remain in place until the end of 2020.

For More Information:

Click on this link to view the entire bill.

Congress is working diligently on a third-phase relief. As we navigate through these challenging times, Walton continues to closely monitor legislative developments associated with COVID-19 relief and maintaining our clients and partners abreast of important updates.

As always, should you have any questions, please feel free to contact us.

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Legislative Update: Congressional Action to Covid-19

H.R. 6201 — Expected soon

The COVID-19 crisis has sparked an unprecedented response and action from Congress, urging lawmakers to work together and act swiftly to respond to economic crises looming over the country. As a result, Congress is expected to enact H.R. 6201 “Families First Coronavirus Response Act” as early as this week. Things are moving fast in Congress. Yesterday, at a lunch event, Senate Majority Leader Mitch McConnell (AL-R) said, “The Senate will not leave town until we have passed another bill to address this emergency. Continue reading “Legislative Update: Congressional Action to Covid-19”

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Walton’s Response to COVID-19 Crisis

As we navigate through this unprecedented environment, I felt it is important to take a moment to express our hope for you and your employee’s good and continuing health during this difficult time and to inform you of Walton’s plans to continue to deliver services and support for our clients. Walton has operational and technical services that are centralized to deliver support to our clients and distributed for technical operations. To ensure the safety and well-being of our employees, Walton is employing additional safety measures that will allow us to continue to operate in a safe environment. Continue reading “Walton’s Response to COVID-19 Crisis”

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Senate passes H.R. 1865

We are almost at the finish line! As expected, this afternoon, the Senate passed H.R. 1865, Further Consolidated Appropriations, 2020, which contains a one-year extension of WOTC and a retroactive extension of Federal Empowerment Zone as well as Indian Employment Credit through December 31, 2020. The President is expected to sign the bill into law by tomorrow. Extenders’ provisions will become effective on the signing date, and official text of the new public law will be published in coming days. We will let you know once it’s signed into law!

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WOTC Legislative Update — December 17, 2019

We are pleased to announce that, early this morning, the House Rules Committee issued a Rule and manager’s amendment to H.R. 1865 “Further Consolidated Appropriations Act, 2020.” The amendment grants the extension for the Work Opportunity Tax Credit (WOTC), including VOW to Hire Heroes Act Credits, through December 31, 2020. It also grants a retroactive extension of the Federal Empowerment Zones and Indian Employment Credit through the end of 2020.

Continue reading “WOTC Legislative Update — December 17, 2019”

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Breaking News: House Passes H.R. 1865

Important developments are happening very rapidly. As expected, yesterday afternoon, the House voted 297-120 to approve H.R. 1865, Further Consolidated Appropriations Act, 2020, with a one-year extension of WOTC, including VOW to Hire Heroes Act and retroactive extensions for Federal Empowerment Zones (FEZ) and the Indian Employment Credit (IEC).

Continue reading “Breaking News: House Passes H.R. 1865”

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WOTC Legislative Update — November 18, 2019

As you may know, the current version of the Work Opportunity Tax Credit (WOTC) program is set to expire on December 31, 2019 unless congress passes legislation that extends the program, as done previously, since its inception in 1996.

Here are the latest developments:

The week of November 4, Senate Finance Chairman Chuck Grassley (R-IA) and House Ways and Means Chairman Richard Neal (D-MA) contended openly over the so-called “tax extenders.” Tax extenders are several dozen non-permanent tax provisions of the U.S. tax code, which include WOTC among the many. Essentially, there were two key points of disagreement:

  1. House Representative Neal and Democrats could grant the extenders two years through 2021, provided programs like the Earned Income Tax Credit, Child Tax Credit, and Child and Dependent Care credit expansions are in the deal.
  2. On the Senate side, Senator Grassley and Ways and Means Ranking Member Kevin Brady (R-TX) oppose the new provisions which add an estimated $300 billion to the deficit. They feel House Democrats are holding the extenders hostage to get their add-ons. Instead, Senator Grassley wants a permanent extension for as many extenders as possible. House Democrats oppose permanent extensions because it adds to the deficit. Instead, they favor temporary extensions which do not add to the deficit under budget scoring rules.

Continue reading “WOTC Legislative Update — November 18, 2019”

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Tax Reform is signed into law

President Donald Trump has signed the Tax Cuts and Jobs Act into law. This law delivers a $1.4 trillion tax overhaul to the U.S. tax code. It provides generous cuts to corporations and simplifies tax brackets for individual filers, lowering taxes for most people. As part of the congressional process to address the tax reform, the future of tax provisions such as the Work Opportunity Tax Credit (WOTC) have became uncertain, particularly in the House. The House called for an unprecedented repeal of the program, as of December 21, 2017.

Continue reading “Tax Reform is signed into law”

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