Under the Families First Coronavirus Response Act (FFCRA), covered employers were required to provide partially paid emergency sick leave and emergency family and medical leave to eligible employees for qualifying purposes related to COVID-19. The FFCRA also provided tax credits to recoup employers for the cost of providing this benefit.
The original mandate requiring employers to pay employees on FFCRA leave expired on December 31, 2020, and was not extended under the December 2020 Consolidated Appropriations Act of 2021 or the March 2021 American Rescue Plan (ARP). However, employers that voluntarily continue to pay employees on leave for the specific COVID-19-related reasons covered under FFCRA may continue to claim tax credits (subject to applicable caps)through September 30, 2021.
In addition to extending this deadline, the ARP includes several new changes to FFCRA leave that took effect April 1, 2021:
- New non-discrimination rules to FFCRA leave, which provide that no tax credit is available if the employer, in determining the availability of paid leave, discriminates in the provision of paid leave in favor of its highly compensated employees, full-time employees, or employees on the basis of tenure with the employer. Employers must also generally follow all of the FFCRA requirements to be eligible for the credits.
- FFCRA use caps reset for Emergency Paid Sick Leave (EPSL).
- The aggregate cap on qualified EFML wages increased from $10,000 to $12,000 and reset effective April 1, 2021.
- For employers that are normally subject to the Family Medical Leave Act (FMLA) (generally employers with 50 or more employees), EFML should continue to count against an employee’s FMLA leave bank.
- If an employee exceeds their annual allotment of FMLA leave under your normal company policy, you should not claim credits for leave provided above that amount, even if some portion was for unpaid FMLA leave not subject to the FFCRA.
- There is no longer a two-week waiting period for EFML during which EFML had been required to be unpaid.
- For those without an existing FMLA policy, EFML leave caps reset as of 4/1/21.
- Qualifying reasons for leave will expand to cover circumstances related to diagnostic testing and vaccination.
- Qualifying reasons for EFML have been expanded to cover reasons previously only available as EPSL.
- New FFCRA credits will be taken against employer Medicare tax instead of employer Social Security tax.
Admins with the “Manage Employees” permission will be able to put employees on leave for reasons related to COVID-19 under the Families First Coronavirus Response Act (FFCRA) and claim related tax credits by heading to an employee's profile and selecting "Schedule FFCRA Leave."
The following employee types are eligible for leave:
- Employee - Full-time
- Employee - Part-time
- Employee - Paid intern
- Owner / Partner (paid)
From your dashboard, navigate to Manage > Employees and select the employee’s profile. On the profile page, select “Schedule FFCRA Leave” on the top left menu.
Once there, you will need to select the emergency leave that the employee has requested and the qualifying reason for leave. Please note that you must select the leave type before you can select the leave reason.Then, set a start and end date for when their leave will take place.
Employees may be eligible for two types of leave, Emergency Paid Sick Leave (EPSL) and Emergency Family and Medical Leave (EFML).
EMERGENCY PAID SICK LEAVE (EPSL)
Under the FFCRA, eligible employees qualify for up to 80 hours of EPSL (or the number of hours usually worked in a two-week period for part-time employees) for qualifying reasons listed further below. You should only use this flow to record paid leave for one of the qualifying reasons under the FFCRA. Leave provided for other reasons is not eligible for FFCRA tax credits and therefore should not be scheduled using this tool.
EPSL provides two weeks of leave paid at either 100% of the employee’s regular rate of pay (capped at $511 per day) or two-thirds the regular rate of pay (capped at $200 per day), depending on the reason for the leave.
EMERGENCY FAMILY AND MEDICAL LEAVE (EFML)
The Emergency Family and Medical Leave applies to employees who have been at the company for at least 30 days, and are eligible based on the qualifying reasons listed further below. You should only use this flow to record paid leave for one of the qualifying reasons under the FFCRA. Leave provided for other reasons is not eligible for FFCRA tax credits and therefore should not be scheduled using this tool. Note that the ARP expanded the qualifying reasons available for EFML to include some reasons previously only available for EPSL.
Note: The IRS has not released any regulatory guidance on the most recent changes to the FFCRA–including the newly expanded reasons for emergency family leave. If they release any guidance in the future that differs from the information currently available, you may be required to repay some or all of the tax credits claimed.
EFML provides twelve weeks of leave paid at two-thirds the regular rate of pay (capped at $200 per day and $12,000 in total).
Notes On Scheduling FFCRA Leave
By scheduling FFCRA leave using Justworks, you will be directing Justworks to claim tax credits and/or refunds on behalf of your company. Customers should only use the tool for qualifying reasons under the FFCRA as this is how Justworks will also claim tax credits that may offset or reduce applicable payroll taxes for your company in accordance with FFCRA.
Additionally, the IRS has released specific guidelines regarding the documentation necessary to substantiate your claim of tax credits under the FFCRA. In order to submit leave using the Justworks FFCRA tool, you will need to certify that you have collected all required documentation and that leave is qualifying, among other things.
Finally, for any employee taking FFCRA leave with a regular rate of pay that is less than the applicable minimum wage, you must ensure that the employee is paid at least that applicable minimum wage during the days they are utilizing leave under FFCRA. Not sure what minimum wage is based on your employee’s work location? Check out this chart on Mineral.*
Reason for Leave
As outlined by the Department of Labor, there are six qualifying reasons for FFCRA leave and each leave-type has subsequent pay-out methods. As of April 30, 2021, the DOL website has not been updated to reflect the expansion of qualifying reasons to include diagnostic testing and vaccination under the American Rescue Plan (ARP) signed into law on March 11, 2021.
Leave is FFCRA qualified when the employee is unable to work (remotely or otherwise) and:
- is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- Shelter-in-place or stay-at-home orders are included under the definition of local quarantine or isolation orders, but those orders must be what's preventing an employee from working in order to be eligible for leave under this qualifying reason.
- Per DOL guidance, employees whose businesses or worksites are closed, or whose employers do not otherwise have work available to them during this time, would not be eligible for leave under this qualifying reason.
- If the leave type selected is EPSL, leave reason 3 will also include the qualifying reason “or at the employer’s request, is obtaining immunization related to COVID–19 or recovering from such immunization.”
- If the leave type selected is EFML, leave reason 5 will also include the qualifying reason “or at the employer’s request, is obtaining immunization related to COVID–19 or recovering from such immunization.”
Note: The leave type and reason you select can impact how much the employee will receive in leave pay, so it’s important to answer accurately. Generally, leave taken for reasons related to one’s own care is capped at $511 per day. Leave taken for other qualifying reasons, or for EFML, is paid out at two-thirds of the employee’s regular pay (or applicable minimum wage, whichever is higher), up to a cap of $200 per day.
Start and End Dates
Next, choose a start date and an end date.
You can schedule an employee for non-consecutive leave using Justworks. For example, you can schedule leave from June 1 through June 4 and again from June 7 through June 10. In order to add non-consecutive leave, go through this flow again for each time period. Please note that you will be blocked from scheduling more paid leave time than is allowed under the FFCRA.
Employer Contribution To Leave Pay (Optional)
In Justworks, employers have the option to pay only the amount that is tax creditable under the FFCRA, or they can choose to “top up” that amount if the employee’s regular pay is more than the applicable FFCRA cap. Note, however, that an employer cannot claim FFCRA tax credits for any amount of pay that they choose to pay above the applicable cap.
Work schedule and wages
Now we will ask for the employee’s typical work schedule.
Select which days of the week this employee typically works. Note that the number of days selected here will directly impact the calculation of leave pay, so it’s important to enter this schedule correctly.
Average Number of Hours Worked In A Day
What are the average hours this employee works every week? Please include any typical overtime as well. We need this information to accurately calculate the leave pay based on an employee’s normal schedule (i.e. their work schedule not affected by COVID) as well as prorate regular payroll correctly when the leave spans mid-pay period.
Average Additional Wages Per Week
Does this employee typically receive commissions or other wages that are part of their regular pay? If so, include that here. We need this information to accurately calculate the leave pay based on an employee’s typical schedule (i.e. their work schedule not affected by COVID) as well as prorate regular payroll correctly when the leave spans mid-pay period.
Once you have input all the information, confirm that you agree to the Federal Families First Coronavirus Response Act Paid Sick Leave Request Certification. By doing so, you will certify that the leave you are submitting qualifies for tax credits under the FFRC, among other things.
Once complete, you can select ‘Schedule leave’ which will prompt a success banner to show at the top of your screen confirming that the employee’s leave is scheduled in Justworks. You will also see the leave amounts and applicable credits on your company's estimated invoice.
Can an employee take both EFML and EPSL at the same time?
EPSL and EFML should not be taken for the same leave period.
Am I required to receive any supporting documentation (e.g., a doctor’s note) before putting someone on leave?
The IRS has provided specific guidelines regarding the documentation you should collect and retain to substantiate your claim of eligibility for tax credits for qualifying leave payments under the FFCRA. In order to submit leave using Justworks’ FFCRA leave tool, you will need to certify that you have collected this documentation. You can reach out to Justworks support to obtain a template leave request form to assist in collecting the documentation required by the IRS.
Can an employer grant EFML or EPSL for purposes other than those listed in the law?
No. The tax credits under the FFCRA only apply to leave for qualifying reasons under the law. You should only use Justworks’ FFCRA leave tool to schedule leave for eligible employees for qualifying reasons under the FFCRA. Additionally, it may be a violation of federal law to count non-qualifying leave against an employee’s annual bank of family and medical leave.
Once I’ve recorded leave using the FFCRA leave tool, do I need to adjust employee timecards or PTO balances in order for the employee to be paid?
Once leave is recorded, it will be paid on the employee’s regular pay schedule according to the information you have included for that employee. Timecards for the same pay period should only include hours that were actually worked by the employee. PTO should not be scheduled or added to employee timecards for the time they are on FFCRA leave scheduled with the FFCRA leave tool. Adding PTO to timecards may result in double compensation. If an employee is using banked PTO to “top up” their pay under FFCRA, use the top-up feature in the FFCRA leave tool, and then manually deduct that time from the PTO balance in Justworks.
Do deductions apply to FFCRA pay?
Only 401(k) and wage garnishment deductions are taken from FFCRA pay. Any missed medical, dental, and/or vision deductions will automatically be collected from the employee once they return from leave.
What happens if I need to schedule FFCRA leave for a period that has already been paid out in the current quarter?
Please contact your Customer Success Manager or Justworks Support for assistance. Please note, we are not able to schedule retroactive leave payments once a quarter has closed.
*Be sure you’re logged into your Justworks account with administrative permissions to access Mineral.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.