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Record Keeping Requirements to Receive FFCRA IRS Tax Credit

Client Alert
April 2, 2020

Employee Requirements The employee must provide documentation to their employer containing the following information prior to taking Paid Sick Leave under the Emergency Paid Sick Leave Act (EPSLA) or Expanded Family and Medical Leave under the Emergency Family and Medical Leave Expansion Act (EFMLEA):

  1. Employee’s name;
  2. Date(s) for which leave is requested;
  3. COVID-19 qualifying reason for leave; and
  4. A statement representing that the employee is unable to work (or telework) as a result of the COVID-19 qualifying reason.

These initial employee requirements are consistent with the Leave Request Form developed by BMD’s Labor & Employment team.

In addition, to be eligible for Paid Sick Leave under Sections 826.20(a)(1)(iii)-(iv) — the employee is experiencing symptoms of COVID-19 and seeking medical diagnosis or is caring for someone experiencing symptoms of COVID-19 — the employee must additionally provide their employer with either:

  1. The name of the government entity that issued the Quarantine or Isolation Order to which the individual being cared for is subject; or
  2. The name of the health care provider who advised the individual being cared for to self-quarantine due to concerns related to COVID-19.

To be eligible for Paid Sick Leave under Sections 826.20(a)(1)(v) or Expanded Family and Medical Leave — the employee is caring for a child whose school or childcare is closed — the employee must additionally provide their employer with:

  1. The name of the son or daughter being cared for;
  2. The name of the school, place of care, or childcare provider that has closed or become unavailable; and
  3. A statement representing that no other suitable person will be caring for the son or daughter during the period for which the employee takes leave (this includes spouses and is a request where employers can nail down specifics). The DOL issued additional guidance that this payment should not be made if there is another suitable parent or individual residing inside the house.

Although these documents and information are provided by the employee, they should be retained by the employer. Beyond the above requirements, an employer may additionally request any material needed for the employer to support a request for tax credits under the FFCRA.

Employer Requirements

An employer is required to retain all documentation relevant to FFCRA leave for a period of no less than four (4) years (best practice is 7 years), regardless of whether leave was granted or denied. Additionally, if an employee provides any oral statement(s) to support their time off, the employer is required to document and maintain that information for four (4) years.

If an employer believes it qualifies for the small business exception, and accordingly denies an employee’s request pursuant to Section 826.40(b), the employer must document the determination and retain that information for four (4) years (best practice is 7 years).

In order to claim tax credits from the IRS, the Department of Labor advised that employers should retain the following:

  1. Documentation to show how the employer determined the amount of paid sick leave and expanded family and medical leave paid to employees that are eligible for the credit, including records of work, telework and Paid Sick Leave and Expanded Family and Medical Leave;
  2. Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages;
  3. Copies of any completed IRS Forms 7200 that the employer submitted to the IRS;
  4. Copies of the completed IRS Forms 941 that the employer submitted to the IRS or, for employers that use third party payers to meet their employment tax obligations, records of information provided to the third-party payer regarding the employer’s entitlement to the credit claimed on IRS Form 941, and
  5. Other documents needed to support its request for tax credits pursuant to IRS applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit.

For questions, or more information, please contact any member of BMD’s Employment/Labor Law team.

U.S. Department of Labortemporary regulationsFFCRACOVID-19employees
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