Paychex HR and Payroll Services in Irving, Texas

As Texas begins to re-open and businesses restore or start planning to restore operations, we at Paychex remain dedicated to serving you, your employees, and your business. Please see below for guidance and best practices around some common questions related to these new challenges for Texas employers.

Unemployment

What are the eligibility requirements for Unemployment Benefits in Texas?

Although specific eligibility requirements may vary by state, employees in Texas generally qualify if they:

• Are totally or partially unemployed (which may include layoffs and reductions in hours/wages);
• Lost their job through no fault of their own, did not quit (without good cause or without good reason unrelated to work, in limited circumstances), or were not terminated for misconduct;
• Have a minimum amount of wages earned in what is called the "base period," which is the first four of the last five completed calendar quarters before the initial claim’s effective date;
• At the time of application, are physically and mentally able to work, available for work (which includes having adequate transportation and child care, if necessary), and is actively seeking work, unless otherwise exempt from this requirement.

For more information on initial eligibility and ongoing eligibility requirements, how to apply for, and how to file a claim for Unemployment Benefits, please visit the Texas Workforce Commission (TWC) Unemployment Benefits website or explore the TWC’s Unemployment Benefits Services page.

Employee Safety & Travel Concerns

What current COVID-19-related travel restrictions are in place for Texas?

On May 21, 2020, Governor Greg Abbott passed Executive Order GA-24, which terminated all air travel restrictions previously established on March 26, 2020 that mandated temporary quarantines for all travelers arriving by air from select high-risk U.S. locations. Executive Order GA-24 also eliminated the previously established 14-day mandatory quarantine order for all travelers entering Texas on roadways from Louisiana, which was put into place on March 29, 2020. For a full overview of all the Executive Orders passed by Governor Abbott, please visit the Legislative Reference Library (LRL) of Texas Executive Order Resource Page.

Despite the passing of Executive Order GA-24, the State of Texas still encourages travelers to follow all guidance provided by the CDC and U.S. State Department regarding travel safety measures and social distancing and advocates that individuals remain up-to-date on all travel-related alerts, warnings, and/or restrictions.

For more information on travel-related restrictions, please visit the Texas Department of State Health Services (DSHS) Information for Travelers website, review Travel Texas’s COVID-19 Resources for Industry Partners page, or explore the following travel resources provided by the CDC:

• COVID-19 Travel Resource Page
• Returning from International Travel
• Considerations for Travelers—Coronavirus in the US
• Travel FAQs and Answers

As an employer, can I prevent my employees from traveling for vacation? If they’ve traveled by plane either internationally or to a high-risk U.S. location, can I restrict them from returning to work for a certain period?

Employers can encourage their employees to limit any nonessential personal travel, especially to high-impact areas, however, they cannot prevent them from traveling outright.

Employers should also educate their employees on the current COVID-19-related risks that are associated with traveling. Some of these travel risks can include but are not limited to potential/greater risk of exposure to coronavirus, becoming stranded due to federal, state, and/or local travel restrictions or closures, and/or having to comply with potential mandatory quarantine protocols for individuals who have recently traveled to and/or returned from a high-risk location. Employers should also advocate that their employees follow all safety, hygiene, and social distancing guidance provided by the CDC.

Employers can require an employee to work from home and to monitor their health for symptoms of COVID-19 for a 14-day period if the employee has:

• Recently traveled to an international location on the current CDC widespread transmission list;
• Recently been on a cruise ship or traveled domestically by air to an area with widespread transmission;
• Recently traveled to a high-risk location within the US under a CDC travel advisory;
• Recently been in contact with an individual with a known diagnosis of COVID-19;
• Or is a resident covered by a state or local ordinance requiring physical office closures.

If an employee who has recently returned from international travel displays symptoms of COVID-19, then employers can and should enforce any federal and/or state-mandated quarantine measures, regardless of whether their travel was for personal or business reasons. The same would apply for those who may have traveled to high-risk areas within the U.S. 

Employers should consider a policy about the above and communicate it to all employees in order to ensure awareness of the potential impact travel may have on their ability to return to the workplace. Before making business decisions that may alter your workplace, consider consulting with an HR professional and/or your legal counsel to help you ensure compliance with federal, state, and/or local law, and for the latest updates, refer to your state and/or local authorities.

For more information, please review our Infectious Disease Outbreak Plan WORX article, explore our Coronavirus at Work FAQs, or visit the Paychex COVID-19 Help Center.

How do I properly conduct COVID-19 temperature testing in the workplace? How do I maintain confidentiality with the test results, or if I must send an employee home? Are there any Equal Employment Opportunity Commission (EEOC) considerations that I should be aware of?

Temperature testing/screening can be conducted on-site at businesses to determine if an individual has a fever. Based on CDC guidance, a fever is just one of many symptoms of COVID-19 and conducting temperature screenings may be a way to potentially protect your employees and business. However, a fever does not always indicate COVID-19 and some with COVID-19 never experience a fever. Therefore, it is one method to consider, but alone may not necessarily be the most effective way to protect a work environment. Temperature testing/screening may also put the employee(s)/individual(s) assigned to take temperatures at a higher risk of exposure, which can create additional concern(s). Other safety methods to consider may include more consistent deep cleaning of the workplace, the reorganizing of work spaces to ensure individuals are spaced six or more feet apart, implementing or continuing remote work capabilities, if applicable, and/or staggering your staff to work on specified days. CDC guidelines also allow for virtual health screenings to be conducted rather than in-person health checks. For more information on this, please review the CDC’s Resuming Business Toolkit, General Business FAQs, or visit their COVID-19 website.

The Equal Employment Opportunity Commission (EEOC) generally considers temperature testing/screening to be a “medical examination.” The agency’s guidance generally permits employers to measure employees’ body temperatures as a result of the CDC and state/local authorities acknowledging that COVID-19 is community spread. It is possible the EEOC may revise this guidance in the future.

Before conducting temperature testing/screening, consider consulting with an HR professional and/or your legal counsel to help you to ensure compliance with state and/or local law.

If an employer plans to implement in-person temperature screenings at their business after discussing their options with an HR professional or legal counsel, they should consider:

• Who will take temperatures and how that person will be protected from exposure,
• Where temperatures will be taken,
• When temperatures will be taken,
• How temperatures will be taken,
• How the temperature screening equipment will be sanitized,
• Where the information/readings will be recorded,
• If recording this information, how will it be recorded and confidentially maintained separate from the employees’ personnel files,
• What steps to take for a high temperature,
• What safety protocols will be put in place and how they will be communicated to the screener(s) and employees,
• Ensuring the time waiting for and undergoing the screening process is considered compensable time.

All temperature screenings should be administered based on legitimate and nondiscriminatory business needs and should be as non-invasive as possible. Employers should also consider whether a third-party vendor will be used to conduct such screenings. Employee results of such testing are considered medical information and should be kept in a confidential file and separated from an employee’s personnel file.

Any employee showing symptoms of COVID-19 should be sent home immediately and encouraged to seek appropriate medical attention. If an employee has a confirmed case of COVID-19, employers should advise other employees who could potentially have had contact with the infected employee about possible exposure to COVID-19. Employers may not, however, disclose the name of the affected employee and should take all possible steps to maintain confidentiality.

In addition, employers may:

• Ask employees if they are experiencing symptoms of COVID-19.
• Request that employees notify them if they or a close family member tests positive for COVID-19.
• Inquire if employees have come into close contact with anyone that is known or suspected to have COVID-19.
• Inquire about employees’ personal travel plans, whether to other countries or within the U.S. (particularly regarding current “hot spots”).

An employer may not ask non-COVID-19-related medical questions, as these may impact an employee’s rights under the Americans with Disabilities Act (ADA). Employers must maintain confidentiality as required by the ADA and applicable state laws with respect to employee medical information.

Be sure to always consult with an HR professional and/or legal counsel before asking employees’ specific medically-related questions to help you to ensure compliance with federal, state, or local law.

For more information, please visit the Texas DSHS COVID-19 Resource Page, review our WORX article, explore the Paychex COVID-19 Help Center, and follow all safety guidance provided by OSHA, the CDC, and your state or local agencies.

Staffing Concerns

Can a grandparent be considered a child care provider/caregiver under the Families First Coronavirus Response Act?

According to the U.S. Department of Labor (DOL), the definition of a “child care provider” is an individual who cares for your child. This includes both persons who are paid to provide child care, such as daycare providers, babysitters, and/or nannies, as well as persons who provide child care regularly at no cost and/or without a license, such as grandparents, relatives, or neighbors.

For more information, please visit the DOL’s FFCRA Resource Page and review the Families First Coronavirus Response Act: Questions and Answers.

What is the Families First Coronavirus Response Act and who is eligible for covered leaves?

The Emergency Paid Sick Leave Act (EPSLA) and the Emergency Family and Medical Leave Expansion Act (EFMLEA) are both included in the Families First Coronavirus Response Act (FFCRA). Employers should consider consulting with an HR professional and/or legal counsel to review their obligations under the FFCRA. Generally, the FFCRA provides employers with under 500 employees an option of refundable tax credits that reimburse them for the cost of providing paid sick and family leave wages to their employees for specific qualifying reasons related to COVID-19.

Small businesses with fewer than 50 employees may be exempt from providing certain paid sick leave and expanded family and medical leave if providing an employee such leave would jeopardize the viability of the business as a going concern. This is not an automatic exemption and must be analyzed on a case-by-case basis. The guidance provides for the criteria and documentation for consideration. The guidance further suggests that determination for an exemption must be documented at the time of each leave request. Employers with fewer than 25 employees may be exempt from certain provisions related to job protection. If considering claiming an exemption, and employer should consult with legal counsel to fully understand the complex parameters of these exemptions.

FFCRA requires employers to provide paid leave through two separate provisions:

• Emergency Paid Sick Leave Act (EPSLA) – employers must provide up to 80 hours of paid sick time to eligible full-time employees, and a pro-rated amount of paid sick time to eligible part-time employees, when they are unable to work for certain qualifying reasons related to COVID-19.
• Emergency Family and Medical Leave Expansion Act (EFMLEA) – employers must provide paid family and medical leave to eligible employees who take leave related to a qualifying reason related only to the employees need to care for a child whose school or place of care is closed due reasons related to COVID-19.

Emergency Paid Sick Leave – Under the EPSLA there are six qualifying reasons for which an employee is entitled to take paid leave related to COVID-19 if the employee is unable to work (including unable to telework) because the employee:

1. is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
2. has been advised by a health care provider to self-quarantine related to COVID-19;
3. is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
4. is caring for an individual subject to an order (described in 1) or self-quarantine (described in 2);
5. is caring for his or her child whose school or place of care is closed (or child care provider is unavailable, now including summer camps or programs) due to COVID-19 related reasons; or
6. is experiencing any other substantially-similar condition specified by the U.S. Department of Health and Human Services.

Under the EPLSA, a full-time employee is eligible for up to 80 hours of EPSL, and a part-time employee is eligible for EPSL in an amount equal to the average number of hours the employee works over a two-week period, for any combination of the six reasons above.

When taking EPSL for any of the six qualifying reasons, the employee has the independent discretion to use their EPSL entitlement or any accrued paid leave provided by the employer under company policy or jurisdictional leave law where the reason for leave is consistent with the policy and/or law. However, the employee cannot be forced to use other available paid time prior to using their EPSL entitlement.

Expanded Family Medical Leave – Under the EFMLEA, an employee qualifies for Emergency Expanded Family and Medical Leave (EFML) for only one reason – if the employee is caring for his or her child whose school or place of care is closed (or child care provider, which now includes summer camps or programs, is unavailable) for reasons related to COVID-19. An eligible employee is entitled to up to 12 weeks of expanded family and medical leave; however, the first two weeks of EFML are unpaid unless EPSL or another applicable paid leave is used. Under the EFMLEA:

• Employees who have been on their covered employer’s payroll for at least 30 calendar days for a covered employer would be eligible for leave. An employee is considered to be employed for at least 30 calendar days if the employee had the employee on its payroll for the 30 calendar days immediately prior to the day the employee’s leave would begin.
• An employee is eligible for up to 12 total weeks of leave under EFMLA for the same reason as (5) above. The first 2 weeks of EFML are unpaid but eligible employees may receive pay under EPSL taken for the same reason.
• Employees taking leave under the EFMLEA must be permitted to elect to use any available paid time off including vacation, personal time, medical leave and/or sick leave during the first 10 days of their EFML, including EPSL. Following the initial 10 days of EFML, when the employee becomes eligible for EFML pay, employers and employees may agree, where Federal or state law permits, to have accrued paid leave supplement the two-thirds pay under the EFMLEA so that the employee receives the full amount of their normal pay.

For more information on FFCRA, the EPSLA, the EFMLEA, and on the payment(s) of these leaves, please review the Paid Leave Under the Families First Coronavirus Response Act, visit the DOL’s resource page, or explore the Paychex resources outlined below:

• Coronavirus (COVID-19) Help Center
• Guidance Updates on the Families First Coronavirus Response Act WORX article
• Families First Coronavirus Response Act: Funding, Tax Credits, and Paid Leave Laws Expanded to Respond to COVID-19 Pandemic WORX article
• The Family First Coronavirus Response Act (FFCRA)

What should I consider when deciding which of my employees will return to work? What happens when an employee tells you that they have an underlying health condition and prefer to stay at home?

Establishing and applying fact-based criteria that are consistent with your legitimate business needs and documenting the reasons for your decisions are important considerations when returning employees to work. Remember to also review the requirements in any written employment agreements, or collective bargaining agreement if you have unionized employees, to make sure that you’re remaining in compliance.

Employment decisions cannot be based on reasons that violate federal, state, or local anti-discrimination laws including, but not limited to, an employee’s membership in a protected class, because an employee has exercised their right to file a complaint against the company (e.g., complaints of unlawful discrimination or harassment), an employee has taken leave that is protected under federal, state, or local law, or because the employer believes that an employee will request leave when called back to work, including Emergency Paid Sick Leave (EPSL) or Emergency Family and Medical Leave Expansion Act (EFMLEA). If you have questions about these laws, or your selection process, consult with your HR professional and/or legal counsel.

An employee’s reason(s) for not returning may make them eligible for some type of leave required by federal, state, or local law, so it is important to engage with your employees to understand why they are refusing to return before taking any action. For example, an employee concerned about their own health condition may be entitled to a reasonable accommodation under the Americans with Disabilities Act (ADA) or similar state law, or an employee caring for a child because their child’s school or daycare is still closed may be entitled to EPSL or EFMLEA.

If your employees are raising reasonable COVID-19 safety concerns, their complaints or even their refusal to work may be protected under OSHA or the National Labor Relations Act, even if your workplace is not unionized. Discuss these issues with you HR professional and/or legal counsel before taking any business action, such as termination or imposing other discipline.

For more information, please watch our prerecorded webinars or review the following WORX articles:

• What to Do if Employees Refuse to Return to Work
• Infectious Disease Outbreak Plan: Considerations for Employers Preparing for Coronavirus
• White House Issues Guidelines for Opening Up America Again during COVID-19 Pandemic

What are an employer’s obligations regarding the posting of the Families First Coronavirus Response Act (FFCRA) “Employees’ Rights” posters? Are there currently exemptions for businesses with under 50 employees?

Under the Families First Coronavirus Response Act, all covered employers are required to post the U.S. DOL’s model notice in a conspicuous place. Other ways employers can satisfy this requirement include:

• Emailing or direct mailing the notice
• Posting on an internal or external employee information website

Employers must also retain documents and information regarding FFCRA leave for a period of four years, regardless of whether the decision was made to grant or deny the request for leave.

For tax credit purposes, the DOL requires employers to maintain the following for four years:

• Documentation to show how the employer determined how much paid leave the employee was eligible for (e.g., records of work performed, telework, and paid leave credits)
• Documentation to show how the employer determined the amount of qualified health plan expenses that were allocated to wages
• Copies of any completed IRS Forms 7200 and 941 that the employer submitted to the IRS (or provided to a third-party payer to meet an employer’s employment tax obligations).

The DOL has also indicated that exemptions for small businesses may be addressed in forthcoming regulations and that until these regulations are passed, employers with less than 50 employees who believe that providing certain benefits under the FFCRA, such as child care, may jeopardize the ability of their business, should record/document why their business would need such an exemption.

Be sure to consult with an HR professional and/or your legal counsel to help you to ensure compliance with federal, state, or local law.

For more information on FFCRA, the EPSLA, and the EFMLEA, please review the Paid Leave Under the Families First Coronavirus Response Act, visit the DOL’s FFCRA resource page, or explore the Paychex resources outlined below:

• Guidance Updates on the Families First Coronavirus Response Act WORX article
• Families First Coronavirus Response Act: Funding, Tax Credits, and Paid Leave Laws Expanded to Respond to COVID-19 Pandemic WORX article

If an employee was required to take sick time to take a COVID-19 test in preparation for another medical procedure, does the employer need to compensate for the time off for the testing? Or is it okay to count this testing time as sick leave?

Due to the CDC and state/local authorities determining that COVID-19 is community spread and poses a direct threat, employers may now choose to administer COVID-19 testing to their employees before allowing them to return to work/re-enter the workplace. To do so, specific precautions must be taken and considerations under the ADA must be met.

However, if an employee had taken sick leave for a medical procedure, unrelated to COVID-19, and was required to undergo a COVID-19 test as preparation for said procedure (and not part of an employer’s testing protocol), then the employer would generally not need to compensate the employee for the time needed to conduct or travel for testing purposes beyond the employee’s sick leave entitlement. In other words, the employee would only receive compensation if that sick leave is paid pursuant to company policy or applicable leave law. Otherwise, it is not compensable time.

Before implementing or conducting COVID-19 testing in the workplace, be sure to consult with an HR professional and/or your legal counsel to ensure compliance with state or local law.

Additional Resources

Where can I find return to work information, safety guidelines, and regulatory updates?

As multiple states begin resuming business operations, Paychex remains dedicated to serving you, your employees, and your business. That’s why we’ve developed several online resources to help you remain up to date on your state's ever-evolving policies and executive orders related to the COVID-19 pandemic and return to work protocols.

Paychex Return to Work Resources:

• COVID-19 Resources by State

Paychex Safety/Legal Resources:

• Coronavirus (COVID-19) Help Center
• What to Do if Employees Refuse to Return to Work WORX article
• After the Pandemic: What’s Next for Your Employees WORX article
• Infectious Disease Outbreak Plan: Considerations for Employers WORX article
• White House Guidelines for Opening Up America Again during COVID-19 Pandemic WORX article
• Coronavirus at Work: Frequently Asked Questions WORX article
• Preventing and Managing Illness in the Workplace WORX article
• Download Your Business Continuity Plan (BCP) WORX Guide

Texas Resources:

• Texas Department of State Health Services (DSHS) COVID-19 Resource Page
• Texas Governor Greg Abbott’s Coronavirus Resources and Response Page
• Texas Workforce Commission (TWC) COVID-19 Resource Page
• Texas Division of Emergency Management COVID-19 Page
• Texas Municipal League (TML) COVID-19 Resource Page
• Texas Association of Counties COVID-19 Information and Resources Page

Additional Resources:

• CDC Interim Guidance for Businesses and Employers Responding to COVID-19
• CDC COVID-19 General Business FAQs
• CDC Workplace Decision Tool
• OSHA Guidance on Preparing Workplaces for COVID-19
• FEMA News Release

The number of states requiring private employers to use E-Verify — the federal web-based system used to verify employment eligibility — is expanding, as Florida’s governor signed Senate Bill 1718 on May 10, 2023. The legislation includes provisions impacting private employers with 25 or more employees. Some provisions of the expanded law go into effect July 1, 2023, while other provisions have different effective dates.

Currently under Florida Labor Statute XXXI, the state requires private employers to verify an individual’s eligibility for employment after an offer has been accepted, using either the E-Verify system or by requiring the employer to retain copies of the same documents presented to complete Form I-9. That statute, which took effect Jan. 1, 2021, also requires the use of the E-Verify system for all public employers, contractors, and subcontractors.

What Is E-Verify?

E-Verify is a federal government program available since the mid-1990s to employers to verify employment eligibility of newly hired employees. The system is designed to help mitigate the risk of hiring and employing individuals who are not authorized to work in the United States. Certain federal contractors are required to use the system, and since the 1990s and mostly in the past decade, 23 states and localities have adopted legislation that mandates the use of E-Verify for certain employers.

E-Verify is available, however, for any employer to utilize voluntarily.

The E-Verify system compares information from an employee’s completed Form I-9 with records available to the U.S. Department of Homeland Security and the Social Security Administration. Form I-9 — the federal form used to verify the identity and employment authorization of individuals hired to work in the U.S. — includes multiple sections. Employees must complete every field in Section I (bullets below), with the exception of their telephone number, email-address, and social security number.

• Name
• Address
• Date of birth

However, if the employer participates in E-Verify, employees must provide their social security number.

E-Verify is designed to provide real-time results that enable employers to know if an individual is eligible for employment in the United States. If there is information that does not match, the employer and employee are provided with details on how to resolve the situation.

States Requiring All or Most Employers To Use E-Verify

The states that require all or most employers in their state to use E-Verify are Alabama, Arizona, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, and Utah. Florida joins this list on July 1, 2023, when it will mandate the use of E-Verify for private employers with 25 or more employees.

While certain public and private employers and government contractor might be required to use the E-Verify system under applicable law, any business in any state may use the system to verify new hires voluntarily.

However, employers should discuss with legal counsel whether they would want to do so voluntarily.

Are Public Employers Required to Use E-Verify?

In addition to Florida, there are also some states, counties, and cities that require public employers and employers with government contracts to utilize E-Verify. Under a presidential Executive Order, certain federal contractors in every state, as well as their subcontractors, are required to use E-Verify under the Federal Acquisition Regulation (FAR). Exemptions and exceptions to this requirement can be found on the E-Verify website.

What Florida Employers Should Know About Senate Bill 1718

Employers covered under the new Florida law (SB 1718) must comply with the federal requirements of the E-Verify system for newly hired employees (not independent contractors) beginning July 1, 2023. Compliance with the E-Verify system prohibits employers from creating cases for employees hired before the employer enrolled in E-Verify.

The following, although not inclusive of every requirement, are just a few of the obligations employers have once an employee is hired. The E-Verify website has more details about your requirements.

• Employers have three days after the first day a new hire begins work to create a case in E-Verify to confirm the employee’s employment eligibility.
• If an employer is unable to gain access to the E-Verify system in those first three business days after a new hire, the employer must retain proof of inaccessibility (e.g., a screenshot of each day the system could not be accessed, an announcement that the system was unavailable).

Employers are also subject to recordkeeping obligations under Senate Bill 1718 that include retaining copies of the documentation presented by the newly hired employee when completing Form I-9 along with any official verification generated from the E-Verify process.

Additional employer compliance requirements under the Florida legislation include certification on its initial return each calendar year of the Re-employment Tax Return.

An employer who voluntarily uses E-Verify and wishes to document usage of the system may also make a certification on its first return each calendar year.

What Are the Penalties for Non-Compliance with Florida’s Senate Bill 1718?

Starting July 1, 2024, enforcement will begin for covered employers. If an employer fails to use the E-Verify system to verify the identity and work authorization of each new hire, the employer will be notified of a determination of noncompliance by the Department of Economic Opportunity and will have 30 days after notification to cure this noncompliance.

Penalties might be assessed for employers who fail to use the E-Verify system three times in any 24-month period. This:

• Might result in fines of up to $1,000 per day until sufficient proof of compliance is provided.
• Could result in suspension or revocation of licenses such as a franchise, permit, certification, registration, charter, or similar form of authorization required by law.
  • The number of days such licenses will be suspended varies with the number of unauthorized individuals employed.

Additional provisions and penalties can be found in the legislation.

A series of co-mingled laws dating back to the earliest days of the COVID-19 pandemic in March 2020 provided billions of dollars in aid that included funding to help finance the requirement for certain employers to offer emergency paid sick and emergency family and medical leave — and later credit for qualified employers who voluntarily offered this coverage.

The end of the National Public Health Emergency resulted in the end of these requirements for certain employers to offer the emergency leaves. What remains now for businesses still trying to recover from the negative financial impact of the pandemic is the potential to claim payroll tax credits if they were eligible but did not claim these credits previously or if they need to adjust the amounts they claimed.

Note: These tax credits need to be reconciled with other tax credits and government funding to ensure that no double-dipping takes place, which includes any tax credits/amounts already claimed and received for Paycheck Protection promise (PPP) loan forgiveness and the employee retention tax credit.

It’s important to understand the framework of leave and associated credit for any employer who needs to amend any prior quarter’s Form 941 in 2020 and 2021 to claim or adjust the credit, so it is done accurately. This requires the use of Form 941-x.

Tax Credits Under Family First Coronavirus Response Act

The Families First Coronavirus Response Act (FFCRA) originally offered payroll tax credits to American private employers with fewer than 500 employees to offset the costs of the requirement to provide employees with qualifying paid leave for specified reasons related to COVID-19. When that mandate sunset at the end of 2020, the American Rescue Plan Act (ARPA) extended and expanded the payroll tax credits, allowing covered employers to take the credits until Sept. 30, 2021, if they voluntarily provided employee paid leave under the FFCRA framework.

However, the credit could be impacted by state and local COVID-19 leave requirements and the interaction with the requirements under FFCRA. Plus, an employer could only qualify for the federal tax credit if the leave met the requirement of the original FFCRA mandate.

It should be noted that the credit cannot be claimed by private employers with 500-plus employers even if they offered comparable leave.

The following highlights the changes under ARPA and delineates by date because if you plan to claim the credit on payroll taxes paid through March 31, 2021, or after April 1, 2021, there are different requirements.

What is the Purpose of the Tax Credits?

Employers who provided employees with qualified paid leave related to COVID-19 that fell under the Emergency Paid Sick Leave Act (EPSLA) and/or the Emergency Family and Medical Leave Expansion Act (EFMLEA) can receive tax credits to reimburse 100 percent of leave wages paid.

April 1, 2020 through March 31, 2021

Generally, American private employers with fewer than 500 employees were eligible to claim the credits. Self-employed individuals could have claimed the family leave credit for up to 50 days.

April 1, 2021 through Sept. 30, 2021

In addition to private employers, healthcare providers and certain governmental and state/local employers became eligible to claim the credit under the same requirements. The limit on the family leave credit for self-employed individuals increased to 60 days.

Under ARPA, new non-discrimination rules also were established that apply to the credit for either leave, disallowing a credit for any employer who discriminates in favor of highly compensated employees, full-time employees or employees based on employment tenure.

Calculation of Maximum Hours

April 1, 2020 through March 31, 2021

• Full-time employees were entitled to 80 hours of leave under the EPSLA if they were normally scheduled to work at least 40 hours each workweek.
• Part-time employees who worked less than 40 hours per week were entitled to EPSL in the amount up to the number of hours that an employee works, on average, over a two-week period.

The U.S. DOL included additional guidance in its Temporary Final Rule for the calculation of maximum EPSL if a traditional weekly schedule does not exist or if a schedule varies.

Under the EFMLEA, calculate hours of leave based on the number of hours the employee is normally scheduled to work. If the normal hours scheduled are unknown, or if the part-time employee’s schedule varies, you may use a six-month average to calculate the average daily hours.

April 1, 2021 through Sept. 30, 2021

The maximum number of days for which qualified sick leave wages could be paid and the number allowed for an employer to get a credit would be reset to 10 days. Hours were calculated as noted above. However, employees couldn’t carry over unused hours. If an employer chose to provide leave under the EPSLA or EFMLEA, they would be eligible to claim the credit again.

What Are the Qualifying Reasons for Taking Leave?

April 1, 2020 through March 31, 2021

An employee qualified for EPSL if they were unable to work (including unable to telework) related to COVID-19 because the employee:

1. Was subject to a federal, state, or local quarantine or isolation order
2. Had been advised by a healthcare provider to self-quarantine
3. Was experiencing COVID-19 symptoms and is seeking a medical diagnosis
4. Was caring for an individual subject to an order (described in 1) or self-quarantine (described in 2)
5. Was caring for his or her child whose school or place of care is closed (or childcare provider is unavailable)
6. Was experiencing any other substantially similar condition specified by the U.S. Department of Health and Human Services

Part-time employees would generally have been eligible for Emergency Paid Sick Leave in an amount equivalent to their regularly schedule hours for a two-week period.

Under the EFMLEA, an employee would have only qualified for leave under No. 5 above.

April 1, 2021 through Sept. 30, 2021

The American Rescue Plan Act changed leave under the EFMLEA. Employees qualified for all six reasons to take leave that was available under the EPSLA, plus both leaves gained additional reasons under No. 3 (above), as follows:

• Employers could have claimed the credit for sick leave wages paid for employees taking leave while they awaited the results of a diagnostic test for COVID-19 after being exposed to the virus or because their employer requested the test.
• Leave taken for the employee to obtain a COVID-19 vaccine or to recover from any health issues resulting from the vaccine.

What Are the Wage Calculations for Paid Sick Leave?

Employees were to be paid based on:

• For reasons Nos. 1 to 3 above, the higher of the employee's regular rate of pay, or the applicable state or federal minimum wage, up to $511 per day
• For reasons Nos. 4 to 6 above, the higher of 2/3rds of the employee's regular rate of pay, or the applicable state or federal minimum wage, up to $200 per day

What Should Businesses Know About the EPSLA?

The American Rescue Plan Act of 2021 changed some of the provisions of the FFCRA, including the reallocation of which portion of the credit is non-refundable. The amount of the credit stayed the same.

April 1, 2020 through March 31, 2021

• If the credit exceeded the employer’s total liability of the portion of Social Security in any calendar quarter, the excess was refundable to the employer.

April 1, 2021 through Sept. 30, 2021

• If the credit exceeded the employer’s total liability of the portion of Medicare in any calendar quarter, the excess is refundable to the employer.

Additional changes included:

• The credit increased by the cost of the employer’s qualified health plan expenses and by the certain employer’s collectively bargained contributions to a defined benefit pension plan and certain amounts of collectively bargained apprenticeship program contributions.

Paid sick time provided under this Act was not preempted by other federal, state, or local laws. The IRS created FAQs that provide an overview of the tax credits.

What Should Businesses Know About the EFMLEA?

Under the EFMLEA:

Through March 31, 2021

An eligible employee qualifies for leave for caring for his or her child whose school or place of care is closed (or childcare provider is unavailable) would be paid by their employer after the first 10 days of leave at a rate of not less than two-thirds of their current rate of pay for the number of hours the employee would otherwise be scheduled to work, up to a maximum of $200 per day or an aggregate of $10,000, for up to 12 weeks in a 12-month period.

April 1, 2021 through Sept. 30, 2021

Other changes under ARPA are an increase in the maximum aggregate amount to $12,000 for up to 12 weeks in a 12-month period and the expansion of eligibility to include employers of healthcare workers and emergency responders

Recordkeeping

Employers must retain documents and information regarding leave for a period of four years, regardless of whether the decision was made to grant or deny the request for leave.

For tax credit purposes, the U.S. DOL requires employers to maintain the following for four years:

• Documentation to show how the employer determined how much paid leave the employee was eligible for (e.g., records of work performed, telework, and paid leave credits)
• Documentation to show how the employer determined the amount of qualified health plan expenses that were allocated to wages.
• Copies of any completed IRS Forms 7200 and 941 that the employer submitted to the IRS (or provided to a third-party payer to meet an employer’s employment tax obligations).

How Paychex Can Help

The passage of multiple laws created complexities for businesses owners who want to take advantage of the paid leave tax credits. However, employers must review their obligations under existing state and local COVID-19 leave laws, as well as any other federal, state or local laws related to an employee’s right to leave.

This is a good time to re-evaluate your HR needs. Consider how our HR Services, tax services and payroll solutions could save you time by helping alleviate extra work and the potential risk of non-compliance.