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Tax Credits for the Paid Leave Provisions of the Family First Coronavirus Response Act

January 01, 0001
Client Alert

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On March 18, 2020, Congress enacted the Families First Coronavirus Response Act (FFCRA). Among other things, the FFCRA requires employers with fewer than 500 employees to provide paid leave for COVID-19-related reasons under both the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act.

To help cover the cost to these employers, the FFCRA also provides refundable paid sick leave credits and the paid childcare leave credits. Employers will be able to claim these credits as an immediate dollar-for-dollar offset against certain payroll taxes due (and therefore retain such payroll taxes) or as a refund based on qualifying leave they provide between the effective date of the Act and December 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances. Small businesses with fewer than 50 employees will be eligible for an exemption from the requirement to provide paid leave relating to school closings or childcare unavailability, where the requirements would jeopardize the ability of the business to continue. The U.S. Department of Labor will provide emergency guidance and rulemaking to clearly articulate the criteria for exemption. Additional guidance is expected this week.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

Copyright © 2020 Stradley Ronon Stevens & Young, LLP. All rights reserved.

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