Documentation Needed to Prove Employer Compliance With FFCRA Benefits

The Families First Coronavirus Response Act (“FFCRA”) effective today, April 1, 2020, has left  many employers wondering “how do I prove my  employee’s use of emergency Paid Sick Leave and/or emergency Family Leave in order to receive tax credits for wages paid to them under FFCRA?”

The IRS has issued guidance on how eligible employers should document an employee’s request and use of FFCRA benefits in order to substantiate the employer’s eligibility for reimbursement through FFCRA’s tax credits.

If an employee requests leave under FFCRA, in addition to other requirements, an employer should require this request be in writing, and include the following information:

1. The employee’s name;
2. The date or dates for which leave is requested;
3. A statement of the COVID-19 related reason the employee is requesting leave and written support for such reason; and
4. A statement that the employee is unable to work, including means of telework, for such reason.

Employers should maintain all records regarding any emergency Paid Sick Leave and emergency Family Leave provided to employees. Best practices, as detailed by the IRS, recommends all employers to keep (for at least 4 years) the following FFCRA related information:

1. Documentation to show how the employer determined the amount of qualified sick and family leave wages paid to employees that are eligible for the credit, including records of work, telework and qualified sick leave and qualified family 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 completed “Advance of Employer Credits Due to COVID-19 (Forms 7200) that an employer submitted to IRS
4. Copies of completed forms “Employer’s Quarterly Federal Tax Return” (Forms 941)

As employees begin to request FFCRA leave benefits, it is crucial that all employers are complying with FFCRA benefits and ensure proper documentation in order to substantiate an employer’s eligibility for tax credits for qualified leave wages.

If you have any questions regarding FFCRA requirements and an employee’s eligibility for FFCRA leave benefits, please contact the Employer Lawyers at Chauvel & Glatt.

The material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes.  We are also not tax advisors or tax attorneys and this article should not be construed to offer tax advice in any form.  Please contact your CPA for more information and how it can apply to you and your business.  For information on your particular legal circumstances, please contact Chauvel & Glatt at 650-573-9500.