Doug:
Thank you for providing the source reference. It seems that we have many interpretations of what the rules are and while I believe our Cafe Connection is a great way to share ideas, it is very important that we all find authoritative answers. Most of us, while well educated financial professionals are not attorneys. I will read the act, but I am certain that my interpretation may not be accurate as I struggle with legalese. Even when I posed the same questions in my initial post to my CPA firm, the firm included a disclaimer to obtain legal advice. Too bad the act does not reimburse employers for the additional legal costs that will be incurred for complying with the law.
You do bring up a very important point on the effective date and it seems that you are absolutely correct. Would it be fair to say that anyone who was out sick as of 3/18/2020 can be paid sick leave under the act, and the employer is entitled to the credit? As I mentioned in an earlier post, we already have employees out on leave, simply due to the fact that they have children home from school. Some would like access to this benefit. While we may be able to wait until 4/2, we may want to implement earlier to help our employees through these times. I was under the belief that we were waiting for some magical date from the IRS or DOL on when and how to start implementing this law. This may never come.
My main concern now turns to what I will call "tripping hazards" of the law. Sec 5102(a) provides six situations where employees are entitled to leave. It does not include the situation where an employee simply wants to take two weeks off because they want to "socially distance" themselves from other employees. Under my interpretation, I can not grant this person leave under this act even if I may sympathize with their concern. Moreover, if I take credit for the time off, I'm probably committing tax fraud. Would you agree with this interpretation?
Thank you for sharing the link to the source, and thanks to CFMA for providing this invaluable resource to share ideas so we can best handle what is turning out to be a very complex issue.
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Michael Sardo
Chief Financial Officer
WL Gary Co., Inc.
Washington DC
(202) 723-0676
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Original Message:
Sent: 03-24-2020 03:34
From: Doug Lyvers
Subject: Families First Coronavirus Response Act
Michael,
There is much confusion as to how this affects employers, especially in construction. We have spent enormous amounts of management time addressing this.
I can tell you that one major misconception that employers have, and I see it repeated here, is that the Act takes effect April 2, 2020. NOT TRUE. The Act took effect when it was signed by President Trump. Employers have until 15 days after its enactment to meet the requirements of the Act. These are 2 different things. The 15 days after enactment is April 2, 2020. See "SEC. 5108. EFFECTIVE DATE." within the Act.
My suggestion to employers with questions is to first, READ THE ACT. After that, see how it applies to your business, and direct any questions to your legal counsel.
You can get the Act at https://www.congress.gov/bill/116th-congress/house-bill/6201/text
Do not rely on the summaries that are written, as most of them gloss over important requirements of the Act. I can tell you that TITLE II thru TITLE VI will likely not apply to a Construction company, and can save you some reading time.
Hope this helps,
Doug Lyvers
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Doug Lyvers
Sunwest Electric, Inc.
Anaheim CA
(714) 630-8700
Original Message:
Sent: 03-19-2020 10:10
From: Michael Sardo
Subject: Families First Coronavirus Response Act
Do anyone have any guidance on how we are supposed to administer the Families First Coronavirus Response Act that was signed into law last night by the President. We already have people who are out at home because schools and daycares are closed. I've read a couple of dozen articles on it and it is not clear at all. Some basic questions I have:
- If we provide PTO in excess of 2 weeks for certain classes of employees, do we have to provide them with an additional two weeks?
- Is the Leave only for Corona related leave? How do know what is and what isn't?
- In order to get the credit against payroll taxes, is supporting documentation required that the leave was paid to "eligible" employees. (One article said employers would be barred from requiring doctors notes, so how are we supposed to be able to even determine who is eligible)
- Is the credit just for the 6.2% of the employer's share of the Social Security Tax or both?
- One article said that we would not withhold the employee's share of Social Security from leave paid under the act.
- What is the effective date for compliance? I read it may be retroactive.
- Software has not been updated to calculate the tax correctly yet.
- How about people who have been out prior?
- Do we take the credit when we deposit the tax on a weekly basis or when we file our 941.
- If we have people unaffected, can we use our share of their Social Security to pay for the leave of an affected employee?
My list can go on and on. Point is, employers need this advice as we may need to implement it immediately.
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Michael Sardo
Chief Financial Officer
WL Gary Co., Inc.
Washington DC
(202) 723-0676
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