Documenting Leave: The IRS Perspective

Yesterday, the IRS provided some answers to frequently asked questions around the Families First Coronavirus Response Act (FFCRA).  The answers uncover one of the most pressing issues for small businesses preparing to provide paid sick leave and expanded FMLA under the act – how to document the leave. Why the IRS?  Remember, the leaves have tax credits attached to them, so if you want the tax credits, you need to follow both DOL and IRS rules.

The IRS requires that the leave request must be in WRITING and include:

  1. The employee’s name,
  2. The date or dates the employee is requesting leave,
  3. A statement of the COVID-19 related reason the employee can’t work (or telework) and written support for the reason, and
  4. A statement that the employee is unable to work for that reason.

Let’s game this out.  Tim from your manufacturing floor calls and says he needs to self-isolate because his live-in girlfriend tests positive for COVID-19.  Here’s the conversation:

  • Tim:     I can’t leave my house, Suzie has COVID-19.
  • You:     Oh no.  Is she okay?
  • Tim:     She’s okay now, but I’m afraid I could get it.
  • You:     Are you okay?
  • Tim:     I think so.
  • You:     Have you spoken with a healthcare provider?
  • Tim:     No.
  • You:     Tim, there are paid leaves available to you in situations like this. In order to get those leaves, I need you to talk with your healthcare provider about what you should be doing.
  • Tim:  I’ll call now.

Tim calls his doctor and calls you back.

  • Tim:     I need to self-quarantine.
  • You:     Ok.  How long?
  • Tim:     Two weeks.  Am I going to lose my job?
  • You:     Not for this, Tim!  This is exactly why we have this new paid leave available.  Ok, can you please send me an email saying you spoke with your healthcare provider (I’ll need their name), they told you to self-quarantine for two weeks because of exposure to COVID-19, and that you want to use the leave because you can’t come in?
  • Tim:     I can do that.
  • You:     Great.  Once I get the email, I respond confirming the leave and providing you a calculation of what you’ll earn during those two weeks.  Is there anything else you need?  Do you have enough groceries?
  • Tim:     I think so.
  • You:     If you don’t, let me know.  I know there are some services that could deliver some. We want you to stay safe, Ok?  Let us know if anything changes.

You are then going to take Tim’s email and your response and file it away in Tim’s medical file and document Tim’s situation in an Xcel document so if you need to produce the document to the IRS, you know who received the leave and where to find the email.  Remember, Tim’s medical file can be held electronically as long as it is secured.

Let’s do another one.  Maria has two little kids from home, ages 3 and 5.  She’s able to work from home, but often the kids get in the way. She calls you.

  • Maria: I’m struggling with the kids being at home.
  • You:     I get that.  Are you able to get work done or is there something we can do to help?
  • Maria: My manager seems to be okay with me working half-time because I’m really only able to work about that because the kids, you know?
  • You:     The kids aren’t in school or daycare?
  • Maria: Duh! Yes, COVID has all of them closed.
  • You:     Ok.  There are some paid leaves available for you that we can use half-time.  Do you want to try that?
  • Maria: What do you mean?
  • You:     Well, because your kids are at home, we could put you out on paid sick leave because the schools are closed because of COVID.  I’ll need you to send me an email saying that along with the school and daycare’s name.  Can you do that?
  • Maria: Yes!  How much will I get paid?
  • You:     The paid sick leave is up to $200 per day for childcare needs, so if you need it half time, you’d get your regular rate for a half day and then $100 for the rest of the day.  Is that okay?
  • Maria: Better than losing my job or nothing, so, I guess.
    You:     Once you send me the email, I’ll respond confirming all of this.  If there’s something missing in the email, I’ll let you know, okay?
  • Maria: Ok.
  • You:     We want you and your family to stay healthy and safe. Okay?  If there’s anything else we can do let me know.
  • Maria: Can you help smooth this over with my boss?
  • You:     I can certainly try.  We understand that this is new for everyone and we’re going to give you as much grace as we can.  Just do your best, okay?
  • Maria: Thank you.  I will.

You’re going to then going to take Maria’s email and your response and put it in Maria’s personnel file.  You’re going to track Maria in your Xcel spreadsheet next to Tim as well.  You’re also going to grab your governor’s order closing schools from the governor’s website, so if you ever need to produce information for the IRS, you know to grab the emails from Maria’s files with the governor’s order.

These should be the most common conversations about these leaves. If you have any questions, please feel free to contact me.  We can go through them.

I’m going to hold another webinar tomorrow at 10 AM CDT to go over documentation and any other guidance (DOL regs expected) that comes out today.  You can join by clicking here.  The password for the webinar is 130798.  (We need the password to hopefully stop zoombombing.)

Photo by Kelly Sikkema on Unsplash

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