Using Families First Money

“I have an employee who has been out for a week and I want to pay her with the Families First money I’ve heard about. How do I do it?”

Your HR Survival Tip

The Families First money is only available when the employee is personally and directly affected by COVID-19. Employees may be eligible for either the emergency Paid Sick Leave (ePSL) and/or the emergency FMLA (eFMLA). We will only cover the ePSL in this article.

As the employer, you must first certify your employee meets one of the allowed qualifications and you have the documentation required by the IRS so you can be reimbursed for paying the employee. Please keep in mind that shelter-in-place orders by the government are not considered to be a personal order of quarantine and do not qualify for this money.

When someone informs you they are being personally affected by COVID:

  • Obtain the certification required, then review it to make sure they qualify. They either need to provide the required documentation to back up their claim or, if unable to obtain a doctor’s note, write a statement about why they can’t work. The doctor’s note works for the statement as long as it mentions being required to stay home due to COVID symptoms, etc.
  • If qualified and you have documentation, the employee is eligible for up to 2 weeks of ePSL pay, with a max of 80 hours. The number of ePSL hours they are paid is based on their average weekly hours over the last 6 months (pre-COVID). For example, if they normally average 24 hours per week, their 2 weeks of ePSL will only be for 48 hours.
  • The level of pay varies (2/3 or 100%) based on the qualifying reason and each has a maximum you can pay per day and per employee.
  • Note: Regular sick time is not covered by ePSL so it’s either paid or unpaid based on accrued time available.

Once you know the gross amount charged to ePSL for employees and you have paid those monies, you can get reimbursed for that gross amount:

  • If you have an outside payroll provider, ask them for the forms they need to withhold federal taxes and how they want you to inform them about the amount that needs to be withheld.
  • When you run payroll, your payroll provider will withhold the requested amount from the federal taxes you would normally submit to the IRS: Federal income tax, Federal Medicare (both employee and employer portions), and Federal Social Security (both employee and employer portions). The amount withheld must match the gross ePSL pay.
  • The withheld amount stays in your bank account rather than going to the IRS, so you have been reimbursed because that money is still available to you.

The IRS will see what you’ve withheld on the tax filings so you need to make sure your backup matches it exactly. The certification is crucial to avoid issues with your reimbursement. Review your payroll reports when using ePSL so you know how your payroll provider is showing these transactions. Then add those reports to your backup so you have everything handy if you are audited next year. It’s obvious that 2020 is going to be an interesting tax year for everyone!

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