Employers providing the mandated new Emergency Paid Sick Leave (EPSL) and Enhanced Family and Medical Leave Act (EFMLA) benefits created by the Families First Coronavirus Relief Act (FFCRA) will want to start collecting documentation now. This documentation may be needed later to submit to the IRS for tax credits, defend against claims brought in court, or to defend against Department of Labor (DOL) enforcement, which is scheduled to begin on April 18, 2020.

Both the Internal Revenue Service (IRS) and the DOL have issued FAQs and other guidance documents identifying the pieces of information that employers may later be asked to show.  The situation is rapidly changing with new regulations and guidance providing additional information daily and these guidance documents do not yet have the force of law and are subject to change.  Nonetheless, they provide roadmaps about how employers might create forms to use in documenting employee's EPSL and EFMLA benefits, and we encourage employers to do their best to create forms and collect information as they are making decisions to grant or deny these new benefits.  Employers should be cognizant that the health care system is currently taxed, and therefore employers should be flexible with medical certification deadlines.  In many cases, it may make sense to have an employee document that they placed a call to her doctor's office and was given advice to stay home and to later follow up to secure the doctor's confirmation.

The DOL's FFCRA FAQs address documentation as follows:

15.  What records do I need to keep when my employee takes paid sick leave or expanded family and medical leave?

Regardless of whether you grant or deny a request for paid sick leave or expanded family and medical leave, you must document the following:

  • The name of your employee requesting leave;
  • The date(s) for which leave is requested;
  • The reason for leave; and
  • A statement from the employee that he or she is unable to work because of the reason.

If your employee requests leave because he or she is subject to a quarantine or isolation order or to care for an individual subject to such an order, you should additionally document the name of the government entity that issued the order. If your employee requests leave to self-quarantine based on the advice of a health care provider or to care for an individual who is self-quarantining based on such advice, you should additionally document the name of the health care provider who gave advice.

If your employee requests leave to care for his or her child whose school or place of care is closed, or child care provider is unavailable, you may must [sic] also document:

  • The name of the child being cared for;
  • The name of the school, place of care, or child care provider that has closed or become unavailable; and
  • A statement from the employee that no other suitable person is available to care for the child.

Private sector employers that provide paid sick leave and expanded family and medical leave required by the FFCRA are eligible for reimbursement of the costs of that leave through refundable tax credits. If you intend to claim a tax credit under the FFCRA for your payment of the sick leave or expanded family and medical leave wages, you should retain appropriate documentation in your records. You should consult Internal Revenue Service (IRS) applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit. You are not required to provide leave if materials sufficient to support the applicable tax credit have not been provided.

See the FAQ here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

Likewise, the IRS guidance (COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs) offers similar advice on documentation:

44.What information should an Eligible Employer receive from an employee and maintain to substantiate eligibility for the sick leave or family leave credits?

An Eligible Employer will substantiate eligibility for the sick leave or family leave credits if the employer receives a written request for such leave from the employee in which the employee provides:

  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 by means of telework, for such reason.

In the case of a leave request based on a quarantine order or self-quarantine advice, the statement from the employee should include the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine, and, if the person subject to quarantine or advised to self-quarantine is not the employee, that person's name and relation to the employee.

In the case of a leave request based on a school closing or child care provider unavailability, the statement from the employee should include the name and age of the child (or children) to be cared for, the name of the school that has closed or place of care that is unavailable, and a representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave and, with respect to the employee's inability to work or telework because of a need to provide care for a child older than fourteen during daylight hours, a statement that special circumstances exist requiring the employee to provide care.

45. What additional records should an Eligible Employer maintain to substantiate eligibility for the sick leave or family leave credit?

   An Eligible Employer will substantiate eligibility for the sick leave or family leave credits if, in addition to the information set forth in FAQ 44 ("What information should an Eligible Employer receive from an employee and maintain to substantiate eligibility for the sick leave or family leave credits?"), the employer creates and maintains records that include the following information:

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.

Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages. See FAQ 31 ("Determining the Amount of Allocable Qualified Health Plan Expenses") for methods to compute this allocation.

Copies of any completed Forms 7200, Advance of Employer Credits Due To COVID-19, that the employer submitted to the IRS.

Copies of the completed Forms 941, Employer's Quarterly Federal Tax Return, that the employer submitted to the IRS (or, for employers that use third party payers to meet their employment tax obligations, records of information provided to the third party payer regarding the employer's entitlement to the credit claimed on Form 941).

See the IRS FAQs here: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs

Takeaways.  Employers should create a system to solicit requests from employees, to recognize such requests and to document the employer's response as well as the employees' need for leave. We recommend the following process.

Step one:  Provide all employees notice of the availability of these benefits.  To do this, we encourage employers to share the poster the DOL provided (linked here):  https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf.

Step two: Create a form for employees to use to request leave that requires employees to provide the information necessary to meet IRS and DOL document requirements.

Step three:  Create a system to keep track of leave requests, including: the date the requests are received; the documentation supporting the request and when it was received; the employer's response regarding its decision to grant or deny the leave; the date the employer's decision is communicated to each employee requesting leave and, if leave is granted, the dates of such leave; and whether the leave is designated EPSL or EFLMA or otherwise. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.