The President signed into law a coronavirus emergency relief package on Wednesday.
It includes paid leave for workers that may be diagnosed with coronavirus, may need to take time off of work to care for family members with coronavirus, or workers that need to take off time to care for children whose schools closed due to the coronavirus.
The paid leave program is available for employers that have less than 500 employees. Growers and labor contractors with 500 or more employees will not be eligible for this paid leave program.
We are currently looking into ways to support employers that may need to provide paid leave for employees.
Here are our initial recommendations on how to handle paid leave for coronavirus:
- Make sure that you and your employees understand any criteria for qualifying for the types of paid leave and any documentation that may need to be provided at a later date.
- Do not use the existing SP wage type for coronavirus paid leave wages. That is tied into the current sick pay system and will deplete the employees’ sick pay balances. That’s not what you want as this is a separate program. (Of course, employees are free to also use their accrued sick pay as well, and in that case you would use the SP wage type.)
- Create a unique general ledger account to expense the wages to. You probably don’t want the paid leave wages mixed with regular wages distorting year to year comparisons. Since the paid leave wages will not be an expense to your business, a contra liability account may be best for this.
- Create a unique wage type to track coronavirus paid leave wages such as “CV” for Coronavirus Paid Leave. Use this wage type for all three types of paid leave.
- Create job codes and cost centers to track the different kinds of paid leave. Either of the following would do:
- A new cost center/crop ID for coronavirus paid leave and a separate job code for each type of paid leave.
- Separate cost centers/Crop ID for each type of paid leave and one job code for coronavirus paid leave.
Note: These instructions are only for government reimbursed sick pay. If you decide to make additional payments not covered under this bill, set up and use a different Wage Type and use a different expense account/job code/cost center. Also, these instructions are primarily for customers using The Farmer’s Office or The Labor Contractor’s Office. Produce shippers and other companies can simply use different G/L accounts, and don’t need to use cost centers and job codes.
We are looking into adding a new setting for the Base Pay Type on the Wage Type Setup window specifically for paid leave. This could be used for other types of paid leave in addition to the coronavirus paid leave, and would distinguish wages from regular hours worked, sick pay, and other types of wages. If you need to set up a wage type for coronavirus paid leave before this setting is available, use the Holiday setting for now. This will not be counted as hours worked, so it won’t result in sick pay accruing on paid leave hours, but it will be counted as hours of service for insurance eligibility purposes. If you use the Sick Pay or Vacation pay settings, this can interfere with the operation of vacation or sick pay accruals.
The paid leave will be funded to employers through a payroll tax credit. It appears that employers will be able to reduce their normal payroll tax deposits to cover the cost of coronavirus paid leave wages. If you do not reduce your payroll tax deposits, it is likely that the government intends to revise the 941 form to include a line for coronavirus paid leave wages to reduce the total taxes due. You would then receive a refund on taxes already deposited.
At this point, we would recommend not issuing any paid leave wages until the Labor Department guidance has been provided.
Increasing Available Sick Pay
Some employers may want to increase the available sick pay for employees. If you are using a lump sum method, you can enter a sick pay adjustment for each employee to increase the amount of sick pay available to employees to use during the remainder of the sick pay plan year.
If you are using the accrual method, we do not recommend making an adjustment to increase employees’ sick pay balances as that may interfere with future accrual calculations. At the present time, it may be best to create a unique wage type (using Holiday or Paid Leave when it becomes available for the Base Pay Type) to pay additional sick pay and track usage and balances for the extra sick pay separately.
We will keep you updated with more information as this program develops.