We recommend you establish a separate workflow to enter and print checks for Covid-19 paid leave. Printing the checks in a separate batch will help keep them separate from checks that need to be distributed to current working employees. This may make it easier to mail them all out or keep the checks separate for pick up by employees.
If you print regular payroll checks separate from paid leave checks, make sure that you do not make a payroll tax deposit after running your regular payroll. Finish issuing all checks including paid leave for the week so that you can take a credit for the paid leave wages and taxes against your total tax liability.
For farm labor contractors, since the wages are not being billed to a grower, you do not need paid leave checks processed before you do the Grower Labor Reports and your regular grower billing workflow.
The Batch Check Entry window can be used for entering paid leave. The Calculate Sick Pay Rate feature on the Batch Check Entry window has been enhanced to calculate employees’ regular rate of pay over the past 180 days. This feature is not available in Daily Payroll. In addition, if you need to adjust miscellaneous deductions while the employee is on leave, you can do this immediately after entering the paid leave wages.
Here is an example of a check where an employee takes leave starting on the 1st of April. This check includes regular wages in March and paid leave starting on April 1st:
Where should I post wages for Covid-19 Paid Leave?
Wages for Covid-19 paid leave should NOT be posted to an expense account. Since the wages are reimbursed by the federal government, use one of the Covid-19 Leave credit accounts that were created by the Covid-19 Setup Wizard. If you have both 941 and 943 employees, you will have two accounts, one for each type of employee. The Type of employee is shown on the Batch Check Entry window at the top, next to the Pay Rate.
If you are not sure what the account numbers are, you can go to Payroll > Setup > Federal Tax Rate Tables and click on the G/L Accounts tab page to see the 941 and 943 Covid-19 Tax Credit Accounts.
You should only use the Covid-19 Tax Credit accounts for leave wage that are reimbursable by the federal government. If your company established some other type of paid leave it is providing to employees, then you should set up and use a separate expense account for these wages. (For instance, if you have more than 500 employees and aren’t eligible for the Covid-19 Paid Leave program.)
Calculate Sick Pay Rate
On the first Covid-19 Paid Leave line item that you enter, you can press Ctrl+R to open the Calculate Sick Pay Rate window, shown here:
When you press Ctrl+R on a line where you’ve entered a Paid Leave wage type, the program calculates the regular rate of pay for the past 180 days, rather than using the employee’s sick pay plan to calculate a rate based on the plan’s lookback period (typically 90 days).
Click Report to preview a report showing the wages and hours used to determine the employee’s regular rate of pay over the last 180 days. On the Print Preview window, you can click Save to save a PDF copy of the report.
Sick Pay Rate Report
The Sick Pay Rate Report will also calculate the two-thirds pay rate to be used when employees request leave to care for someone else that is quarantined or for their child. You can provide the Sick Pay Rate Report to the employee to show how their leave pay rate was calculated.
Paid Leave wages count as hours of service, so the hours will be included in the Insurance Hours totals by month at the bottom of the window.
Recap
On the Recap tab page, you can see the breakdown of the wages, taxes, and miscellaneous deductions:
The total Paid Leave hours and wages have been added below the Holiday wages in the Gross Wages section on the left side of the window.
Covid-19 Credits
After the Payroll Journal has been updated, the Covid-19 credits will be included on the Tax Deposit window:
The Payroll Journal will post the total of the wages and employer Medicare taxes. Credits for qualified health plans expense are not calculated by the Payroll Journal. (This may be added to the HR program at a later time.)
When you do your payroll tax deposit, you can enter the negative number for the Covid-19 credit in the Amt to Pay column. This will reduce your total tax deposit by the amount of the Covid-19 paid leave and medicare taxes on those wages. There will be a separate credit amount for 941 and 943 employees.
Additional Recommendations
The program does not track how much paid leave the employee has remaining at this time. To help keep track of employees that are receiving paid leave, it may be helpful to assign employees to a unique department or crew #. Then, you can easily print a labor analysis report for those employees to review how much paid leave each employee has received and determine how much they have left. A separate cost center or job code used for ESPL vs. FMLA+ will help keep these two types of leave (and the maximum hours/weeks employees are allowed to take for each) separate.
At this time, the program does not check to make sure that employees do not receive more than the maximum dollar amount per day as specified in the law. For now, you should check to make sure you are not issuing more paid leave than your company will be reimbursed for through tax credits.
For each employee, you may also want to add information to the employees Notes entry with the leave start and end dates. You can enable the option to display the employee notes before entering Paid Leave checks.
Another approach is to set up a history code for Covid-19 paid leave and record the starting and ending dates for leave in the employee file, along with the regular rate of pay that was determined for the employee’s leave.
Once you have determined the regular rate of pay for the paid leave period, you may want to enter this on the employee account’s Pay Rate entry. The Batch Check Entry window will automatically put this rate in the Rate column when entering paid leave lines.
For leave where the employee is taking care of someone else and receiving two thirds of their regular rate of pay, enter the two thirds rate in the employee file. (We do not recommend entering the actual regular rate of pay on checks and using a wage type with an Overtime Factor of .66 or .67 as this can result in rounding errors.)
Employee Threshold
If your workforce is currently under 500 employees but you anticipate hiring more and going over this threshold at some point, you will need to keep track of the current number of employees carefully. Once your workforce is over 500 employees, your company is not eligible to be reimbursed for ESPL and FMLA+ wages.
The ’employee count’ on the date that the employee starts the leave is used to determine whether or not your company is eligible for the ESPL and FMLA+ programs. If an employee requests leave for a future date and you anticipate that your workforce will be over the 500 employee threshold, the employee may not be eligible for the leave on that date.
The Labor Analysis Report can be used to check the number of employees you have on a given work date, but it can only be run after you’ve issued checks. It can be used after the fact to establish that your workforce is below the 500 employee threshold.