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COVID-19 Answers for Your Small Business - Part 3

  • By: James Rumps
  • 02-10-2021
  • Category: Uncategorized

We continue our five-part series where we answer your top questions regarding how Covid-19 affects your business.*  With many states reporting an increase in cases, it's important to know how this could affect your business.  We have the next three questions and answers below.

How do employers utilize the payroll deduction to cover costs associated with EPSLA and EFMLA?
Eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that the employer paid, rather than depositing them with the IRS. The payroll taxes available for employers to retain include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that the IRS plans to release this week. The IRS expects to process these requests in two weeks or less.


  • If an eligible employer pays $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments.
  • The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

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. For example, set up a new code for the various types of leave employees could take, use timesheets and record and track payroll. You should consult 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.

If one of your employees takes expanded family and medical leave to care for his or her child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19, you may also require your employee to provide you with any additional documentation in support of such leave, to the extent permitted under the certification rules for conventional FMLA leave requests. For example, this could include a notice that has been posted on a government, school, or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care, or child care provider.

What are the regulations for employers with more than 500 employees?
At present, FFCRA does not apply to employers with more than 500 employees.

Will the small business loans and other programs be available for employers who have laid off employees?
In general, businesses are eligible for SBA Section 7(b) Economic Injury Disaster Loans (EIDLs) if they have suffered an economic injury as a result of COVID-19, provided they were able to meet their financial obligations prior to COVID-19. See the Small Business Association website for more detailed instructions. Under the CARES Act, loan forgiveness under the Paycheck Protection Program will be reduced proportionally by any reduction in employees compared to the prior year as well as any reduction in payment to an employee beyond 25% of their prior-year compensation. Further, to provide an incentive for employers to retain and rehire employees, borrowers will not be penalized for having a reduced payroll at the beginning of the period if they rehire employees they had furloughed.

We are here to help
At Marvel Law, we are here to help serve you with purpose.  Click here to email us or call us at 309-807-2885 for your FREE 15-minute consultation.  Due to CDC guidelines, we are offering FREE 15-minute video conference consultations.  To take advantage of the video conferencing ability, please email us to set up a time.

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*This information is provided for information purposes only, and should not be construed as legal advice on any subject matter. You should not act or refrain from acting on the basis of any content included herein without seeking legal or other professional advice from Marvel Law.