Updated April 30, 2021
While Families First Coronavirus Response Act (FFCRA) pay is no longer required by law, eligible employers can still get a refundable tax credit equal to the amount of the qualified leave wages, plus allocable qualified health plan expenses for leave taken through September 30th, 2021.
What we'll cover
- Is my small business required to provide FFCRA paid leave?
- How FFCRA pay types are defined in OnPay
- Getting started adding pay types
- How to add FFCRA pay to employees
- Compliance with daily and aggregate limits
- Reviewing payroll
- How tax credits for FFCRA payments are processed
Is my small business required to provide FFCRA paid leave?
No. Requirements ended on December 31, 2020, but it is still optional. See our overview of paid leave and tax credits through the FFCRA.
How FFCRA pay types are defined in OnPay
There are three new pay types in OnPay that can be used to pay workers for FFCRA-related emergency sick or family leave.
For sick and care leave (up to 2 weeks paid)
Note: An employee can only use 80 hours total of FFCRA Sick, FFCRA Care, or a combination of the two according to the law. Once these items are exhausted, an employee can then take up to 10 weeks of the FFCRA Extended pay.
- Use this pay type for an employee who is unable to work because they:
- Are in quarantine (pursuant to Federal, state or local government order or advice of a doctor or medical professional)
- Have been exposed to COVID-19
- Seeking or awaiting the results of a COVID-19 test when the employee has been exposed to COVID-19 or the employer requested the test
- Are experiencing symptoms of COVID-19 and are seeking or awaiting testing or diagnosis
- Obtaining a COVID-19 vaccine
- Recovering from any injury, disability, illness, or condition related to such vaccine
- Limits: The employee should be paid their regular rate up to a daily limit of $511, and an aggregate limit of $5,110. Any amount above the daily limit will not be eligible for a payroll tax credit.
- Use this pay type for an employee who is unable to work because they have to care for:
- A family member who is under quarantine or has been advised to self-quarantine (pursuant to Federal, state or local government order or advice of a doctor or medical professional)
- A child (under 18 years of age) whose school or place of care has been closed or is unavailable due to COVID-19, and/or the employee is experiencing any substantially similar condition or circumstances
- A family member or child in obtaining a COVID-19 vaccine, or recovering from any injury, disability, illness, or condition related to such vaccine
- Limits: The employee should be paid two-thirds of their regular rate up to a daily limit of $200, and an aggregate limit of $2,000. Any amount above the daily limit will not be eligible for a payroll tax credit.
For extended family and medical leave (up to 10 weeks paid)
- Use this pay type for an employee who has been employed for at least 30 calendar days and is unable to work due to a need to care for a child (under 18 years of age) whose school or place of care has been closed or is unavailable due to COVID-19.
- Limits: The employee can be paid up to 10 weeks at two-thirds their regular rate of pay, with a daily limit of $200 and aggregate limit of $10,000.
Getting started adding pay types
FFCRA pay types can be added to employees as you run a regular payroll, in Enter Hours. Skip to this step→
Click Payroll in the left menu.
Select all appropriate employees and check the pay run details at the top, as you normally would when processing a pay run. Read more about how to run a standard payroll in OnPay.
Click Enter Hours.
How to add FFCRA pay to employees
For each employee who should receive an FFCRA pay type, click the button to expand the window to see additional Pay Items.
Click the "Select Pay Type" menu, type FFCRA to quickly find these pay types. Select the type appropriate for this employee, and click + Add Item.
Tip: If you're not sure whether the employee qualifies for FFCRA Sick, FFCRA Care, or FFCRA Expanded, you can review how these pay types are defined above.
To add the hours for the new pay item, click the blue pencil icon next to it.
Is the employee eligible?
The first time you edit FFCRA hours, you'll see this info window explaining:
"For an employee who is unable to work because they are in quarantine (pursuant to Federal, state or local government order or advice of a doctor or medical professional), and/or are experiencing symptoms of COVID-19 and are seeking or awaiting testing or diagnosis.
CAUTION: Employees can either be paid the FFCRA Sick pay item or the FFCRA Care pay item for a total of two weeks or 80 hours. For example, Sick for 40 hours + Care for 40 hours. Or, 80 hours of either pay type. Any amount over 80 hours will not be eligible for a payroll tax credit.
For FFCRA Sick, the employee should be paid their regular rate up to a daily limit of $511. Any amount above the daily limit will not be eligible for a payroll tax credit."
Click OK to continue.
Note: Once you click OK, you won't see this message again. But you can return to this information while entering FFCRA hours by clicking the prompt shown below.
Browse through the pay schedule and enter the leave hours for each day that qualifies for FFCRA pay. Your progress is saved as you go. Just click Close when you're done. You'll see the total FFCRA hours assigned to the employee.
Note: You will only be able to enter hours dated April 1, 2020 or later. The FFCRA was made effective on April 1 and its provisions have been extended to September 30, 2021, per the American Rescue Plan of 2021.
Compliance with daily and aggregate limits
The FFCRA outlines daily and aggregate limits to how much of this leave is eligible for tax credits. These limits have been reset for qualifying leave taken between April 1, 2021 and September 30, 2021. Don't worry, we'll keep track. And if the entered value exceeds the limit, we'll automatically reduce the hours to fulfill the maximum value without exceeding it. In the below example, eight hours were entered for each day that James was out sick during this period, including Sunday. But because this would have exceeded the limit, the hours were reduced for Sunday.
Reviewing and approving payroll
Once you have added all FFCRA pay types and amounts to employees, you're ready to review and approve payroll as normal. Click Review Payroll.
Any added FFCRA pay types will show as their own line item in the wages summary for each employee, with a total at the bottom.
When you approve payroll that includes FFCRA pay types and hours, you'll see a breakdown of all FFCRA pay types in the pay run, summarizing the value of eligible tax credit. Make sure everything looks correct.
How tax credits for FFCRA payments are processed
OnPay will automatically reduce your 941/943 tax liability by the eligible amount paid in the FFCRA leave wages, and an apportioned amount of employer medicare and cost of employer share benefits (if this amount is logged in OnPay), based on the FFCRA pay included on the payroll.
If there is any remaining credit value, you can redeem that amount via a refund from the IRS directly, or OnPay will continue to reduce the tax payment of your future pay runs until the total of all credits is used.
Keep up to date with all of this and more by checking our COVID-19 Resource Center. We’re updating it regularly as there are new developments and government guidance.
Please note that as COVID-19 legislation is changed or extended, always refer to IRS guidance for the most up-to-date information.
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