Update on Federal Mandated Leave and Tax Credits

 – March 19, 2020
Update on Federal Mandated Leave and Tax Credits

On March 18, President Donald Trump signed into law legislation that will require companies with fewer than 500 employees to provide new paid family leave and sick pay in response to COVID-19, and the new benefits will be funded through $105 billion in tax credits. The legislation does not include any other tax incentives, but lawmakers are expected to turn immediately to stimulus legislation where tax provisions will be considered.

The new bill with have a significant and immediate impact on organizations with fewer than 500 employees. Affected businesses will need to quickly implement the new policies and separately track employee leave that falls under the specific categories in the legislation. The cost is fully funded by new refundable credits against payroll taxes, and an equivalent credit is also available for certain self-employed individuals.

Grant Thornton has published a full update on this issue.