• Small and midsize employers can begin taking advantage of two new refundable pay​roll tax credits designed to immediately and fully reimburse them, dollar-for-dollar, for the cost {please remove both commas} of providing COVID-19-related leave to their employees.
  • Employers with fewer than 50 employees can apply for an exemption to this Act if they deem it will be detrimental to their business.
  • The act gives businesses with fewer than 500 employees funds to provide employees with up to 80 hours of paid leave, either for the employee’s own health needs or to care for family members.
  • There are two credits available the 1) Paid Sick Leave Credit and the 2) Child Care Leave Credit

Paid Sick Leave Credit

  • For an employee who is unable to work because of COVID-19 quarantine or self-quarantine or has COVID-19 symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days (up to 80 hours).
  • First 10 days of employee leave is unpaid.
  • Employees paid 2/3 of normal pay rate and at the number of hours an employee would work for up to 10 weeks. Note: Two weeks of paid sick leave must be taken first before FMLA benefits kick in (this provides a total of 12 weeks leave).
  • Employees entitled to reinstatement of same or similar position after leave is over.
  • Employers receive 100 percent credit against payroll taxes for payments made under qualifying Family and Medical Leave. If credit is more than tax, employer can request a refund or have credit roll-forward to future payroll tax payments due. Note: This is not handled at the time of 941 filing, rather it is handled with each deposit schedule.

Child Care Leave Credit

  • In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to COVID-19, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

Using the Credits

  • Under guidance that will be released this week, 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 they paid, rather than deposit them with the IRS.
  • The payroll taxes that are available for retention 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 there are not sufficient payroll taxes to cover the cost of paid qualified sick and child care leave, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced this week.


  • If an eligible employer paid $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 an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
  • Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.

Small Business Protection