ABCs to Account for COVID-19 Sick Leave

March 23, 2020

On March 18, 2020, the Families First Coronavirus Response Act was enacted into law and will go into effect on April 2, 2020.

What does that mean for companies and what should be done to prepare the accounting system to record and track these types of costs? The first recommended step is to establish at least four new leave accounts in your system to track for tax credits, as described below:

Note: The maximum combined sick leave is 80 hours. 

Recommended Tips:

  • Instruct your employees to record their time to the appropriate charge code on their timesheet to facilitate the correct calculation of their pay.
  • Check with your payroll provider to cap the maximum costs allowed to pay. There may be a need to establish additional leave codes for part-time employees who receive reduced benefits.
  • Check with your tax provider as to how to claim those tax credits.

A. COVID-19 Sick Pay for Employees

For the following situations:
1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID–19.
2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19.
3. The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.

B. COVID-19 Sick Pay for Taking Care of Family Member(s)

For the following situations:
4. The employee is caring for an individual subject to a federal, state or local quarantine or isolation order or advised by a healthcare provider to self-quarantine due to COVID-19.
5. The employee is caring for a child of such employee if the school or place of care of the child has been closed, or the childcare provider of such child is unavailable, due to COVID–19 precautions.
6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

C. Family Medical Leave Act (FMLA)

  • Emergency leave generally is available when an employee who has been employed for at least 30 days is unable to work or telework due to a need for leave to care for children under age 18 because a school or place of care has been closed, or a childcare provider is unavailable, due to an emergency with respect to COVID-19 that is declared by a federal, state, or local authority.
  • The employee may elect to take the first ten days of leave unpaid or use any accrued leave (PTO or vacation) for some or all of the required ten-day unpaid period. Pay calculation is based on an amount not less than two-thirds of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work, not to exceed $200 per day and $10,000 in the aggregate.

If you have additional questions or concerns regarding how to account for sick leave during these difficult times, please contact Donna Dominguez at 301.222.8232, Barbara Morgan at 301.231.6238, or Christopher Lee at 301.231.6241. For additional information on how to guide your business through the coronavirus outbreak, visit our resources page.