Farms can pay for sick leave by retaining part of their quarterly payroll taxes
As the state opens up and the risk of COVID-19 remains, the likelihood that farms are affected continues. Farms with employees are reminded that under the Families First Coronavirus Recovery Act (FFCRA), they may be required to pay sick leave to employees affected by COVID-19.
The law passed quickly during a time with lots of COVID-19 news and legislation. As a result, many farms with employees may be unaware of the fact that the law applies to them, just as it does to all small businesses with fewer than 500 employees.
The law is meant to reduce the spread of the coronavirus by making it financially possible for employees to stay at home if needed. To help make this paid sick leave feasible for small businesses, the federal government will provide dollar-for-dollar reimbursement through tax credits.
Farms are required to pay up to 80 hours of sick leave at full wages to W-2 employees who are unable to work because they are quarantined under government orders or medical advice, experiencing COVID-19 symptoms, or seeking a medical diagnosis. Farms are required to pay up to 80 hours of sick leave at two-thirds of regular wages to employees who are unable to work because they must care for someone under quarantine or to provide child care. Paid family and medical leave was also expanded, now required for up to 12 weeks. Eligible employees include those who receive W-2 statements from the farm and does not include those who receive 1099s.
Farms can pay for this newly required sick leave by retaining part of their quarterly payroll taxes, or even receive advanced payment of tax credits. Note that farms receiving Paycheck Protection Program (PPP) loans cannot use PPP to pay sick leave and then apply the FFCRA tax credit.
A University of Wisconsin-Madision Division of Extension fact sheet is available summarizing the new requirements, including several links to official sources for information on compliance: https://aae.wisc.edu/pdmitchell/2020/04/08/families-first-coronavirus-recovery-act-legal-obligations-for-farms-with-employees-during-covid-19/. Farms will want to work with their tax providers or accountants to properly claim the tax credit and may want to seek formal legal advice to ensure that they are in compliance.