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Daily DigestMarch 23, 2020by Stanton LawDaily Digest 3/23/2020

Navigating the FLSA Tip Credit: Who and What Qualifies, Valid Tip Pools, and Other Things You Need to Know

We hope everyone had a safe weekend. Below are some highlights you may have missed. As we mentioned in prior daily digests, the general trend seems to be towards more shutdowns, with states closing down non-essential businesses for the time being. Over the weekend, New Jersey, California, and Connecticut joined several other states ordering all residents to stay home, subject to only a few exigent exceptions. If you believe your business falls within the non-exempt businesses, and your state has not ordered a mandatory shutdown, then prepare now for more telework or advise employees a mandatory closure may be around the corner. Clear, frequent, and honest communication should be the rule.

• President Trump signed the Families First Coronavirus Response Act (FFCRA) into law Wednesday evening. The law intends to provide relief to employees by providing Emergency Paid Sick Leave and paid Emergency Family and Medical Leave. This law, however, adds more questions and uncertainty than answers during this crazy time, and the various agencies are scrambling to clarify employers’ obligations.

o The Department of Treasury, the IRS, and the Department of Labor (DOL) announced on March 20 that they would provide guidance regarding the exemption under FFCRA. The DOL stated it would provide “simple and clear criteria” for meeting the standards under which Emergency Paid Sick Leave would jeopardize the business as a going concern.

o The DOL announced a temporary non-enforcement policy to allow employers to comply with the new paid leave requirements. Employers who make reasonable, good faith attempts to comply with FFCRA will not be subject to enforcement action for 30 days after the law goes into effect on April 2. The DOL also promised to provide “compliance assistance” during the 30-day period.

o The IRS clarified that employers will be able to recoup their paid sick leave payments to employees by immediately keeping a portion of their deposit for their employees’ federal, Social Security, and Medicare taxes.

o Now that FFCRA has been signed into law, employers need to act, even if you think you may qualify for one of the exemptions. While the applicable government agencies are working to clarify what is demanded from employers and will attempt to clear up any gray areas, there are just too many unknowns with this new law, so the best practice is to try and comply as much as possible until further notice.

o Regarding the tax credits, the IRS made it clear that any payments on federal, Social Security, or Medicare taxes that would normally be held in escrow can be used to pay employees taking paid family and medical leave under FFCRA. If you have questions about this, please reach out to your accountant or a local tax attorney to clarify how you can implement this.

o We are working diligently to seek answers to the many questions we are receiving regarding FFCRA. If you have any questions about your new obligations under FFCRA, please feel free to call us at 404-531-2341.

Stanton Law is glad to be one of your resources for daily updates on COVID-19’s effect on your business. If you have any questions regarding this or any other legal matter, please do not hesitate to contact our experienced Atlanta employment attorneys at 404-531-2341 or online.

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