IRS Issues Assistance on New Paid FMLA Tax Credit

The IRS just issued a FAQs sheet regarding the new Tax Cuts and Jobs Act of 2017 that created the Paid Family and Medical Leave Tax Credit. The tax credit allows eligible employers to claim a general business tax credit of up to twenty five percent of the wages paid when employees take paid family and medical leave.

Generally, in order to utilize the tax credit, an employer must have a written policy allowing for at least two weeks of paid FMLA and pay employees on FMLA leave at least fifty percent of their usual wages receive. In 2018, the tax credit will only be available for payments to employees who made less than Seventy Two Thousand Dollars in 2017.

Most forms of paid leave, (vacation leave, personal leave or sick leave) will not be considered paid FMLA leave for purposes of the Act and such payments will not be applicable for the tax credit.

Lastly, the FAQ indicated that the IRS was going to issue other FAQs addressing various aspects of the FMLA tax credit. I will keep an eye out for these FAQs and send out new updates as they are issued.

The DOL Has Begun to Issue Opinion Letters Again – And You Should Read Them

Under President Obama, the U.S. Department of Labor stopped issuing specific Opinion Letters[1] in 2009, in favor of issuing more general Guidance. After President Trump took office, the DOL announced that it would begin to once again issue Opinion Letters. This is a good thing for employers. Although the Opinion Letters do not have the force and effect of law, they do tell us how the DOL is going to interpret the law.

On April 12, 2018, the DOL issued two new Opinion Letters, each dealing with specific aspects of the Fair Labor Standards Act.

In the first Opinion Letter, an employer asked if it was required to compensate non-exempt employees for fifteen (15) minute breaks that it was required to allow employees under the Family and Medical Leave Act. The employee’s physicians certified that they needed to take a fifteen minute break every hour (eight, fifteen minute breaks in an eight hour shift). The DOL acknowledged that such breaks were primarily for the benefit of the employees in question and that the FMLA states that FMLA-required breaks may not be compensable time. As such, the DOL indicated that the breaks were not compensable time. However, the DOL also noted that the employees who were taking FMLA-protected breaks were nonetheless also entitled to the same paid breaks as their co-workers. So, if the employer allowed all of its employees to take two, paid fifteen minute breaks a day, then the two employees taking eight, fifteen minute breaks a day should be paid for at least two of those breaks.

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