In the face of the coronavirus pandemic, the federal government and many states and localities have implemented paid leave requirements.

Federal Law: The federal Families First Coronavirus Response Act (“FFCRA”) requires that covered employers provide paid leave for designated COVID-19-related purposes, and provides employers with tax credits for such payments, subject to very specific recordkeeping requirements. (See our client alert on this topic.) The IRS has issued guidance specifying the documentation required in order to support the payroll tax credit for FFCRA-required paid sick and family leave, which includes documentation pertaining to the reason for the leave (including detailed requirements regarding leave for child care issues), work records, and the amount of compensation paid, among other things. (See our client alert on this topic.) Failure to maintain the required documentation results in an inability to receive the tax credit.

In addition, time taken under the FFCRA may be consolidated with time taken under the federal Family and Medical Leave Act for purposes of determining the maximum amount of leave time available to an employee. Carefully tracking leave is therefore essential.

State and Local Law: Many state and local laws and ordinances also require paid leave for various COVID-19-related purposes. For instance, Colorado just enacted the Healthy Families and Workplaces Act (“HFWA”), which provides up to two weeks of paid leave to most workers for designated COVID-19-related purposes. (See our client alert on this topic.) Under the HFWA, employers can receive “credit” for paid leave provided under other laws and policies, including the FFCRA.

Similarly, San Francisco’s Public Health Emergency Leave Ordinance (“PHELO”) allows employers to offset their obligation to provide leave under PHELO by paid leave time that they have allowed employees to take for purposes consistent with PHELO, provided that the leave was in addition to previously accrued paid time off hours. Other jurisdictions have similar permissible offsets.

In order to take advantage of these credits, though, and rebut any claim of failure to provide the required paid leave, employers must document the prior leave granted and the compensation provided for that leave.

Employer Takeaways: Employers should carefully document the leave granted for COVID-19-related reasons, the justification for the leave, and the compensation provided to the employee, in accordance with the FFCRA and applicable state and local law, in addition to other required information. Such documentation should not be maintained in the employee’s personnel file, but in a separate, confidential file. Rigorous adherence to documentation guidelines will ensure that the employer can take advantage of tax credits that may be available, as well as offsets against additional paid leave requirements.