Employee W-2’s May Need to be Corrected for FFCRA Leaves

March 25, 2021
Hall Benefits Law, LLC

Under the Families First Coronavirus Response Act (FFCRA), employers with fewer than 500 employees are required to provide paid sick and family leave for certain COVID-19-related reasons. Employers are required to report leave payments as wages on each qualifying employee’s Form W-2.

While IRS Notice 2020-54 provided guidance on the W-2 reporting requirement in July 2020, this guidance was not incorporated into Form W-2 instructions for 2020. Since most employers provide W-2s to their employees by January 31, there may be many who misreported leave payments and must now send corrected W-2s to their employees.

Form W-2 Reporting Guidance for FFCRA Leaves

Qualified sick leave wages: Qualified sick leave wages should be reported in boxes 1, 3 and 5 of Form W-2. These wages must also be reported separately, either in Box 14 or a separate statement. For employees who received qualified sick leave wages while they were quarantined, experiencing symptoms, or awaiting a diagnosis, the entry must be labeled “sick leave wages subject to the $511 per day limit”. For employees who received qualified sick leave wages while they were caring for someone else, the entry must be labeled “sick leave wages subject to the $200 per day limit”. 

Qualified family leave wages: Qualified family leave wages should be reported in boxes 1, 3 and 5 of Form W-2. Family leave must also be reported separately, either in Box 14 or a separate statement. The wages must be labeled “emergency family leave wages” or similar language.

Employers that opt to report qualified sick or family leave wages in a separate statement must provide that statement with the employee’s W-2 in the same manner (paper or electronic) and time as the W-2.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 678-439-6236.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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