Deductions & credits

The answer is not straight forward and I can only give additional "clarification" offered by Department of Labor. The U.S. Department of Labor has published the following information but it is by no means clear when she is "subject to a federal, state, or local COVID-19 quarantine or isolation order". Each person's tax situation is different. 

The first issue that the regulations clarify is when an employee is subject to a Federal, State, or local quarantine or isolation order under the first qualifying reason. The answer is: Not as often as you might think.

Contrary to many commentators’ expectations when the Families First Coronavirus Response Act (FFCRA) was enacted, the first qualifying reason pursuant to which employees’ may take Emergency Paid Sick Leave Act (EPSL) does not apply when an employee is unable to work because his or her employer is subject to an order – even a quarantine order – shutting the business down or substantially curtailing its operations. 

According to § 826.20(a)(2), this reason for EPSL applies:

only if, but for being subject to the order, he or she [the employee] would be able to perform work that is otherwise allowed or permitted by his or her Employer, either at the Employee’s normal workplace or by Telework.  An Employee Subject to a Quarantine or Isolation Order may not take Paid Sick Leave where the Employer does not have work for the Employee as a result of the order or other circumstances.

In other words, if the employer shuts down or furloughs some employees because their work is not deemed to be essential under applicable state or local health orders, the employee is not eligible to take EPSL for this reason. This does not mean that the employer is barred from extending paid leave to the employee, but the employer will not be eligible for a tax credit on the wages paid for that leave and it likely will not count against the employee’s 80-hour EPSL allotment.

The DOL offered a concrete example:

If the coffee shop closed due to its customers being required to stay at home, the reason for the cashier being unable to work would be because those customers were subject to the stay-at-home order, not because the cashier himself was subject to the order.  Similarly, if the order forced the coffee shop to close, the reason for the cashier being unable to work would be because the coffee shop was subject to the order, not because the cashier himself was subject to the order.

The Department’s illustration works well when the employer and the employee are subject to the same health orders. However, many employers have employees who live in one state and work in another or who live in one city or county while working in another.  

• For example, six counties in the San Francisco Bay Area issued more restrictive shelter-in-place orders on March 31.  Under those orders, employees of non-essential businesses are not permitted to go to work.  If their employer’s worksite is outside those counties and is permitted to operate under more permissive definitions of essential business under the statewide order, it would appear to be the case that the employee would be entitled to use EPSL based on the first reason because a quarantine order has not shuttered the employer or eliminated the employee’s work.  It is only the local quarantine order applicable to the employee keeping the employee at home.  

This circumstance will hopefully be uncommon, but the possibility of contradictory state or local health orders underscores that employers will need to carefully assess individual circumstances before denying leave requests.

Source: Squire Patton Boggs