by Marti Cardi, Esq. - Senior Compliance Consultant and Legal Counsel
& Gail Cohen, Esq. - Assistant General Counsel, Employment and Litigation
June 21, 2018
Tax credits to reward good employer policies? Offering tax credits to encourage paid leaves of absence is cropping up more often recently. The federal government included a tax incentive in the December 2017 Tax Cuts and Jobs Act for employers providing from 2 to 12 weeks of paid family and medical leave for reasons covered by the Family and Medical Leave Act. Our blog post on this federal tax incentive can be found here. Some states, such as Connecticut and Utah, have tried to follow the same path this year, introducing tax incentive bills rather than full-fledged paid family and medical leave laws; but so far none has passed except the limited-purpose law just enacted in Colorado.
Colorado’s donor leave incentive law. Colorado has passed a law creating a state tax credit for employers who voluntarily provide a paid leave of absence for an employee to serve as an organ donor. The tax credit is limited to leaves of absence up to 10 working days or the hourly equivalent. An employer may claim as the tax credit 35% of (1) the amounts the employer pays to the employee during the leave of absence; and (2) costs incurred by the employer, if any, for temporary replacement help during the employee’s leave.
The tax credit does not apply to any period during which the employee uses other paid leave already offered by the employer such as vacation, paid time off, or sick days. In addition, the tax credit is available only for paid leave provided to employees who receive less than $80,000 in annual wages.
The employer must be able to provide documentation from the employee’s medical provider verifying the organ donation to support the claimed tax credit. Although not addressed directly, this implies that the employer can (and should) require medical documentation from the employee as a condition of receiving the paid leave of absence.
The law will go into effect for leaves of absence on or after January 1, 2020, and sunsets on December 31, 2024. You can view the full text here.
Colorado’s law does not require employers to provide time off for organ donation, nor does it provide job protection for the leave of absence; that will depend on the employer’s policies. Several other states do have laws providing employees with time off for donation of an organ, bone marrow, and blood or its components. See our previous blog post summarizing those state laws here.
MATRIX CAN HELP! Matrix provides leave, disability, and accommodation management services to employers seeking a comprehensive and compliant solution to these complex employer obligations. We monitor the many leave laws being passed around the country and specialize in understanding how they work together. For leave management and accommodation assistance, contact us at [email protected].