The recently-enacted Tax Cut and Jobs Act (the “Tax Act”) includes a provision that eases the burden for employers who adopt paid family and medical leave policies. The Tax Act added a new federal tax credit available through 2019 to employers that adopt a paid family and medical leave policy to all of their “qualifying employees”. The credit is available only if the employer pays its qualifying employees at least 50% of their regular compensation during the leave period. In addition, the policy must provide for at least two weeks of paid leave for a full-time employee, with a reduced period required for part-time employees. The specifics of the credit are a bit too complicated to detail in a blog post, so if you already have paid family leave in place, or you are considering implementing one, be sure to consult with your tax attorneys.
The recently-enacted Tax Cut and Jobs Act (the “Tax Act”) includes an unheralded change to the tax law that will directly affect sexual harassment settlements. As a direct result of the recent highly-publicized cases involving sexual harassment of employees, a new provision (Section 162(q)) has been added to the tax code to deny a business deduction for “any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement.” The new provision, which is already effective, also denies a deduction for the attorneys’ fees related to such a settlement or payment.
As a result of the new law, an employer making a settlement payment in connection with a sexual harassment case will have to balance the monetary benefit of a tax deduction against the potential harm that could be done to its business if a plaintiff is permitted to publicize the details of the settlement and the claim.