You can pay them utilizing the Family and Medical Leave Act (FMLA) You will need to look at the documentation for this from the IRS's website.  There are different ways it is paid based upon the status of the employee.  Meaning in your case they are actually sick with COVID and staying home, away from work due to the illness.  The wages do not need to be paid by a third party to get to take the tax deduction amount but you do need to look at the documentation to see how to pay the wages (i.e. how they need to be listed on their paycheck and then on thei W-2).