As you undoubtedly know, the Families First Coronavirus Response Act of 2020 (FFCRA) was enacted in April 2020. The FFCRA required that companies with fewer than 500 employees, as well as certain governmental employers, provide their eligible employees with emergency paid sick leave and paid expanded family and medical leave to accommodate COVID-19 issues. The FFRCA expired as expected on December 31 and has not been renewed.
However, the paid leave issue was part of the nearly 6,000-page Consolidated Appropriations Act, 2021, which was made law on December 27, 2020. This relief bill provides tax credits to employers who voluntarily decide to continue the FFCRA paid leave requirements through March 31, 2021. But to be clear, the law extends the tax credits, but it does not extend the requirement to provide the paid leave.
The COVID-19 pandemic is far from over. So what does this new provision mean for your company?
Paid Leave Policies
While the FFCRA leave requirements have expired, you may still have employees who are affected by COVID-19 and need to take leave. They may be diagnosed with the coronavirus, or they may need to care for someone who has. They may also still face childcare issues if schools or centers are closed. In this case, you may want to offer accommodations such as flexible hours or remote work (if you have not already). You may also consider changing your paid and unpaid leave policies during this challenging time.
If you choose to continue to the FFCRA leave allowances through March 31, 2021, you can take a payroll tax credit. This stipulation of the Consolidated Appropriations Act offers these tax credits to employers who voluntarily extend this leave benefit to their employees. Not only does this provision assist employees, but it also helps employers recover some of the costs of providing FFCRA leave in 2020.
Before you extend this option to your employees, make sure you understand all the eligibility rules and keep comprehensive records. The FFCRA has specific limitations on paid leave (up to 80 hours of emergency paid sick leave and up to 12 weeks of paid emergency family and medical leave). These limits also apply to the payroll tax credits. For instance, if an employee used all the FFCRA paid leave in 2020, no FFCRA paid leave is available for 2021, even if your company voluntarily chooses to offer such leave. Make sure you understand the amount of paid leave for which you can receive tax credits. You must separately track paid leave for which you cannot receive these tax credits, per your company’s leave policy.
You must also consider how FFCRA leave in 2020 could impact the Family and Medical Leave Act (FMLA) allowances available in 2021. Expanded family and medical leave provided by FFCRA required specific FFCRA-qualifying reasons and counted toward the regular FMLA entitlement. For example, if an employee took a few weeks of expanded family and medical leave in 2020 per FFCRA, that will count against the amount of FMLA still available in 2021. However, this amount also depends on which 12-month period you use for measuring FMLA availability. Check your records for both years to ensure that your leave allowances are accurate.
In the months ahead, you will still have many pandemic-related employee leave issues to consider, but perhaps the payroll tax credits will help you maneuver some of those accommodations.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.