Families First Coronavirus Response Act Paid Leave Benefits Extended (sort of)
December 28, 2020
By: Justin M. Harrison and Laura Hoffman Lorensen
On Sunday, December 27, 2020, President Trump signed the “Consolidated Appropriations Act, 2021,” (“the Act”) which includes a subtle, yet significant, amendment to the Families First Coronavirus Response Act (“FFCRA”).
To review, the FFCRA became effective on April 1, 2020, and requires employers with fewer than 500 employees to provide two types of paid leave regarding Covid-19: (1) Emergency Paid Sick Leave (“EPSL”); and (2) Expanded FMLA (“E-FMLA). Under the EPSL benefit, employees are entitled up to two weeks (80 hours) of paid leave for certain Qualifying Reasons. For example, eligible employees include employees who are experiencing symptoms of Covid-19 and seeking a medical diagnosis, or employees who are subject to certain quarantine orders. Under E-FMLA, an employee is eligible for up to 12 weeks of paid leave if they are caring for a child whose school or daycare is unavailable due to Covid-19. The paid leave benefit varies depending upon the Qualifying Reason. In addition to providing benefits to employees, the FFCRA also allows employers to receive a 100% tax credit for the leave benefits that are paid under EPSL and E-FMLA. Originally, the FFCRA was set to expire on December 31, 2020.
Under the new Act, Congress has extended the availability of the employer tax credits for EPSL and E-FMLA paid leave benefits that are provided to employees between January 1, 2021, through March 31, 2021. Although the tax credits have been extended, the obligation to provide EPSL and E-FMLA benefits remains unchanged and will terminate on December 31, 2020. In short, Congress is encouraging voluntary continuation of these paid leave benefits by offering the tax credits through March 31, 2021. The tax credits are only available based upon the original Qualifying Reasons set forth in the FFCRA. Employers are free to provide more generous leave benefits, but they will not receive the tax credits for doing so. Likewise, this extension of the tax credit does not expand the paid leave entitlement itself. For example, if an employee exhausted EPSL benefits in 2020, then the employer is not eligible to receive tax credits for any additional EPSL benefits that it chooses to pay in 2021. Additionally, continued availability of the tax credit is conditioned upon employers not retaliating against employees for using these paid leave benefits.
Employers who are subject to FFCRA need to consider whether they should continue these benefits through the first three months of 2021 for those employees who have not exhausted their entitlement to paid leave. We can expect the Department of Labor (“DOL”) to issue some additional guidance, but for the time being employers that wish to maintain these benefits into the New Year probably should do so based upon the same criteria that were originally adopted by the DOL.