The FFCRA Expires December 31, but Employers Can Still Claim Tax Credits for COVID-Related Paid Leave in 2021

In response to the pandemic, Congress passed the Families First Coronavirus Response Act (the “FFCRA”) that provided up to 10 days of emergency paid sick leave for COVID-related absences and up to 12 weeks emergency paid family leave to care for a child in the event of a COVID-related school or daycare closure.  These benefits went into effect in April 2020 and will terminate on December 31, 2020.

Many speculated that Congress would extend the FFCRA benefits to provide continued relief to individuals and families still grappling with work-related absences caused by the ongoing pandemic.   Cases have spiked in many areas and schools continue to provide remote learning.  Although the Consolidated Appropriations Act (the “Act”) signed by President Trump earlier this week provides various pandemic relief programs, the Act did not extend the expiration date of the FFCRA.

The Consolidated Appropriations Act’s extension of FFCRA Tax Credits for Employers.

Although the Act does not mandate a continuation of the FFCRA’s leave protections, it does extend the FFCRA’s employer tax credits to those employers who voluntarily opt to permit employees to take leave for the COVID-related reasons available under the expired FFCRA.  From January 1 through March 31, 2021 employers offering paid leave are eligible for a dollar-for-dollar tax credit on wages paid to employees taking leave for reasons that qualify under the current FFCRA framework.  The caps on the amount of pay an employee is eligible to receive – up to $511 per day for personal illness and $200 a day for family care – and the documentation requirements under the FFCRA will still apply to employers seeking tax credits under the Act.   The decision to continue to offer and pay FFCRA benefits after January 1, 2021 will be made by each employer individually.

What About Employees Who Already Exhausted FFCRA Benefits?

Many employees have already exhausted their leave entitlements under the FFCRA.   Whereas the Act does not increase the leave benefits available under the FFCRA, those employers using the “rolling look-back” method to calculate leave under the Family Medical Leave Act (“FMLA”) will not be eligible for second tax credit for any employee who exhausted FFCRA leave benefits in 2020 and is thereafter granted additional leave is 2021.   It is unclear, however, whether those employers using the calendar year method that results in a “reset” each January 1st will be able to take advantage of the tax credit for additional FFCRA qualifying leave in 2021. Additional guidance from the US Department of Labor is needed to resolve this issue and employers should consult with employment counsel to determine qualification for the tax credit.

We recommend that employers clearly communicate with employees if they opt to extend FFCRA leave rights into 2021.  In addition, employers must keep in mind any COVID-related leave rights that may exist under applicable state laws that are not scheduled to expire on January 1st.

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