On December 21, 2020, Congress passed a large appropriations bill containing $900B in COVID relief. President Trump signed the bill on December 27, 2020. The bill extends tax credits for eligible employers who voluntarily choose to allow employees to take leave under the Families First Coronavirus Response Act (FFCRA) through March 31, 2021. It also provides additional unemployment benefits, more Paycheck Protection Program funding, and $600 direct stimulus payments to individuals, along with relief from student loan repayment obligations and changes to health and dependent care flexible spending accounts.
Private sector employers with fewer than 500 employees who choose to extend FFCRA leave to their employees will be eligible to claim tax credits through March 31, 2021. The bill does not, however, provide employees with a new allotment of FFCRA leave. If an employee exhausted all FFCRA emergency paid sick leave (2 weeks or up to 80 hours) in 2020, it doesn’t appear that the employer can claim tax credits for additional FFCRA emergency paid sick leave it chooses to provide that employee in 2021. However, if an employee used paid FMLA-expansion leave in 2020, and the employer’s 12-month period for FMLA leave resets on or before March 31, 2021, an employer should be able to claim tax credits for additional FMLA-expansion leave it pays to employees through March 31, 2021. Further guidance is needed from the U.S. Dept. of Labor or the IRS.
Our CO members with 16 or more employees who become subject to the Healthy Families and Workplaces Act (HFWA) beginning January 1, 2021, are asking how the FFCRA tax credit extension potentially affects them. The FFCRA tax credit extension would not alter the requirement for these employers to begin accruing paid sick leave for their employees on January 1, 2021. If an employer chooses to allow employees to take FFCRA leave in the early part of 2021, it makes sense that the employee would use FFCRA leave first prior to using paid sick leave under HFWA. Since the extension of FFCRA leave is voluntary, it would not reduce the amount of HFWA leave employers must provide to employees in 2021.
We will keep members apprised of further developments.