Congress's 5593-page Consolidated Appropriations Act, passed by the Senate on December 21, 2020, and signed by the President last night (December 27, 2020), includes an extension of employer tax credits for leave provided under the Families First Coronavirus Act (FFCRA), first instituted in March 2020.
Specifically, employers should be aware of the following:
- The new Act does not extend the FFCRA's requirements for employers to provide emergency paid sick leave or emergency paid family and medical leave. The original deadline of December 31, 2020, still stands, and employers are not required to provide FFCRA-required leave beyond that date but they can choose to.
- Employers will still be able to obtain a tax credit for leave provided to employees under the FFCRA through March 31, 2021. Accordingly, an employer may voluntarily provide employees paid leave for reasons covered under the FFCRA through March 31, 2021, and receive the tax credit.
- The amount of leave that is available to employees has not been expanded. Accordingly, if an employee has already used all available FFCRA leave (either under the paid sick leave or expanded family leave provisions), the employee is not entitled to additional paid leave for reasons covered by the FFCRA and the employer is not entitled to any additional tax credits for that employee.
What should employers do now?
- Decide whether your company will continue providing leave for reasons under the FFCRA. Although employers are not required to provide leave, the tax credit remains available if you elect to provide leave for eligible employees who have not exhausted FFCRA leave benefits. If your company elects to continue providing leave, it should provide the leave on a consistent, rather than case-by-case, basis to mitigate legal risks. Employers should make the decision as to whether to continue providing leave as soon as possible so that they are prepared to handle employees' use of leave early in the New Year.
- If your company will continue to provide FFCRA-covered leave, update communications to employees to reflect that the expiration date is now March 31, 2021.
- If your company will continue to provide FFCRA-covered leave, be mindful that employees who have previously used or exhausted FFCRA-related leave are not eligible for additional leave.
- Communicate with your accounting team to make sure that your company is taking full advantage of the tax credit extension.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.