Employers May Voluntarily Extend FFCRA Paid Leave Benefits and Receive a Tax Credit – Through March 31, 2021
The paid sick leave and family leave mandates under the Families First Coronavirus Response Act (FFCRA) end on December 31, 2020; however, the stimulus bill passed by Congress on December 22, 2021 permits employers to voluntarily provide those paid leave benefits, and receive the corresponding tax credit, through March 31, 2020. President Trump is expected to sign the bill into law.
Back in March, near the beginning of the COVID-19 pandemic, Congress passed the FFCRA, which, among other things, imposed two leave mandates on employers with fewer than 500 employees: (1) a two-week emergency paid sick leave (“EPSL”) mandate for employees who are unable to work or telework due to six specific COVID-19-related reasons; and (2) a temporary expansion of coverage under the Family and Medical Leave Act (FMLA), to enable employees to take their twelve weeks of FMLA leave for school and child care closures associated with COVID-19 (EFMLA), including a ten-week paid leave component. Significantly, employers are reimbursed for the cost of the leave(s) through a tax credit.
These leave mandates are set to expire on December 31, 2020, even as the pandemic rages on, and many wondered if Congress would extend the mandates into 2021. In the stimulus bill, Congress chose to let the mandates expire, but gave FFCRA-covered employers the option to extend the EPSL and EFMLA benefit, and take the tax credit, through March 31, 2021, to the extent that the employee has not yet exhausted those benefits. Thus, if an employee has not used all two weeks of EPSL or twelve weeks of EFMLA as of December 31, 2020, the employer could allow the employee to use any remaining EPSL or EFMLA until March 31, 2021.
Note that these are not new banks of EPSL or EFMLA. The stimulus bill contains language that removes the prohibition on carry over of any unused EPSL from one year to the next, thereby enabling the employee to use any EPSL remaining at the end of 2020 in 2021. The existing FFCRA regulations already provide that an employee is only entitled to a maximum of twelve weeks of EFMLA, even if the period during which EFMLA can be used (April 1, 2020 through the original sunset date of December 31, 2020) spans two FMLA twelve-month periods.
Although the FFCRA leave benefits will no longer be mandatory, employers may wish to consider extending these benefits if employees who have not yet exhausted those benefits become sick or are quarantined by order of a governmental agency or doctor, or are unable to work because of a COVID-related school/childcare closure, until March 31, 2021. These employees will necessarily have to remain out of the workplace during that time, and under the stimulus bill the employer is now afforded the ability to take a tax credit if they allow employees to use any remaining EPSL or EFMLA.
Additionally, many states and local jurisdictions have enacted COVID-19 leave mandates that continue to apply. Thus, employers should ensure that they are in compliance with these additional laws.
We expect that the DOL will revise its extensive and detailed FFCRA Q&A to reflect these changes.
This is obviously a fast-moving and ever-changing situation, and we will continue to send out E-lerts on any significant developments. You may also wish to check our continually-updated FAQs frequently.