Extension of Tax Credits for Voluntary FFCRA Leave Through March 31, 2021
Since March of this year, companies with less than 500 employees and all public employers have been required to provide emergency paid sick leave and expanded family and medical leave under the Families First Coronavirus Response Act (FFCRA). Our summary of these requirements can be found here and our summary of the Department of Labor’s Guidance on the FFCRA can be found here. The FFCRA leave mandates were always set to expire on December 31, 2020, and the new COVID-19 stimulus bill that was signed into law on December 27, 2020, titled the Consolidated Appropriations Act, 2021 (the “Act”), does not change this.
The Act does not extend the mandate that any employer provide FFCRA leave beyond December 31, 2020. However, employers may continue to voluntarily offer the 80 hours of emergency paid sick leave and 12 weeks of expanded family and medical leave set forth in the FFCRA. The Act provides that private companies with less than 500 employees who voluntarily provide FFCRA leave to employees may obtain federal tax credits for leave provided under the FFCRA through March 31, 2021. The Act does not provide for any additional leave beyond the amount granted under the FFCRA and CARES Act. Therefore, a company cannot obtain a tax credit for leave provided in 2021 to an employee who already exhausted his or her leave under the FFCRA in 2020. As in the FFCRA and CARES Act, public employers do not qualify for the aforementioned tax credits.
Below are some frequently asked questions we have been receiving related to the extension of the FFCRA tax credits in the Act and what we know as of now. Our analysis may change if the Department of Labor provides additional guidance.
Q: Am I required to provide any FFCRA leave in 2021?
A: No. The mandates under FFCRA will expire on December 31, 2020, and the new stimulus bill does not require any additional FFCRA leave. Employers should carefully monitor any leave that may be required by local or state law.
Q: Are there any financial incentives to voluntarily providing FFCRA leave in 2021?
A: Yes, if you are a private employer with less than 500 employees, you may be able to obtain a tax credit for FFCRA leave taken in 2021. Public entities may be able to take advantage of other provisions of the Act to cover the costs of this leave.
Q: Will the Department of Labor (DOL) provide further guidance on the extension of FFCRA tax credits?
A: Hopefully yes. As with the FFCRA, the DOL may also interpret the law in a way we did not necessarily expect.
Q: Do employees have a new “pot of leave” under the Act?
A: No. Any leave taken under the FFCRA in 2021 is voluntary. In addition, an employer can only obtain a tax credit for leave taken in 2021 if the employee did not already use up all of his or her leave under the FFCRA in 2020.
Q: What notifications should I make to my employees about COVID leave in 2021?
A: If you plan to offer additional “COVID leave” in 2021 on top of your pre-existing sick leave/vacation leave, we recommend preparing a notice to your employees about what leave will be available.
Q: If I want to get a tax credit for FFCRA leave taken in 2021, do I have to allow employees to take both Emergency Paid Sick Leave Act (EPSLA) and leave under the Emergency Family and Medical Leave Expansion Act (EFMLEA)?
A: Based on our current understanding of the Act, an eligible employer could decide it wants to provide only certain leave under the FFCRA (for example, only providing leave under the EPSLA and not the EFMLEA) through March 31, 2021, and still get a tax credit for that leave.
Our employment, government, and business attorneys are available to answer your specific questions about COVID-related leave in 2021. Please reach out to your Lashly & Baer attorney with any questions. Prepared by Julie Z. Devine, James C. Hetlage, and Alexandra S. Sievers.