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.
As we previously reported, the current FFCRA requirements expire after December 31, 2020. The relief bill does not extend the FFCRA and the mandate requiring employers to provide paid leave but instead will allow employers to decide if their company will continue to provide paid leave. Employers can now continue to receive the federal tax credit for allowing employees to take unused FFCRA paid sick and family leave through March 31, 2021.
If an employee exhausted all FFCRA emergency paid sick leave (2 weeks or up to 80 hours) in 2020, it does not 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 and expected from the U.S. Department of Labor or the IRS. We are following this legislation closely and will be issuing further updates for employers, as needed.