Congress Declines to Extend FFCRA Leave, New Tax Credit in Effect

a close up of a typewriter with a sign on it

With all the talk of the passing of the new $900 billion stimulus package on December 21, 2020, we all believed that this sealed the deal for the extension of Families First Coronavirus Act (FFCRA). After reading House Speaker Nancy Pelosi’s press release statement, we may have jumped the gun. Pelosi stated the new stimulus, “Supports paid sick leave: The agreement provides a tax credit to support employers offering paid sick leave, based on the Families First framework.”  

According to the current version of the Bill (just a short read, only 5593 pages), here is what we know about FFCRA: 

  • Mandated FFCRA leave will sunset on December 31, 2020. 
  • Effective January 1, 2021, covered employers (those with 500 or fewer employees) may voluntarily provide emergency paid sick and/or emergency paid family leave under  FFCRA (as originally adopted) AND take a tax credit associated with this leave. 
  • The tax credit is only available for leaves taken through March 31, 2020. 

So, what does this actually mean?  

FFCRA leave is no longer mandated but will provide a tax credit for covered employers that voluntarily offer leave under the FFCRA guidelines so long as that leave is taken prior to March 31, 2021. 

This does not mean that an employer can take a tax credit for an entirely new bucket of FFCRA leave effective January 1, 2021. If an employee used their 80 hours of leave under FFCRA, they do not have access to an additional 80 hours at the beginning of the new year and the employer would not be eligible for an additional tax credit. 

What we still do not know… 

If an employer has an FMLA policy that is based on the calendar year it could be argued that FFCRA-ERFMLA could be paid for a new ERFMLA leave in 2021. However, we do not have guidance on this as of now.  

State Law & Company Leave… 

Several states, counties and cities across the U.S. enacted their own leave laws that offer additional assistance or offer coverage to employers with 500 employees or more.  

It is critical that you continue to monitor these leave requirements and their expiration date (some are extended out into 2021) as well as how they interact with your company paid leave policies.  

Key Takeaways… 

Let’s all resign ourselves to climbing back on the roller coaster and buckling up. Mandated FFCRA will end December 31, 2020 with a tax credit extended to covered employers that voluntarily offer leave through March 31, 2021. Vaccinations have started and will likely be running into late summer so we may see cases and a need for leave reach beyond this tax credit extension. Review your state, local and company policy on leaves and any paid sick or PTO programs prior to making a definitive ruling. We are still waiting on guidance on the new 5593-page stimulus bill and what a calendar reset may mean for companies and their employees that have an FMLA plan that resets with the year. While we climb back on the “COVID Coaster”, let’s remember to breath, we will make it through this and TPPS is here to support you. 

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