Client Alerts

Congress Permits Employers to Voluntarily Extend FFCRA Leave and Claim Tax Credits Through March 31, 2021

By: Stephanie E. Harley and Jonathan R. King

About: Employment & Labor

December 23, 2020 – In March 2020, the federal government passed the Families First Coronavirus Response Act (FFCRA), which required employers to provide paid leave to employees under certain circumstances related to the global coronavirus pandemic. The FFCRA contains two main provisions that address employee absences: the Emergency Family and Medical Leave Expansion Act (EFMLEA) and the Emergency Paid Sick Leave Act (EPSLA). The EFMLEA and the EPSLA were set to expire on December 31, 2020. From the employer’s perspective, an important aspect of the FFCRA included a provision that allowed employers to take payroll tax credits for paid leave provided to employees under the FFCRA. On the other hand, employees knew they would be compensated when they had to miss work for specific COVID-19 related reasons. Everyone benefited from the incentives this legislation provided for employees to stay home from work when necessary to help combat the virus.

On December 21, 2020, Congress approved the Consolidated Appropriations Act, 2021.[1] The new legislation does not require employers to provide paid EFMLEA or EPSLA time off past December 31, 2020. However, employers that voluntarily continue to provide EPSLA leave under the FFCRA can still take payroll tax credits for the paid leave they provide until March 31, 2021. The new legislation also does not require employers to provide additional EPSLA leave beyond the 80 hours set forth in the original FFCRA. Therefore, employees who have already used their maximum amount of time under the EPSLA are not entitled to additional leave under this new legislation, nor will employers be able to claim the payroll tax credit for the additional leave.

The EFMLEA works differently, however, because the EFMLEA works in conjunction with the traditional Family and Medical Leave Act. Thus, if an employer extends FFCRA benefits past December 31, 2020, an employee may have additional leave available under the EFMLEA depending on how the employer calculates the 12-month FMLA year (rolling or calendar year basis). If the employer calculates the 12-month FMLA year on a calendar year basis, an employee who used all 12 weeks of FMLA/EFMLEA leave in 2020 may start 2021 with a new bank of 12 weeks of leave. However, it is still an open question whether that time off will be paid under the EFMLEA and whether the employer can take payroll tax credits for the leave. As with the original FFCRA legislation, the Department of Labor and IRS will probably issue guidance for employers that choose to provide this leave beyond December 31, 2020, but it may take weeks for them to do so.

In the meantime, employers need to consider whether they will stop offering FFCRA benefits on December 31, 2020, or extend benefits into the new year for those employees who have not exhausted their paid leave entitlement. Employers should also consult their state and local laws to ensure compliance with COVID-19 related leave requirements. Once the decision is made about how to proceed, it should be communicated to employees so there is no misunderstanding about how their absences will be treated.

The pandemic will not end on December 31, 2020, and even though vaccines are being distributed, experts believe that we will not achieve herd immunity for months. Therefore, the need to keep employees who could spread COVID-19 out of the workplace will continue into the new year, and employees who are not paid for COVID-19 related time off may be tempted to come to work if they cannot afford to miss a paycheck.

The attorneys in Ulmer’s Employment & Labor Practice Group are available to strategize with you and provide counsel regarding extended FFCRA leave and the Consolidated Appropriations Act, 2021. Please reach out to one of the authors listed if you have any questions.

The information provided in this client alert speaks only to the information and guidance we have available as of the date of publication and is subject to change. We will continue to follow further issued guidance and regulations and endeavor to post those updates via our website. This legal update was created by Ulmer & Berne LLP, and is not intended as a substitute for professional legal advice. Receipt of this client alert, by itself, does not create an attorney client relationship. For any questions, or for further information, please contact Stephanie E. Harley at sharley@ulmer.com or Jonathan R. King at jking@ulmer.com.

[1] President Trump has threatened to veto this legislation for a number of reasons unrelated to the FFCRA, but it is expected that Congress would override his veto.