On December 27, 2020, the President signed the “Consolidated Appropriations Act, 2021” which included in it the “Coronavirus Stimulus & Relief” bill. Amongst its many provisions, the bill amended the Families First Coronavirus Response Act. As a quick reminder, the FFCRA provided for two types of paid leave to be provided by covered employers to eligible employees.
The FFCRA provided for Emergency Paid Sick Leave of up to 80 hours if the eligible employee suffered any one of six reasons, all related to COVID-19. The paid leave was at the employee’s regular rate or at 2/3 of the regular rate depending upon the reason for the leave. This 80 hours was available between April 1 and December 31, 2020.
The FFCRA also provided for Expanded Family Medical Leave of up to 12 weeks, the latter 10 of which were paid at 2/3 of the employee’s regular rate, when in essence an eligible employee could not work or telework because their child could not go to school or child care due to COVID-19 closures. This leave was available between April 1 and December 31, 2020.
To ease the burden on businesses (who were largely businesses employing fewer than 500 employees), the law provided that the amounts paid by the employer could be recouped through a payroll tax credit.
These descriptions are a shorthand introduction to talk about 2021.
What do these December 27 amendments to the FFCRA mean for your business as you enter the New Year? The amendments hold the FFCRA in a suspended state through the first quarter of 2021. More specifically, the amendments act as if both the “Emergency Paid Sick Leave Act” and the “Emergency Family and Medical Leave Expansion Act” are in this suspended state through March 31, 2021, allowing employers to voluntarily extend these benefits if they choose. The “carrot” for employers to do so is that the IRS will continue to allow employers to utilize the payroll tax credit as if these laws did not expire on December 31, 2020, but on March 31, 2021.
The following scenarios exist for employers who are covered under the FFCRA beginning January 1, 2021.
Emergency Paid Sick Leave
Option One. Stop providing Emergency Paid Sick Leave (the up to 80 hours) to your employees on January 1, 2021. This is required through December 31, 2020, but not after. If you have employees currently on this leave, we suggest you notify them of this decision. (It is important you take inventory now to ensure you have properly paid everyone through December 31 and claimed your payroll tax credits.)
Option Two. Voluntarily continue to offer the Emergency Paid Sick Leave through March 31, 2021, and continue to utilize the payroll tax credit. The same rules apply; for example, as to whether a business is covered, as to the eligibility of an employee, as to the daily maximums, etc. Most importantly, the rule that an individual may only take up to 80 hours (for a full time employee defined as regularly scheduled to work 40 hours per week) applies. For example, if you have a full time employee who took 80 hours of Paid Sick Leave in November 2020, that employee has no additional Paid Sick Leave to take in 2021. In a second example, if a full-time eligible employee took 20 hours of Paid Sick Leave in 2020, they would have 60 hours remaining to take in the first quarter of 2021. Finally, although there is no specific requirement in the law, if you choose to continue to offer this, you might want to keep the poster posted through March 31, 2021, to assist in your communications.
Emergency Family and Medical Leave
Option One. Stop providing the additional leave as outlined in the Emergency Family and Medical Leave Expansion Act – up to 12 weeks, the latter 10 of which are paid at 2/3 pay. This is required to be provided only through December 31, 2020. If you have employees currently on this leave, you probably want to give them notice. They may be eligible for other forms of leave, including possibly unpaid traditional FMLA leave. (Additionally, take time to ensure you have properly paid all eligible employees and claimed your payroll tax credits.)
Option Two. Voluntarily continue to offer this leave through March 31, 2021. Again, the same underlying rules apply. The change is that, if an employer chooses, it can act as if the law did not expire on December 31, 2020, but instead expires on March 31, 2021. To encourage employers, the law is continuing the employer’s ability to claim the payroll tax credit for the Paid Family Medical Leave benefits paid under this law through March 31, 2021.
The government did not give employers a lot of time to digest this option. Because it is voluntary, you will not be penalized if you opt not to do it. Of course, with the payroll tax credit, many employers may find it an easy choice to continue offering the benefits. But you must choose, and both questions appear to be “either/or” propositions:
- Will you stop the benefits under the Emergency Paid Sick Leave Act on December 31, 2020, or will you extend them through March 31, 2021?
- Will you stop the benefits under the Emergency Family and Medical Leave Act on December 31, 2020, or will you extend them through March 31, 2021?
Either way, communicating your decision to your employees will be key, especially in light of the amount of press over the legislation.