The Families First Coronavirus Response Act (FFCRA), which went into effect back in March, required covered employers (those with fewer than 500 employees, with some exceptions) to provide emergency paid sick leave and emergency family and medical leave for certain employees. After it was passed, we discussed the details of the law here. Always expected to be a temporary measure, the FFCRA was set to expire on December 31, 2020.
The House and Senate agreed on a new $900 billion stimulus package, the Consolidated Appropriations Act (or, as related to the FFCRA, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021), which provides a wide range of FFCRA and non-FFCRA related tax relief measures for employers, many of which are summarized here. President Trump recently signed the bill into law.
The FFCRA’s mandates for emergency paid family and medical leave (Section 3102(a)(1)) and emergency paid sick leave (Section 5109) will still expire on December 31, 2020. What the new law does however is extend the deadlines for the tax credits under the FFCRA until March 31, 2021. This gives employers who were covered under the FFCRA the option to continue providing emergency paid sick and emergency paid family and medical leave until March 31, 2021. Employers who voluntarily choose to continue providing these benefits will be eligible to collect corresponding tax credits up to the cap (e.g., 80 hours for FFCRA sick leave). The new law does not change the maximum amount of paid leave subject to the tax credit for an individual employee, meaning that if an employee already took 80 hours of paid sick leave for a qualifying reason in 2020, and the employer claimed the tax credit in 2020 for that leave, the employer cannot now claim an additional tax credit on wages paid to that same employee for additional paid sick leave in 2021.
In light of this year-end development, employers must quickly assess their staffing needs and the potential tax advantages to determine whether to voluntarily continue providing FFCRA benefits to employees during the first three months of 2021. Since there is no longer a mandate, it is unclear whether employees must offer these benefits to all employees to take the tax credit, or could limit to some classes of employees, or offer only emergency paid sick leave and not emergency family and medical leave, for example.
There are a number of questions that the U.S. Department of Labor (USDOL) will need to answer about the new law and the expiration of the FFCRA mandate. One issue is whether emergency paid family and medical leave under the FFCRA resets to allow employees an additional 12 weeks of paid leave to care for a child if the child’s school is closed due to COVID-19 related conditions. Since this provision amended the FMLA, it would not affect employers that used a rolling year for benefits, but is an issue where the employer’s FMLA policy resets every calendar year. We do not think Congress intended this result but we expect the USDOL to provide guidance on this issue.
Another significant issue is what employers are obligated to do for employees who are out on approved FFCRA leave, or have requested such leave, on or immediately prior to December 31, 2020. Until there is further guidance from USDOL, we recommend that employers provide all emergency paid sick leave, reinstatement and other FFCRA rights, even if that leave continues after December 31, 2020. Employers should be able to take the tax credit under the original or new law.
A related, more challenging question is whether employers are required to continue to provide emergency paid family and medical leave for employees who qualified for and began taking such leave in 2020. Nothing in the FFCRA says that protected leave needed to be completed by December 31, 2020. In many cases, employees would not have a need for leave over the holidays when schools are typically closed. Again, pending further guidance from USDOL, the cautious approach is to provide this leave to employees already approved, even if you choose not to voluntarily provide such leave for requests made after January 1, 2021.
Those employers who opt to continue offering FFCRA benefits should advise employees accordingly, either through a policy update or memorandum. Those employers who do not continue providing FFCRA leave must remain vigilant and comply with local and state leave laws (paid and unpaid), as well as traditional FMLA leave and disability-related accommodation obligations. By way of example, depending on the circumstances of an employee’s leave, it is possible that the employee could be entitled to normal unpaid leave under the FMLA even after the FFCRA expires, provided the employee still has weeks available under the FMLA.
