On December 27, 2020, President Trump signed a $900 billion COVID-19 relief bill, providing for, among other things, a $300 per week supplemental unemployment benefit, direct payment checks of up to $600 per adult and child, $284 billion in Paycheck Protection Program (“PPP”) loans, and $25 billion in rental assistance.

So what effect will this relief bill have on the paid leave mandated by the Family First Coronavirus Response Act (the “FFCRA”)? As detailed in a blog post on March 19, 2020, the FFCRA was enacted at the outset of the Covid-19 pandemic, and provided for Emergency Paid Sick Leave (“EPSL”) and Expanded Family Medical Leave (“EFMLA”) to eligible employees who are unable to work for reasons related to the ongoing health pandemic. Notably, the mandate to provide paid leave under the FFCRA is set to expire on December 31, 2020, and the recently passed stimulus package will not extend the requirement that employers provide EPSL or EFMLA beyond this date. Rather, the relief bill only extended the tax-credit available to employers who voluntarily provide FFCRA-qualifying leave until March 31, 2021. As result, starting January 1, 2021, employers will no longer be required to provide paid leave under the FFCRA, but may choose to voluntarily provide such leave (and claim the tax credit for doing so) until March 31, 2021.

Given Congress’s extension of the tax credit, employers subject to the FFCRA should immediately consider whether they will voluntarily provide EPSL and EFMLA after December 31, 2020. In making this decision, employers should keep in mind that many states and localities have passed their own paid leave laws related to the pandemic, so there may still be an obligation to provide paid leave related to COVID-19. Employers should also clearly communicate their decision regarding the continued provision of FFCRA-qualifying leave to their workforce, so employees understand what leave will be available to them in the new year.

Finally, employers who chose to voluntarily provide leave after December 31 will need to determine how much leave qualifies for the tax credit. The relief bill allows a tax credit for leave provided between January 1, 2021 and March 31, 2021, but only to the extent that said leave would have been required if the FFCRA applied. Of course, under the terms of the FFCRA, paid EPSL is capped at 80 hours per employee. Thus, an employer will likely be unable to claim a tax credit for paid EPSL provided to an employee in 2021 if that same employee already took 80 hours of EPSL in 2020. Similarly, an employer cannot claim a tax credit for the full 80 hours of EPSL voluntarily provided to an employee in 2021 if the same employee took less than 80 hours of EPSL in 2020, as employees likely do not get a new bank of EPSL at the start of the new year. The available tax credit for paid EFMLA in 2021 is more complicated, as the DOL has pointed out that the amount of EMFLA available to an employee “depends on how much leave [they] have already taken during the 12-month period that [the] employer uses for FMLA leave.” Thus, the appropriate tax credit for paid EFMLA voluntarily provided in 2021 will likely depend on how the employer calculates the 12-month period under its FMLA policies, and how much FMLA/EFMLA an employee has taken during the 12-month period. Employers who chose to voluntarily provide FFCRA-qualifying leave should therefore be on the lookout for guidance from the Department of Labor regarding the effect that previously provided EPSL or EFMLA/FMLA will have on the calculation of the tax credit in 2021.

As always, the attorneys in Miles & Stockbridge’s labor and employment practice are available to advise employers on issues concerning employee leave and compliance with employment laws related to the COVID-19 pandemic.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.