It’s Official, the FFCRA Expires this Year. Tax Credits Available to Employers That Voluntarily Provide Paid Leave for COVID-19 Absences

Dickinson Wright
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Dickinson Wright

There were rumors that with the new stimulus deal that Congress would extend FFCRA leave, but that turned out to be fake news. Upon reviewing House Speaker Pelosi’s press release discussing the stimulus deal it became clear that no, the FFCRA would not be extended to provide employees guaranteed paid leave benefits for COVID-19 qualifying absences but rather that there would be tax credits available to employers that voluntarily offered paid sick leave benefits to employees based on the FFCRA’s original framework. Specifically, the press release provided:

The agreement provides a tax credit to support employers offering paid sick leave, based on the Families First framework.

While you can read the full 5,593-page stimulus package here, what this appears to mean is that mandated FFCRA paid leave expires December 31, 2020. Come January 1, 2021, covered employers, i.e., those employers with under 500 employees, may continue to provide emergency paid sick leave or emergency paid FMLA Leave under the FFCRA and take the tax credit associated with those payments for leave taken through March 31, 2021.

It does not appear that this grants employers the ability to take the tax credit for paid leave that goes beyond what an employee would be entitled to under the original FFCRA. Rather, it merely allows employers to continue allowing employees to exhaust any FFCRA leave they would have been entitled to through March 31, 2021. In other words, this does not give employees additional paid leave. It just allows them to use FFCRA until March 31, 2021 instead of December 31, 2020.

It also does not require covered employers to grant employees additional paid leave, meaning covered employers are free to extinguish all paid leave entitlements under the FFCRA at the end of this year.

One thing that is not yet clear is whether the emergency paid leave under the FMLA extension resets to allow employees an additional 12 weeks paid leave to care for a child if the child’s school is closed due to COVID-19 related conditions in the event the employer’s FMLA policy resets every calendar year. Given the tone of Speaker Pelosi’s press release, it would seem that the new leave is not available and that only traditional, unpaid FMLA leave would reset. However allowing employees with remaining emergency FMLA leave to use up any remaining emergency FMLA time through March 31, 2021, instead of December 31, 2020, would have the effect of providing employees and employers who agree to allow it with an extension to take emergency FMLA leave. Hopefully the Department of Labor and/or the IRS will provide some guidance in the next couple of weeks on this issue to clarify this and other issues for employers.

Note that a number of states (specifically, Colorado, New Jersey, Oregon, and Washington D.C.) and local governments (specifically, California cities Emeryville, Long Beach, Los Angeles, Oakland, Sacramento, San Diego, San Francisco, San Jose, San Mateo, and Santa Rosa) passed their own COVID-19 leave laws in response to the pandemic so employers will need to review those laws, and whether they will be extended or not, in order to fully understand their rights and obligations to employees.

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