Temporary FFCRA Leave Requirements End in 2020 but Tax Credit Extended Through March 2021

Davis Wright Tremaine LLP
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Davis Wright Tremaine LLP

[co-author: Crystal Miller-O'Brien]

The Families First Coronavirus Response Act (FFCRA), passed on March 18, 2020, temporarily mandated paid sick time and paid family leave for COVID-19-related issues, including for school and place of care closures, for certain employees and employers through December 31, 2020.

On December 21, 2020, Congress decided not to extend FFCRA paid time off obligations beyond 2020, and the latest COVID-19 stimulus bill (Consolidated Appropriations Act of 2021) became effective on December 27, 2020. Even though FFCRA paid leave benefits are no longer mandatory, employers can voluntarily continue providing paid leave benefits with the option of claiming the payroll tax credit, which has been extended through March 31, 2021. (See our prior advisories on U.S. Department of Labor guidance on the FFCRA here.)

Updates to the FFCRA

  • Paid Sick Time: While employers are no longer required to provide FFCRA paid sick time to employees after December 31, 2020, employers who choose to provide FFCRA paid sick time benefits to employees continue to be eligible for a tax credit for the paid sick time through March 31, 2021. Employees who have exhausted available FFCRA paid sick time entitlements will not be entitled to additional paid sick time.

However, if employers opt to continue to provide FFCRA paid sick time, employees can use available sick time. Employers will not receive tax credits for benefits provided in excess of statutory limits.

  • Paid Family Leave: While employers are no longer required to provide FFCRA paid family leave to employees after December 31, 2020, employers who choose to provide the FFCRA paid family leave benefits to employees continue to be eligible for a tax credit for the paid sick time through March 31, 2021. Employees who have exhausted available FFCRA paid family leave entitlements will not be entitled to additional paid family leave.

However, if employers opt to continue to provide FFCRA paid family leave time, employees can use available family leave. Employers will not receive tax credits for benefits provided in excess of statutory limits.

  • No Retaliation: In order to remain eligible for the tax credit for providing employees with FFCRA paid sick time and family leave, employers also must not discharge, discipline, or in any way discriminate against an employee who seeks to take leave as provided for in the FFCRA. In addition, even if employers choose not extend the FFCRA benefits, retaliation against employees who used FFCRA benefit remains prohibited.

Employer Considerations

  • Employers should consider whether to extend FFCRA paid sick time and family leave benefits to employees through March 31, 2021.
  • Employers should also keep in mind there may be other state and local laws that provide similar benefits to employees and that some of these laws may also be changing.
  • If employers continue to provide FFCRA benefits to employees, employers should obtain the requisite documentation for the FFCRA benefits to receive the tax credit. Please see our prior blog post here on FFCRA documentation.
  • If employers are providing extended FFCRA benefits, they should continue to document leave use. Employers will not receive tax credits for benefits provided in excess of statutory limits.
  • Employers should be mindful that the anti-retaliation provisions of the FFCRA are still applicable to past use of FFCRA benefits even if employers do not extend benefits until March 31, 2021. This means that employers cannot discharge, discipline or in any way discriminate against an employee who seeks to take leave or took leave as provided for in the FFCRA.
  • Employers may also want to review their COVID-19 benefits and policies to ensure they are up to date.

[View source.]

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