On December 27, 2020, the President signed into law a new COVID-19 stimulus package. Notably, the bill declines to extend the Families First Coronavirus Response Act (“FFCRA” or the “Act”) and, as a result, does not extend an employer’s obligation to provide emergency paid sick leave or emergency paid family leave for specific COVID-19 related reasons beyond December 31, 2020. Employers that nevertheless voluntarily provide paid emergency sick leave and paid emergency family leave will be entitled to a tax credit for qualifying payments made through March 31, 2021. A summary of the main changes in the legislation is set forth below.
A. Paid Sick Leave and Paid Family Leave Requirements Expire December 31, 2020.
Beginning January 1, 2021, employers with fewer than 500 employees will no longer be required to provide paid sick leave or family leave for COVID-19 related reasons under the FFCRA.
B. Payroll Tax Credit Extended Until March 31, 2021.
Beginning January 1, 2021, employers may elect to voluntarily provide emergency paid sick leave and emergency paid family leave to qualifying employees and claim the FFCRA’s payroll tax credit for payments made through March 31, 2021. Gunster’s prior alert providing more details on the payroll tax credit can be found here: Families First Coronavirus Response Act – Tax Alert.
C. Limitations to Claiming Tax Credit.
There are some limitations to the tax credit available:
- Employers can only claim the tax credit if the leave they provide would have been required under the FFCRA.
- To remain eligible for the tax credit, employers must not discipline, discharge, or discriminate against an employee who seeks to take, or who takes, the emergency paid sick leave or emergency paid family leave.
- Employers cannot receive tax credits for any amount of leave provided in excess of the FFCRA’s statutory limits or for employees who would not qualify under the FFCRA.
What Employers Should Keep in Mind: Employers who elect to voluntarily continue the emergency paid sick leave and emergency family and medical leave should continue to evaluate whether an employee is eligible for leave and maintain records to support any tax credit sought. Employers should review past guidance on the FFCRA in determining how to comply with the new legislation and should consider any updated guidance that may be published by the Department of Labor.
If you need assistance with your leave policies, please direct any questions to Gunster’s Labor and Employment practice group.
