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e-Alert: FFCRA Paid Leave Entitlements Expire – Tax Credit Extended

By January 11, 2021 January 15th, 2021 No Comments

Background

The Families First Coronavirus Response Act (FFCRA) required employers with fewer than 500 employees to provide sick and family leave benefits for certain COVID-19-related reasons. These leave requirements expired, as expected, on December 31, 2020.

Summary

On December 27, 2020, President Trump signed an appropriations bill into law that does not extend the paid sick leave and expanded family and medical leave mandates created by the FFCRA. Therefore, employers will no longer be required to provide paid leave under the FFCRA after December 31, 2020.

However, under the law, employers that voluntarily provide paid FFCRA leave will continue to receive full reimbursement from the federal government through tax credits and/or refunds through March 31, 2021.

Taking advantage of tax credit extension:

Employers wishing to take advantage of this tax credit extension should be aware that the relief package does not change:

  • Qualifying reasons for which employees may take FFCRA leave
  • FFCRA documentation requirements for reimbursement
  • Caps on the amount of pay employees are entitled to receive
  • The amount of leave that employees are entitled to take under the FFCRA
    • Full-time employees are entitled to a one-time allotment of 80 hours of paid sick leave and 12 weeks of expanded family medical leave.
    • If an employee has already used 80 hours of Emergency Paid Sick Leave (EPSL) in 2020, they will not be able to take any additional hours in 2021 and the employer will not be able to claim the tax credit for those hours.
    • If an employee only used 40 hours of EPSL, the employer may voluntarily choose to extend the employee’s deadline to utilize the remaining 40 hours from December 31, 2020, until March 31, 2021, while still applying for the payroll tax credits.

IRS Updates FAQs on FFCRA Tax Credits:

The IRS has added or updated more than 80 answers to questions in its series of FAQs on “COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses.”

Tax credits provide employers with funds to cover costs of the employee leave required by law. Specifically, the tax credits are available for:

  • Qualified sick leave wages
  • Qualified family leave wages
  • Qualified health plan expenses allocable to employee leave wages
  • The employer’s portion of Medicare tax related to the qualified wages

Employers Next Steps

  • You should keep compelling records of any FFCRA leaves in 2021 while remaining consistent with granting employees continued FFCRA leave.
  • Continue to monitor guidance from HRK and government agencies regarding FFCRA and other COVID-19-related legislation.
  • If you are a Full-Service or Virtual HR client and would like our assistance with updating your policy, please email us.

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This content is provided with the understanding that HR Knowledge is not rendering legal advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. The material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable laws in your jurisdiction and consult experienced counsel for legal advice. If you have any questions regarding this content, please contact HR Knowledge at 508.339.1300 or email us.

 

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