by Marti Cardi, Esq. - Vice President, Product Compliance
December 23, 2020
As of this writing, Congress has passed a new COVID-19 relief bill, the Consolidated Appropriations Act, 2021, but President Trump responded with a hissy fit and the threat of a veto. However, the paltry tax credit extension discussed in this post has not been brought up for criticism and so is likely to remain as is despite any other revisions the bill may undergo. If anything changes, though, you can bet we’ll write about it here.
The bill has surprised many of us as it contains no extension or expansion of the emergency paid sick leave or the expanded paid FMLA for school closures provided in the Families First Coronavirus Response Act. Those mandated paid leaves expire on December 31, 2020, regardless of whether an employee has used all of his/her entitlement. If you need a refresher on the paid leave provisions of FFCRA you can check out our prior blog post here.
Tax credit extended. On the other hand, the tax credit provided for wages paid by private employers as required by FFCRA have been extended by 3 months, for FFCRA-like wages paid through March 31, 2021. What does this mean, you ask? Great question. The language of the CAA is poorly constructed. But here is what appears to be the best interpretation:
- There is no requirement for employers to provide further emergency paid sick leave or expanded FMLA leave for school closures after December 31, 2020.
- An employer may choose to do so voluntarily, but further school closure leave will not count against an employee’s basic FMLA 12-week entitlement.
- If such leave is paid in accordance with the FFCRA requirements applicable up to December 31, 2020, the employer can still claim a tax credit for wages paid through March 31, 2021.
- However, the employer cannot claim a total tax credit in 2020 and 2021 combined for more wages per individual than the amount of paid leave required by FFCRA in 2020 – that is, 80 hours or part time equivalent of paid sick leave and 10 out of the 12 weeks of expanded FMLA, at the rates of pay specified in FFCRA.
What do employers need to do now?
- Decide right away whether you are going to allow more FFCRA-like paid leave on a voluntary basis. If you do, apply that decision consistently across the board – either all employees with a qualifying reason can still take FFCRA-like paid leave through March 31 or none can. This includes both continuation of existing leaves and new leaves for a qualifying reason in the first 3 months of 2021.Of course, you can always allow such leave for as long and in such amounts as you choose through a company policy leave program.
Be aware that if you do not continue FFCRA-like leaves into 2021, some employees may already be on continuous or intermittent leaves that would otherwise extend into 2021 and these will end on December 31, 2020.
- If you decide you are going to allow more FFCRA-like leave and care about the tax credit, be sure to get the documentation the IRS will require to support the credits. We previously summarized the IRS guidance for claiming the tax credit here.
- Regardless of your decision on continued FFCRA-like leaves in 2021, remember that there are still many state and municipal laws, governors’ proclamations, and the like that provide at least temporary COVID-related leaves and job protections. And don’t forget the Americans with Disabilities Act as it may apply in this COVID world.
If Matrix is managing your FFCRA expanded FMLA leave for school closures, get in touch with your account manager right away to let us know your decision regarding continuation of these leaves into 2021. We cannot charge any such leave against an employee’s FMLA entitlement after December 31, 2020, so all such pending leaves will be closed as of that date. But we do have options for you, including switching the time requested to a personal leave of absence or instituting a company policy leave for school closures. Congress has left us with very little time to deal with this situation, but we will do our best to stay up to date with our clients’ directions.
Matrix can help. At Matrix we have developed a variety of pandemic-related leaves for employers that don’t have existing policies to cover all the COVID-related situations, such as leave due to quarantine or school closures. If you are interested in learning more about these options, contact your Matrix or Reliance Standard account manager, or send a message to firstname.lastname@example.org.