On December 21, 2020, Congress passed a $900 billion coronavirus relief bill (“relief bill”) as part of a broader spending bill for fiscal year 2021. President Trump signed the relief bill on December 27, 2020. In anticipation of any coronavirus relief, employers and HR professionals have been asking whether Congress would extend mandatory paid leave under the Families First Coronavirus Response Act (“FFCRA”), which is set to end on December 31, 2020. Congress did not. Instead, under the relief bill, employers who voluntarily pay FFCRA leave through March 31, 2021, are eligible for tax credits associated with such leave. Other highlights of the relief bill include extensions of certain unemployment compensation benefits and the employee retention tax credit, which had previously expired or were set to expire by December 31, 2020.
As a reminder, the FFCRA requires employers with fewer than 500 employees to provide two forms of paid leave to their employees: (1) 80 hours of emergency paid sick leave (“EPSL”) to a full-time employee who is unable to work because of a qualifying reason related to COVID-19; and (2) 12 weeks of emergency family and medical leave (“EFML”) (of which at least the final 10 weeks are paid) to an employee who is unable to work because of child care needs related to COVID-19. To offset the cost of such required paid leave, the FFCRA provides a tax credit for each form of leave. The mandatory FFCRA leave and the associated tax credits expire on December 31, 2020.
The relief bill does not extend the mandatory FFCRA leave. Therefore, employers are not required to provide FFCRA leave (either EPSL or EFML) after December 31, 2020. However, the relief bill extends the tax credits to March 31, 2021. As such, if an employer voluntarily provides either EPSL or EFML through March 31, 2021, the employer will be eligible for the tax credit associated with such leave.
We read the relief bill as permitting an employer to provide one form of leave (e.g., EPSL), but not the other (EFML), and still be eligible for the tax credit for such leave. The tax credits for EPSL and EFML are governed by separate provisions, and neither is conditioned on whether the employer offers the other type of leave. We also do not read the relief bill as providing a reset or additional leave to employees who have already exhausted their 80 hours of EPSL or 12 weeks of EFML. Therefore, an employer can only take the tax credit for leave taken by those employees who have not already exhausted their EPSL and EFML leave allotments in 2020.
Now that the relief bill has become law, the DOL and/or the IRS may release updated guidance on the now-voluntary FFCRA leave.
Finally, although employers are no longer required to provide FFCRA leave after December 31, 2020, they may have PTO or other paid leave policies that are applicable. In addition, employers must be aware of any state or local laws that mandate paid leave.
The relief bill extended several pandemic-related unemployment insurance benefits that were created by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). First, it extends the Pandemic Unemployment Assistance (“PUA”) program, which provides unemployment assistance to individuals who are not eligible for regular unemployment compensation benefits, to March 14, 2021 (with a phaseout for certain individuals through April 5, 2021). The relief bill also increases the duration of the PUA benefit from 39 weeks to 50 weeks.
Second, the relief bill provides a $300 federal pandemic unemployment compensation enhancement (the previous $600 enhancement expired on July 31, 2020). Thus, individuals will receive their regular unemployment compensation benefit under state law, plus $300. This enhancement ends on March 14, 2021.
Finally, the relief bill extends the Pandemic Emergency Unemployment Compensation (“PEUC”) benefit, which provides emergency unemployment compensation to individuals who have exhausted their regular benefits under state or federal law, to March 14, 2021 (with a phaseout for certain individuals through April 5, 2021). The relief bill also increases the duration of the PEUC benefit from 13 weeks to 24 weeks.
Employee Retention Credit
The CARES Act created an employee retention tax credit for an employer whose business was closed due to a government order or suffered a significant decline in gross receipts, but who continued paying wages to its employees. The credit was set to expire on December 31, 2020. Among other things, the relief bill extends the credit through June 30, 2021; increases the amount of the credit; and decreases the reduction in gross receipts necessary to qualify for the credit.
If you have any questions about the latest coronavirus relief bill, including its effect on FFCRA leave, please contact an attorney in the McNees Labor and Employment Group.