There continues to be some confusion about the emergency paid sick leave (E-PSL) and emergency FMLA (E-FMLA) provisions contained in the Families First Coronavirus Response Act (FFCRA), which was passed back in April 2020. As previously reported, employers with 500 or fewer employees or not currently required to provide paid leave for COVID-19.
December 2020 Stimulus Bill: Tax Credits Extended but Not Paid Leave
Remember, as of Dec. 31, 2020, employers are not required to provide eligible employees with E-PSL or E-FMLA. As part of the December 2020 stimulus bill, however, employers may choose to voluntarily provide employees with E-PSL and E-FMLA from Jan.1, 2021 to March 31, 2021 and may claim the FFCRA’s payroll tax credits for that period only.
As the DOL explained in a recent FAQ:
FAQ#104. I was eligible for leave under the FFCRA in 2020 but I did not use any leave. Am I still entitled to take paid sick or expanded family and medical leave after December 31, 2020?
Your employer is not required to provide you with FFCRA leave after December 31, 2020, but your employer may voluntarily decide to provide you such leave. The obligation to provide FFCRA leave applies from the law’s effective date of April 1, 2020, through December 31, 2020. Any change to extend the requirement to provide leave under the FFCRA would require an amendment to the statute by Congress. The Consolidated Appropriations Act, 2021, extended employer tax credits for paid sick leave and expanded family and medical leave voluntarily provided to employees until March 31, 2021. However, this Act did not extend an eligible employee’s entitlement to FFCRA leave beyond December 31, 2020.
But, benevolent employers beware: the December 2020 stimulus bill did not appear to increase the cap on the total amount of tax credits an employer can claim per employee. Specifically, the tax credits for providing E-PSL is capped at $511 per employee per day and $5,110 in the aggregate (or $200 and $2,000 depending on use) and E-FMLA is capped at $200 per employee per day and $10,000 in the aggregate.
This means tax credits claimed for leave taken before Dec. 31, 2020 will likely count towards available credits that employers may claim for leave taken through March 31, 2021. Thus, unless we receive contrary guidance from the DOL or IRS, employers should take care to ensure that any voluntarily-provided E-PSL or E-FMLA between January 1 and March 31 does not exceed the aforementioned caps.
Regardless of whether an employer chooses to voluntarily provide paid leave under the terms of the former FFCRA after it expired on Dec. 31, 2020, the employer should still be mindful of any applicable local paid leave regulations in addition to general FMLA and ADA considerations.
Next Stimulus Bill May Extend COVID-19 Paid Leave Requirement through Sept. 30, 2021
Last week, Democrats in the House of Representatives revealed the framework of a proposed $1.9 trillion stimulus plan endorsed by President Biden. Democrats are using a process called “budget reconciliation,” which allows legislation to pass by simple majorities in each chamber (and avoid a filibuster in the Senate).
While the bill will likely pass the House without much resistance, many of the provisions will face fierce opposition in the equally-divided Senate. Remember, in order to become law, both the House and Senate must agree, so even if a provision makes its way through the House, this does not mean that it will become part of the final law. Indeed, several Democrats have voiced opposition to some of the more controversial provisions, such as the $15 minimum wage.
In its current form, the next stimulus bill proposes to extend and expand the E-PSL and E-FMLA requirements contained in the FFCRA. That is, the stimulus bill proposes to reinstate the paid leave requirements through Sept. 30, 2021. But, for employers with 500 or fewer employees, the bill would extend the payroll tax credits for the same time period. While the proposal is still far from becoming law, we will continue to monitoring as it winds its way through Congress.
Remember, as of today, contractors are not required to provide E-FMLA or E-PSL to eligible employees. Employers may voluntarily provide the leave to eligible employees and can claim the tax credits through March 31, 2021, but they should be mindful of the caps outlined above. Finally, take note that the leave requirements may be reinstated by the next stimulus bill, but we still don’t know what provisions will make it into the final legislation.