Updated February 2021: The IRS released updated FAQs to cover how the COVID-19 stimulus bill, extends the availability of the tax credits created by the FFCRA to eligible employers for paid sick and family leave provided through March 31, 2021, as well as other amendments to the credits.
Updated December 2020: President Trump signed the COVID-19 stimulus bill into law on December 27, 2020.
On December 21, 2020, Congress passed a COVID-19 stimulus bill (“bill”), which, among other things, confirms that the mandated Families First Coronavirus Response Act (“FFCRA”) leave will end on December 31, 2020, though covered employers may continue to provide paid leave that would have otherwise been mandated under the FFCRA voluntarily and claim a tax credit to cover the costs of the paid leave provided through March 31, 2021. For an overview of the FFCRA leave requirements, please visit our blog post. This is what we know so far about the status of the FFCRA from the text of the bill:
- Employers with less than 500 employees nationwide do not need to provide FFCRA leave after December 31, 2020;
- Employers may voluntarily provide leave that would have otherwise been required by the FFCRA after January 1, 2021 and claim a tax credit to cover the cost through March 31, 2021. This will only apply to employees that have not already exhausted their FFCRA leave entitlement;
- There is no increase of the total amount of the tax credit available to pay for each individual employee;
- Any FFCRA leave taken before December 31, 2020, will count against the available tax credit that can be claimed through March 31, 2021;
Employer Considerations
While COVID-19 related leave entitlement under the FFCRA will expire at the end of the month, there are many state and local leave laws and ordinances that may remain available for employees during the ongoing pandemic beyond December 31, 2020. Employers will want to ensure they are aware of any additional state and local leave requirements that may apply.
We anticipate the Department of Labor or IRS will provide updated guidance on this provision of the bill and we will update this article as we learn more.
Additional Resources
- COVID-19 Stimulus Bill (December 21, 2020)
- Department of Labor FFCRA FAQ
- COVID-19 Related Tax Credits for Required Paid Leave FAQs
- Determining the Amount of Tax Credit for Qualified Family Leave Wages
- Sequoia Blog: Employer Tax Credits under the FFCRA and the CARES Act
- Sequoia Blog: What Employers Need to Know About FFCRA Recordkeeping & Posting Requirements
- Sequoia Blog: Families First Coronavirus Response Act Takes Effect April 1st
- Sequoia Blog: Expansion of State/Local Sick Leave in Response to COVID-19
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2020 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved
