FFCRA Leave Tax Credits Extended, but Protected Leave Rights Set to Expire in 2020

COVID-19 Update

On Sunday, December 27, 2020, President Trump signed the latest round of COVID-19 legislation, the 5,500-page Consolidated Appropriations Act, 2021 (the Act). The Act, which was passed by Congress on December 21, updates the tax credit provisions of the Families First Coronavirus Response Act (FFCRA), extending their availability to employers until March 31, 2021. Employers may continue to apply for tax credits for employee leaves taken under the FFCRA through that date. Notably, the Act does not extend an employer’s obligation to provide leave, nor does it extend job protections to employees who take leave beyond December 31, 2020. Instead, it permits employers who continue to provide leave voluntarily through March 31, 2021, to continue claiming the available tax credits through that date.

Why it matters: Importantly, because the Act does not extend the obligation to provide any leave, then unless revised or supplemented, employer obligations to provide leave under the FFCRA will sunset on December 31, 2020. Employees who exhausted leave in 2020 will not be entitled to new FFCRA leave in 2021, nor will employers be able to claim a second credit toward an employee who has exhausted his or her available FFCRA leave. The Act authorizes the Department of the Treasury to issue additional regulations to comport with the extended tax credits.

While the Act addresses COVID-19-related leave under federal law, employers should keep in mind that employees may have paid sick and paid leave rights under local and state laws that will continue, even after FFCRA leave obligations expire in 2020.

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