Update to the Families First Coronavirus Response Act

The COVID-19 relief package signed on December 21, 2020, includes an update to the Families First Coronavirus Response Act (FFCRA) as it relates to employers’ duty to provide paid sick leave and  expanded family and medical leave for reasons related to COVID-19.

• Under the Families First Coronavirus Response Act (FFCRA), enacted in March, 2020, employers with fewer than 500 employees were required to provide employees with two weeks of fully paid sick leave related to COVID-19. Employers that did not meet the exemption criteria were also required to provide up to 12 weeks of partially paid family and medical leave (FML). Employers were able to claim a tax credit for those leave wages via the quarterly Form 941.
• FFCRA leave is no longer required as of December 31, 2020.
• As of January 1, 2021, covered employers may voluntarily provide paid sick leave or emergency paid FML under FFCRA (as adopted earlier this year) and take the tax credit associated with this leave under the latest COVID relief bill.

The tax credit may only be taken for leave through March 31, 2021.

The tax credit can be taken via the quarterly Form 941.

FFCRA leave is no longer required but, if covered employers voluntarily provide these leave benefits through March 31, 2021, they are eligible to take the tax credit for any leave wages paid. The new Bill did not extend the requirement for certain employers to provide FFCRA leave, but it did extend refundable payroll tax credits and employee eligibility for such paid sick and family leave, enacted in the FFCRA, from December 31, 2020 through March 31, 2021. It also modifies the tax credits so that they apply as if the corresponding employer mandates were extended through the end of March 2021. This provision is effective as if included in FFCRA.

The potential tax advantages, or disadvantages, of extending FFCRA are likely to be worth a discussion. Contact VonLehman’s Human Resources Consulting Group at 800.887.0437 for guidance related to this topic.