Many employers are providing voluntary Families First Coronavirus Response Act (FFCRA) leave, even though organizations aren’t sure if they will qualify for a tax credit for doing so. Employer obligations to provide FFCRA paid sick and family leave expired at the end of last year, but the Consolidated Appropriations Act of 2021 (CAA) extended the payroll tax credits for employers that choose to provide paid FFCRA-like leave.
The CAA “only makes additional leave that would have been covered by FFCRA eligible for tax credits, even though it’s now voluntary rather than mandatory,” said Maura McLaughlin, an attorney with Morgan, Brown & Joy in Boston.
Some employers are applying their current paid-time-off policies to COVID-19-related leave as they wait to see whether Congress will advance additional paid-leave requirements.
The FFCRA had two major provisions: the Emergency Paid Sick Leave (EPSL) Act and the Emergency Family and Medical Leave (EFML) Expansion Act. Under the EPSL Act, private employers with fewer than 500 employees and some public employers had to pay sick leave of up to 80 hours, or roughly 10 days, to employees who need to take leave for certain coronavirus-related reasons.
Under the EFML Expansion Act, employees were eligible for an additional 10 weeks of family leave paid at two-thirds of their regular wages to care for a child whose school or place of care is closed or whose child care provider is unavailable because of COVID-19. The FFCRA did not have requirements for private-sector employers with 500 or more employees.
Employers that choose to let employees use FFCRA-type leave between Jan. 1 and March 31 cannot grant an employee an additional allotment of EPSL and EFML, beyond what the employee was entitled to under the FFCRA, and receive the tax credits for that extra time, McLaughlin noted. Employers will not receive tax credits for EPSL and EFML extended to employees who exhausted their entitlements in 2020.
Put another way, employers are not eligible to be reimbursed for paid leave in excess of:
- Two weeks (up to 80 hours) for EPSL or 10 weeks for EFML.
- The maximum EPSL benefit for any employee, which is capped at $511 per day per employee and $5,110 in the aggregate per employee.
- The maximum EFML paid-leave benefit for any employee, which is capped at $200 per day per employee and $10,000 in the aggregate per employee.
In addition, public-sector employers remain ineligible for the tax credit, just as they were prior to Dec. 31, 2020, McLaughlin said.
“It is important to note that these per-employee limits did not reset for 2021. So, if your employee took some FFCRA leave in 2020 and you received corresponding tax credits, you would only be entitled to the balance of the aggregate credit limits for each such employee,” emphasized Joe Nuzzo, VP counsel, global compliance with ADP in Roseland, N.J., and Stacy Williams, senior counsel, global compliance with ADP in Alpharetta, Ga., in a joint email.
Reinstatement of FFCRA leave is possible
“Many employers want to know if employees are going to be granted additional paid-leave time,” said Dena Sokolow, an attorney with Baker Donelson in Tallahassee, Fla.
She noted that the Biden administration has proposed the “American Rescue Plan,” which would reinstate the EPSL Act and the EFML Expansion Act by:
- Extending the requirements of EPSL and EFML leave until Sept. 31.
- Applying the leave requirements to all employers, including employers with more than 500 employees, and eliminating the small business exemption for employers with fewer than 50 employees.
- Providing over 14 weeks of paid sick and family and medical leave to help parents with additional caregiving responsibilities when a child or loved one’s school or care center is closed, for people who have or are caring for people with COVID-19 symptoms or who are quarantining due to exposure, and for people needing to take time to get the vaccine.
- Providing a maximum paid-leave benefit of $1,400 per week for eligible workers. Employers with fewer than 500 workers could be reimbursed for the costs of this leave.
More Q&As about voluntary FFCRA-like leave
“Employers are asking whether reinstatement to the same or a similar position is required for voluntary FFCRA-like leave, as it would be under the FMLA,” Nuzzo and Williams noted. “The answer is no, it is not required unless the leave is also covered by the FMLA.”
“Another question we’ve heard is whether employers are required to continue to offer FFCRA paid leave,” they added. “The answer again, is no, it is not required.”
If emergency paid leave also would be covered by the FMLA, the employer should count these absences against the employee’s 12 weeks of FMLA leave entitlement, said Jeff Nowak, an attorney with Littler in Chicago.
Employers are asking whether it makes sense to provide the voluntary FFCRA-like leave and whether others are doing so. “Many are concerned about balancing the potential abuse of providing it with the safety and health concern of not providing it,” said Chelsea Mesa, an attorney with Seyfarth in Los Angeles.
“This issue is really industry-specific, with many employers in harder-hit industries willing to provide some form of additional leave, even where not required to do so by local ordinance or any other law, to prevent an outbreak of cases,” she said. “I’ve been asking my employers to look at how FFCRA impacted their workforces during the last eight months of last year and whether they felt, as a whole, it served to protect their employees.”
While employers have asked whether they may extend some but not all of the FFCRA leave voluntarily, David Barron, an attorney with Cozen O’Connor in Houston, doesn’t recommend this approach, saying that it “could open the door for a discrimination claim.”