In March of 2020 Congress passed the Families First Coronavirus Response Act (FFCRA) with a sunset (ending) date of December 31, 2020. The FFCRA provided temporary paid leave benefits, Emergency Paid Sick Leave (EPSL) and Emergency Family Medical Leave Expansion Act (EFMLEA), due to Covid-19, for employees of U.S. employers with fewer than 500 employees. The leaves benefited both employers and employees. Employers were permitted, under FFCRA, to utilize payroll tax credits to offset the cost of paid leave and employees could continue to earn income despite being unable to work for Covid-19 reasons.
The Consolidated Appropriations Act (CAA), passed on December 27, 2020 did not extend an employer’s obligation to provide FFCRA paid leave benefits beyond the December 31, 2020 sunset date. Instead, the CAA extended the FFCRA employer tax credits through March 31, 2021, thereby allowing employers to voluntarily extend FFCRA paid leave benefits through March 31.
The CAA did not change the total amount of leave available, the qualifying reasons for which an employee may take the leave, or the caps on the amount of pay employees are entitled to receive. The CAA simply permits employers (with under 500 employees) to elect to provide the paid leaves to eligible employees and seek a payroll tax credit for the leave provided. The CAA did not provide employees with a new leave entitlement. If an employee exhausted his/her entitlement under EPSL and EFMLEA in 2020, the employer would not be entitled to a tax credit on any additional Covid-19 related leave time provided to that employee after December 31, 2020. Employers who voluntarily elect to continue to provide FFCRA benefits should comply with all FFCRA documentation requirements and provide the leave consistently to all eligible employees to avoid discrimination claims.
The CAA does not address whether employers can choose to extend EPSL or EFMLEA, or both. Employers should be careful to avoid making any choices that could be viewed as discriminatory.
On December 31, 2020, the U.S. Department of Labor (DOL) updated its FFCRA FAQs to address the voluntary benefits, making clear that employers are not required to provide the EPSL or EFMLEA to employees after December 31, 2020, but if they voluntarily chose to provide the paid benefits they could receive tax credits for such payments until March 31, 2021.
Since employers are no longer required to provide FFCRA leave after December 31, 2020, employers must be mindful that some states and localities have enacted their own Covid-19 leave laws, which may still be in effect.
In New York State, for example, the New York State Quarantine Leave law, which requires employers to provide job-protected sick leave to employees who are unable to work or telework, and who are subject to a mandatory or precautionary order of quarantine or isolation, is still in effect as it did not expire at the end of 2020. As a result, New York employers who decide to stop providing FFCRA leave benefits must continue to satisfy all requirements under the state quarantine leave law.
While Covid-19 vaccinations are beginning to be distributed across the country and the end of the pandemic is still nowhere in sight, the need for employees to take leave for Covid-19 reasons will remain in 2021. The decision to stop providing FFCRA leave, despite the extended tax credit, may result in negative consequences for both employers and employees, so employers should make the decision to stop providing the FFCRA leaves carefully.