FFCRA paid leave requirements set to expire – but employer payroll tax credit extended

As of January 1, 2021, certain US employees will no longer be able to take advantage of expanded paid leave benefits put in place by the Family First Coronavirus Response Act (FFCRA), a federal law enacted in response to the coronavirus disease 2019 (COVID-19) global pandemic and set to expire December 31, 2020.  However, covered employers may elect to voluntarily permit employees to use any unused FFCRA leave through March 31, 2021 and claim a corresponding payroll tax credit to their advantage.

Signed into law on March 18, 2020, the FFCRA created two new emergency paid leave provisions requiring covered employers to offer two forms of COVID-19 leave to their employees: the Emergency Paid Sick Leave Act (EPSLA) and the Emergency Family and Medical Leave Expansion Act (EFMLEA).  As noted in our prior Employment Alert, these two provisions created new paid leave entitlements for employees impacted by COVID-19 who work for “covered employers” – private employers with fewer than 500 employees and certain public employers.  Under the FFCRA, covered employers are required to provide employees up to 80 hours of emergency paid sick leave under the EPSLA provisions, and up to 12 weeks of partially paid emergency Family and Medical Leave Act (FMLA) leave under the EFMLEA provisions. 

Under the text of the FFCRA, these expanded leave provisions expire on December 31, 2020.  While Congress has approved an additional round of COVID-19 relief offering additional benefits to individuals and businesses alike, there has been no agreement to extend the FFCRA’s expanded leave provisions.  Accordingly, as of January 1, 2021, the FFCRA will no longer require covered employers to offer either form of emergency leave. 

While covered employers will not be required to offer additional paid leave benefits under FFCRA after December 31, 2020, they may elect to voluntarily provide FFCRA leave and claim a corresponding payroll tax credit for any leave taken through March 31, 2021.  If an employee has exhausted all their FFCRA sick leave as of December 31, 2020, they would not be eligible to receive any additional FFCRA sick leave in 2021.  However, if an employee has not exhausted all their FFCRA sick leave as of January 1, 2021, a covered employer may elect to voluntarily extend the employee’s deadline to use any remaining FFCRA sick leave through March 31, 2021.  In exchange, the employer could seek a payroll tax credit for the employee’s use of the original allotment of FFCRA leave.    

FFCRA sick leave or expanded FMLA leave taken before December 31, 2020 will still count against the total amount of any tax credits covered employers may claim for leave taken through March 31, 2021.  Employees who already have exhausted their 80 hours of emergency paid sick leave and/or 12 weeks of emergency family leave will not be afforded a new allotment.

Prudent employers will stay mindful of how the FFCRA’s impending expiration interacts with their existing FMLA policies.  Generally, the FMLA provides certain employees with up to 12 weeks of unpaid, job-protected leave per every 12-month period for certain qualifying conditions.  If your policy dictates that each employee’s 12-month FMLA period resets on January 1, 2021, an employee may be entitled to an additional 12 weeks of FMLA leave under the FFCRA – with the final 10 weeks paid – beginning on January 1, 2021, to use through March 31, 2021. This topic is subject to additional guidance that may be issued by the US Department of Labor and the Internal Revenue Service.

Notwithstanding the FFCRA’s impending expiration, employers must continue to comply with the Americans with Disabilities Act, the FMLA and any other applicable federal, state and local laws, including any laws that subject employers to additional employee leave requirements.

If you have any questions regarding the FFCRA and its requirements, please contact the authors, any member of the DLA Piper Employment group or your DLA Piper relationship attorney.

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