Under the new stimulus bill, signed into law Monday December 28, 2020, the Consolidated Appropriations Act (CAA) of 2021, employers will have an option to extend the Families First Coronavirus Response Act’s (FFCRA) paid sick leave and emergency FMLA. 

The FFCRA went into effect on April 1, 2020 expired on December 31, 2020, but the CAA extends the option for employers to elect to continue offering the leave to staff.  Employers can continue to offer paid leave through March 31, 2021 and receive the tax credits on form 941.  As a refresher, here is a link to our original post on the FFCRA: https://www.ktllp.cpa/families-first-coronavirus-response-act/.

There are a few items employers need to be aware of when considering extending the FFCRA leave:

  1. The relief package does not change the qualifying reasons for which employees may take leave and the caps on the amount of pay employees are entitled to receive.
  • The two weeks of paid sick leave and the ten weeks of emergency FMLA do not reset on January 1, 2021.  If an employee has already used any or all their leave in 2020, the employee is not entitled to it in 2021 and the employer cannot get the tax credit on any leave taken by the employee.  This also applies if the employee used their leave at another employer, they don’t get additional leave when they join your organization.
  • Employers should insist on documentation from the employee supporting the need for leave.  There is a chance of organizations being audited by the IRS for the leave used in the first quarter of 2021.
  • The tax credits/refunds are available for leaves taken through March 31; you can claim tax credits for wages paid in April for work performed in March.
  • Make sure to follow state laws regarding leave.  For example the states of New York, Colorado, and California have COVID-19 leave laws.

At the time of the writing of this article the above information is all that has been provided.  We will continue to monitor any guidance provided by the Department of Labor and post additional content as needed.  If you have specific questions, please reach out to your KTLLP advisors or to me directly.