COVID-Related Emergency Paid Sick Leave And Extended FMLA Will Be Extended Past December 31, 2020 On A Voluntary, Not Mandatory, Basis

As with most last-minute year end spending bills in the U.S. Congress, the Consolidated Appropriations Act, 2021 (Act) passed last week and was signed into law by the President on December 27. The Act contains, among its 5,593 pages, all sorts of provisions covering all sorts of subjects. However, some of the most interesting provisions, at least in the area of employment law, are those concerning the COVID-related leave provisions of the Families First Coronavirus Recovery Act (FFCRA).

As readers of this newsletter are aware, the FFCRA, approved in early 2020, provided 80 hours of Emergency Paid Sick Leave (EPSL) to employees who qualify under one of the six categories set forth in the statute. Employers qualified for a tax credit based on the payments issued to employees. Similarly, under the FFCRA’s Extended FMLA leave (EFMLA) provisions, employers could also get a tax credit for payments to employees caring for children who were no longer able to attend school or daycare because of shutdowns or unavailability associated with COVID.

The big question related to the 2021 spending bill was whether Congress would extend those leaves into the new year. The answer, as with much of federal legislation, is both “yes” and “no.” By way of explanation, while the COVID-related leaves were extended past the December 31, 2020 expiration date, they would not be mandatory after that date. Employers who wish to extend the EPSL and the EFMLA leave may do so on a voluntary basis through March 31, 2021 and would qualify for the same type of tax credits as when those leaves were mandatory.

However, it does not appear, at least at this point, that the Act would allow employees to “reload,” so that they will be entitled to an additional 80 hours of EPSL and/or 12 weeks of EFMLA leave. It does appear that the Act’s provisions will allow employees to carry over unused COVID-related leave into the first three months of 2021 and will continue to provide a tax credit for employers if such leave is paid.

In summary, if an employer voluntarily allows an employee to take unused FFCRA leave through March 31, 2021, a tax credit will be available for the employer to cover these payments. However, employers should be wary of providing paid leave to employees who have already exhausted these benefits under the EPSL and EFMLA in 2020 because doing so would not appear to allow the employer to take a tax credit for such payments. We will keep readers advised in the event federal agencies issue clarifying regulations and guidance on this topic.

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