The Families First Coronavirus Response Act (“FFRCA”) ended by its terms on Dec. 31, 2020. Although many expected the FFCRA protections to be extended due to the continuing pandemic, only a portion of the FFCRA was extended through the Consolidated Appropriations Act of 2021 (the “Act”), signed into law on Dec. 27, 2020. (It remains to be seen whether the new administration will seek to extend other protections.)
What does the Act do? The Act does not extend the Emergency Paid Sick Leave (“EPSL”) or Expanded Family and Medical Leave (“EFML”) that covered employers were required to provide to eligible employees between April 1, 2020, and Dec. 31, 2020. It does, however, extend available employer payroll tax credits for EPSL and EFML until March 31, 2021. Thus, employers may voluntarily continue to provide EPSL and/or EFML on the same terms as previously, and continue to receive the payroll tax credit, until March 31. The Act appears to allow the decisions to continue EPSL and EFML to be made independently; in other words, an employer may elect to continue EPSL but decline to extend EFML.
How can employers qualify for the payroll tax credit? Notably, the payroll tax credit will apply only to employers previously covered by the FFCRA and employees eligible for leave under the terms of the FFCRA. Employers who elect to extend FFCRA leaves must continue to comply with EPSL and EFMLA requirements. Thus, existing documentation requirements remain in effect. (See our prior Client Alert on this topic here.) Moreover, the leave in total cannot exceed the allotment under the FFCRA (i.e., up to two weeks of EPSL and up to 10 weeks of EFML in total during 2020 and Q1 2021). (Essentially, this allows employers to permit a “carryover” by employees of unused 2020 FFCRA time into the first quarter of 2021.)
The Department of Labor (“DOL”) has published limited updated guidance on this partial extension (see Question 104 in the FAQs, added Dec. 31, 2020, available here.) Note that there are still unanswered questions regarding leave calculations; hopefully, these issues will be addressed in further guidance from the DOL. (For instance, an employee’s leave entitlement for EFML and FMLA leave is limited to 12 weeks in total; it is unclear how the Act impacts that if the employer uses a calendar year for FMLA entitlement calculations and an employee became eligible for a new 12 weeks of FMLA leave on Jan. 1.)
What should employers do? Covered employers should determine whether they will continue to make available to employees any unused EPSL and/or EFML (as of Dec. 31, 2020) until March 31. Decisions should not be made on a case-by-case basis; rather, the policy should be consistently applied.
An employer can elect to make one type of leave, such as EPSL, available, but not the other. However, given the continuing payroll tax credit, it can provide employees with a virtually no-cost benefit by continuing both. The employer must, however, ensure that employee eligibility requirements are being met and leaves are properly documented in order to maximize the tax benefit. Regardless of what the employer chooses to do, the decision should be clearly and promptly communicated to all employees.
Consider the interplay between various leave laws: Whether employers elect to continue offering EPSL or EFML, they should keep in mind the interplay with paid COVID-19-related leave under state and local law, as well as paid and unpaid leaves available under the Family and Medical Leave Act (“FMLA”), other applicable laws and company policies. Where state and local laws provide paid leave for reasons that overlap with the FFCRA, it makes sense for employers to continue to offer EPSL and EFML in order to obtain the payroll tax credit that is not available when leave is provided only under state or local law. Employers should be sure to designate the leave as EPSL/EFML in such circumstances, and properly document it.
Moreover, some leaves are permitted to run concurrently, while others are not. Employers should review applicable rules and expressly designate concurrently running leave periods where permitted. Also, remember that even if an employee is no longer eligible for EPSL/EFML, the FMLA and/or other leave laws may apply.
These ever-changing laws create a difficult landscape to navigate. Keeping apprised in a timely manner of the legal requirements, employer options and legal and financial implications is critical. Our experienced legal counsel can assist in determining how best to proceed and in crafting comprehensive policies to effectuate employer decisions.