This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown

The $2.3 trillion COVID-19 stimulus is now law. There are a variety of provisions including a modification to the mandated employer leave for exposure and quarantine.

Employers are asking: is the Families First Coronavirus Relief Act (FFRCA) extended? No, the mandate for Emergency Paid Sick Leave (EPSL) and Emergency Family and Medical Leave Extension (EMFLA) will still expire on December 31, 2020, but employers may choose to voluntarily extend it.

Voluntary Leave Programs

Starting in 2021, these are voluntary programs and the employer’s tax benefit is extended to March 31, 2021. This means if an employer wishes to continue these leave programs, they may do so through March 31, 2021, and receive the tax credit as was available during 2020. 

From an employment perspective, this is an operational choice considering the size of the workforce, the nature of the work performed as well as other business factors. Employers may also consider employee morale and retention when deciding to discontinue or extend the leave programs.

Regardless of the choice, the decision should be applied equally or in a non-discriminatory manner across all employees. It is important to note employers cannot simply pick and choose which part of these programs they desire.  If employers intend to apply for that tax benefit for leave granted after December 31, the employer must offer both forms of leave in compliance with the pre-existing rules.

Tax Perspective

The tax credit for FFCRA is extended and available through March 31, 2021, for employers that voluntarily extend FFCRA leave benefits, but it is not an expansion for additional credits to be taken under the law. 

If an employee took the maximum FFCRA leave during 2020 and the employer claimed the maximum benefit allowed under the tax credit, the employer cannot claim additional tax credits on wages paid to that same employee for additional sick leave in 2021. However, the employer can claim credits for employees to have unused FFCRA leave during 2020 and use it in 2021 before the extended deadline.

The Big Picture

Congress effectively expanded COVID-19 related-leave until March 31 but removed the mandate. Because many employers put a written policy in place that states the benefit expires on December 31, voluntary extensions should be communicated in writing, as well.