New Law Extends Paid Leave Tax Credits, Other Relief
January 4, 2021
The Consolidated Appropriations Act of 2021 (the Act) was signed into law on December 27, 2020. Among its many extenders, the Act provides employers the option to continue paid leave through March 31, 2021 and receive a tax credit for amounts paid.
In the alternative, employers can discontinue required paid leave ending December 31, 2020 and forego the associated tax credit. Pending further guidance, it appears any continued paid leave would need satisfy the original terms of the FFCRA (e.g. qualified reasons for leave).
- The Act does not extend the mandates of the Emergency Family and Medical Leave Expansion Act (EFMLEA) or the Emergency Paid Sick Leave Act (EPSLA) enacted under the Families First Coronavirus Response Act (FFCRA);
- The FFCRA provided up to 80 hours of paid sick and family leave under the EPSLA along with up to 10 weeks of partially paid family and medical leave under the EFMLEA to eligible employees who were unable to work because of certain COVID-19-related reasons;
- The Act allows tax credits to employers for “FFCRA like” paid leave benefits paid to employees through March 31, 2020; and
- The Act does not alter state law imposing a separate requirement that paid leave be provided.
Continued Mandatory Leave under State Law
Some employers have questioned whether the extended tax credit will be available for amounts paid in satisfaction of continuing mandatory paid leave requirements under state law. While further guidance is forthcoming, the language of the Act does not appear to support such a reading. Section 286 of the Act amends the meaning of “Qualified Sick Leave Wages” as wages paid through March 31, 2021: “which are required to be paid by reason of the Emergency Paid Sick Leave Act, or which would be so required to be paid if such Act were applied…” There is similar treatment for the EFMLEA component.
The Act expands upon the previously enacted CARES Act and provides for continued federal assistance to unemployed workers with supplemental weekly benefit payments of $300 and an extension of the maximum benefit period.
The Act continues the Paycheck Protection Program (PPP). Businesses with 300 or fewer employees (previously 500) who can document at least a 25% decrease in gross revenues from previous 2019/ 2020 quarters can receive additional PPP monies, up to $2 million. As before, PPP monies do not have to be repaid if primarily used for payroll purposes.
The Act provides direct payments to Individuals of $600 making up to $75,000 a year/ families up to $150,000 per year.
Further Guidance Expected
As with previous legislation, clarification is needed and expected. We will provide additional information as it becomes available. Employers with questions about the Act are encouraged to contact a Kerr Russell attorney.
About the author:
Liam K. Healy focuses his practice on helping clients maintain compliance with the myriad of state and federal tax laws and regulations that govern individuals and businesses. A particular focus of Liam’s practice is in the area of employee benefits and ERISA. Liam specializes in designing pension and executive compensation plans to benefit business owners and executives. His practice includes drafting and reviewing deferred compensation agreements, severance agreements and non-compete agreements, representing employers in multi-employer plan collection and withdrawal liability matters.
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