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Not (Completely) Dead (Just) Yet – The status of the FFCRA following passage of the COVID-related Tax Relief Act of 2020

When it passed the Families First Coronavirus Response Act (FFCRA) in March 2020, Congress gave the law a clear expiration date – December 31, 2020 – leaving no question regarding whether any of the rights provided or obligations imposed by the law would continue into 2021. They would not. However, as a result of the COVID-related Tax Relief Act of 2020 (which President Trump signed into law on December 27, 2020), certain aspects of the FFCRA will now continue through the first quarter of 2021.      

Critically, the Tax Relief Act did not extend an employer’s requirement to provide FFCRA leave. Consequently, as of January 1, 2021, the FFCRA no longer requires subject employers (employers with fewer than 500 employees) to provide leave for any of the circumstances outlined under the law. At the same time, employees no longer have a basis under the FFCRA to demand leave for those circumstances.     

But, through amendments made by the Tax Relief Act, the FFCRA now provides subject employers with the option of continuing to allow employees to take FFCRA leave, and continuing to receive federal tax credits covering wage payments made for that leave, through March 31, 2021. In other words, although not required to do so, subject employers may continue to provide FFCRA leave to eligible employees through the end of March. If they choose this path, employers can seek the same federal tax credits they had been receiving for FFCRA leave provided in 2020 so that, if done properly, the financial impact of the provision of such leave in early 2021 would be significantly reduced, if not eliminated. 

Subject employers that would like to continue providing FFCRA leave to employees and receiving federal tax credits in connection thereto will want to do at least each of the following:

  1. Ensure that every employee to whom you want to provide leave qualifies for leave under the original eligibility requirements provided by the FFCRA. These requirements are set forth in detail here.
  2. Confirm that every employee to whom you want to provide leave has leave remaining under the original terms of the FFCRA. The Tax Relief Act does not contain any language providing that employers can obtain tax credits by providing additional leave to employees who have already exhausted their FFCRA leave allotment. Consequently, in the absence of federal guidance to the contrary, any employer that provides such leave would be risking an audit and/or disapproval of its tax credit request(s).
  3. Guarantee that every employee to whom you want to provide leave is paid no more for that leave than the amounts set forth in the FFCRA (i.e., no more than $511/$200 per day, depending on the circumstances of the leave).

Because the provision of additional FFCRA leave is voluntary, employers presumably have more freedom to decide the specific circumstances under which they will grant employees the ability to take such leave. This freedom comes with both positives and negatives. On the positive side, an employer could conceivably continue allowing most of its employees to continue taking FFCRA leave where appropriate, but prohibit employees working in certain key positions from doing so. On the negative side, an employer that selectively grants additional leave to certain employees but not to others may run the risk that a disadvantaged employee would respond with allegations of discrimination. Consequently, any employer that wishes to permit or deny additional FFCRA leave on a selective basis should take steps to reasonably ensure that such selectivity is not likely to result in additional risks to the business. 

In any event, to reduce confusion and potential legal risks, any employer that decides to continue to offer FFCRA leave on a voluntary basis should consider putting together a written policy/policy amendment addressing the circumstances under which the employer will/will not consider requests for leave.      

Please contact John Gardner or any other member of DeWitt’s Employment Relations practice group if you have any questions or need any guidance relating to an employer’s obligations under the FFCRA.

           

About the Author

John Gardner is an attorney practicing out of our Madison office. He is the Chair of the Labor & Employment Relations practice group. He is also a member of the Litigation practice group. Contact John by email or by phone at (608) 252-9322.

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