Congressional Proposal Extends Tax Credits to Companies Providing Paid Leave, but Allows Requirement to Expire

As the President and Congress continue to debate the status of a new stimulus bill in response to the COVID-19 pandemic, one question on a lot of employers’ minds is what will happen to the status of the Families First Coronavirus Response Act (“FFCRA”).  As discussed previously on this blog, the FFCRA was passed in the early days of the pandemic as employers and employees faced uncertainty over how to respond to transmission of the virus, quarantine orders, and school closures.  The FFCRA created two new types of paid benefits—a paid sick leave benefit and a paid emergency Family Medical Leave Act (“FMLA”) benefit—guaranteed to employees of covered businesses.  Employers were reimbursed by the federal government for benefits paid to employees through tax credits.

Critically, the new benefits provided under the FFCRA were temporary, and are set to expire on December 31, 2020.  The question of whether to extend these benefits has been hotly debated in Washington, and we now appear to know their fate.  Earlier this week, Congress passed a new stimulus bill which extended the tax credits afforded under the FFCRA until March 31, 2021, but did not extend the leave requirements.  What this means is that employers will no longer be obligated to provide paid leave benefits as required under the FFCRA starting January 1, 2021.  However, employers may voluntarily provide these benefits, and if so may receive tax credits for all leave taken up to and including March 31, 2021. 

Notably, President Trump has expressed some opposition to the stimulus bill.  He has not, however, threatened to veto the legislation, and White House officials had previously stated he would sign the bill into law.  The President’s objections to the legislation do not appear to be related to these FFCRA provisions. 

So as employers look ahead to the new year, they can expect that the leave requirements under the FFCRA will expire.  However, if a stimulus deal is ultimately reached, it is likely to contain an extension of tax credits available to businesses who voluntarily provide paid benefits under the FFCRA’s framework. 

For assistance with questions regarding the FFCRA or any other employment-related issues, please contact any member of our Labor & Employment Group

KMK Law articles and blog posts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. The laws/regulations and interpretations thereof are evolving and subject to change. Although we will attempt to update articles/blog posts for material changes, the article/post may not reflect changes in laws/regulations or guidance issued after the date the article/post was published. Please consult with counsel of your choice regarding any specific questions you may have.

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