As an employer or an employee, here’s what you need to know about what is still available in 2021.
Background on Paid COVID-19 Leave and Employer Credits
What is it? From March 2020 to December 31, 2020, employees could take up to 80 hours of paid leave due to illness from COVID-19 or partially paid time off for childcare issues resulting from the pandemic. In return, employers would receive a tax credit. As of December 31, 2020, mandatory paid FFCRA leave ended and instead the availability for applicable paid leave as a result of COVID-19 would be left up to the employer’s discretion.
FFCRA Sick Leave Tax Credit Extension
What is new? With the new December 2020 legislation, if an employer voluntarily offers paid sick leave up to 80 hours or 10 days to an employee due to COVID-19 reasons, they can still claim a tax credit through September 30, 2021. The tax credit has also been expanded to state and local governments who provide this benefit.
The most recent legislation passed in March expanded the employer tax credits. The initial credit amount was capped at $10,000. However, following new legislation, the limit has been increased to $12,000 after March 31, 2021. The American Rescue Plan Act also extends tax credits up to 10 weeks at 2/3 salary for employees up to $200.00 per day to care for a child whose school or daycare is closed due to COVID-19. In order to obtain the credit, employers must follow all other FFCRA conditions, including job protection.
Sick Leave for Vaccination
What about employees receiving the vaccine? Another important change to FFCRA and its tax credit is that eligible sick leave now includes time for the vaccination process. For employers voluntarily extending paid sick leave, the tax credit includes leave for employees receiving the COVID-19 vaccine and if they have a negative reaction or side effects. The tax credit also includes sick leave for an employee who is awaiting COVID-19 test results after being exposed to the virus or being asked to get tested by the employer.
FMLA and Emergency Paid Sick Leave (EPSL) Hours
What if all 80 hours of leave were used? The FMLA hours will reset for an employee on April 1, 2021. If the employer uses the calendar year or another 12-month period for their FMLA year, the employee’s FFCRA hours would reset with the employer designated FMLA year. Unlike the FMLA, if employers continue to voluntarily provide FFCRA sick leave, employees do not get reinstated hours of EPSL after March 31st. Employees can use EPSL hours for any FFCRA reason after March 31st through September 30th.
What if I am self-employed? For self-employed individuals, schedule C and F filers, the FMLA hours have reset as of January 1, 2021, and the paid family leave credit increased from 50 to 60 days. Through a collective bargaining agreement, the self-employed individual will also receive reimbursement of pension plan and apprenticeship contribution made during the leave.
For more information about the FFCRA tax credit originally enacted in the CARES Act, click here. Before these most recent changes, the FMLA tax credit was extended in December 2020 as part of the Consolidated Appropriations Act, so you can click here for more details. If you have any questions or concerns, please contact Abacus Payroll.