COVID-19 Aid Invoice – What Employers Have to Know

Monday 28 December 2020

On Sunday, December 27, 2020, President Trump signed the Federal Funding Act and a long-awaited coronavirus aid package (the “Act”). The far-reaching law contains a number of important provisions that will affect employment in the public and private sectors in 2021. Of particular importance to employers are:

  1. The Bill does not expand the mandates of the Family and Medical Leave Extension Act (“EFMLEA”) or the Emergency Paid Leave Act (“EPSLA”), enacted under the Family First Coronavirus Response Act (“FFCRA”).

  2. The bill provides tax credits for employers for “FFCRA-like” paid vacation benefits, which are paid to employees through March 31, 202

  3. The bill does not provide an economic incentive for public employers to continue the FFCRA’s paid vacation benefits.

  4. The bill extends the previously enacted CARES bill to provide continued federal support for the unemployed with additional weekly benefit payments of $ 300 and an extension of the maximum benefit duration.

The FFCRA vacation will become optional after December 31, 2020

FFCRA granted eligible employees who were unable to work for specific reasons related to COVID-19 up to 80 hours of paid sick and family leave under the EPSLA and up to 10 weeks of partially paid family and sick leave under the EFMLEA. For private employers, the obligation to provide this FFCRA paid vacation has been offset by dollar-to-dollar tax credits on wages paid to employees taking paid vacation. These FFCRA provisions are expected to expire on December 31, 2020 and the bill does not add any amendments to these provisions.

However, the bill gives private employers the option to claim US dollar tax credits for wages paid to employees who take vacation between January 1 and March 31, 2021 under the employer’s paid vacation policy. In fact, the FFCRA’s paid vacation policy after December 31, 2020 is optional. The tax credits are available through March 31, 2021 provided that the employer’s paid vacation is available as “this would be payable if [the FFCRA] were applied. “

Whether employers should continue to offer paid vacation in line with the FFCRA in 2021 is a matter for employers to evaluate and plan before year end. Every employer has their own concerns and a variety of factors that must play a role in making this decision. For example, private employers who have staffing or financial problems may find future tax credit entitlements of little value in continuing to grant paid leave under the FFCRA. Most public sector employers are likely to get a similar economic outcome as they are not eligible to apply for tax credits under the FFCRA. On the flip side, private employers who choose to continue offering paid vacation benefits, who now rely on tax credits for the eligible amounts, may find that the positive impact on work ethic and employee retention justifies the decision to continue offering paid sick and family vacation .

Employers subject to the FFCRA must evaluate their options for 2021 and decide on an approach that best suits their individual circumstances. Regardless of the decision made, employers will need to revise, update, or delete the existing FFCRA paid leave guidelines in light of the mandatory components of the FFCRA which will expire on December 31, 2020. It is also important that employers notify employees in advance of changes to paid vacation policies, including any effects such changes may affect their rights and vacation options under those policies.

Improved unemployment benefits

In view of the historic unemployment and the expiry of the federal emergency work programs set out under the CARES Act on December 26, 2020, another essential part of the law is the expansion of unemployment benefits. The bill extends the length of time the unemployed can receive unemployment insurance benefits by an additional 11 weeks. The CARES Act had extended the unemployment benefit period by 13 weeks for those receiving unemployment benefits under their government programs, as well as for those eligible for benefits under the Pandemic Unemployment Assistance Program. The additional 11 weeks of benefits extend to 24 weeks of the extended unemployment period.

The law will also reintroduce federal additional unemployment benefits under the CARES Act, but at a lower weekly rate than before. Previously, the federal government added $ 600 per week to state unemployment insurance benefits for eligible individuals. The additional federal benefits expired in July. The bill provides for additional federal unemployment benefits of $ 300 per week for unemployed people who are eligible for benefits under their state’s unemployment programs and / or the Pandemic Unemployment Assistance Program. Without an extension by Congress, the federal unemployment benefit will expire on March 14, 2021.

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