New Stimulus Bill Extends Tax Credits, Paid Leave Mandate Expires

The president last month signed the Consolidated Appropriations Act, 2021 (H.R. 133), a $2.3 trillion spending bill that combines $900 billion in COVID-19 stimulus relief with a $1.4 trillion omnibus spending bill for the 2021 federal fiscal year. Notably, the package also contains provisions related to the paid sick and family leave program authorized under the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), which went into effect on April 1, 2020.

The FFCRA was enacted at the outset of the COVID-19 pandemic and required employers, including county governments, to provide emergency paid sick leave and expanded paid emergency family leave to eligible employees who were unable to work for reasons related to the ongoing health pandemic. To offset the fiscal impact of the new mandate, the federal government enacted the Emergency Paid Leave Payroll Tax Credit, which provides a dollar-for-dollar offset from payroll taxes for paid leave wages provided to employees taking FFCRA.

The recently passed stimulus package did not extend the December 31, 2020 expiration date of the FFCRA paid leave mandate. However, the relief bill did extend the tax credit available to employers who voluntarily provide FFCRA-qualifying leave until March 31, 2021. Accordingly, as of January 1, 2021, employers are no longer required to provide paid leave under the FFCRA, but may choose to voluntarily provide such leave (and claim the tax credit for doing so) until March 31, 2021.

According to the National Association of Counties (NACo):

The recently passed COVID-19 relief package contains two notable items related to the paid sick and family leave program authorized under the FFCRA:

  • The legislation extends the payroll tax credit for eligible employers to use for paid sick and paid family leave through March 31, 2021. The tax credits were originally scheduled to expire on December 31, 2020. Counties are still not eligible to receive payroll tax credits under the new legislation.
  • The legislation does not extend the FFCRA mandated paid leave framework. Therefore, employers, including counties, are not required to provide employees with FFCRA paid sick or family leave since the program ended on December 31, 2020. However, if an eligible employer chooses to allow employees to take leave for a COVID-19-related reason between January 1 and March 31, 2021, they may still claim the payroll tax credit. Counties are no longer mandated to provide paid sick and family leave under the new legislation.

Stay tuned to Conduit Street for more information.

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Previous Conduit Street Coverage: Congress Strikes Deal on $900B COVID-19 Relief Package, Will Extend CRF Spending Deadline

NACo Coverage