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Employment-Related Impacts of the New Federal COVID-19 Relief Legislation Employment-Related Impacts of the New Federal COVID-19 Relief Legislation

Employment-Related Impacts of the New Federal COVID-19 Relief Legislation

On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act 2021 (Act), which contains the newest federal COVID-19 relief legislation. As it relates to COVID-19, the Act focuses, in large part, on additional monetary relief and assistance for businesses and individuals; however, there are a few sections of the Act that are more directly connected to employment matters. Importantly, the Act does NOT extend the mandatory job-protected, paid leaves under the Families First Coronavirus Response Act (FFCRA), although due to an extension of the FFCRA tax credits, employers may still voluntarily provide such leaves in the first quarter of 2021 and receive tax credits for doing so. The Act also partially reinstates and extends some of the unemployment benefits provided through the CARES Act.

Unemployment Provisions

The Act partially reinstates the “bonus” unemployment payments provided under the CARES Act, which expired on July 31, 2020. For weeks beginning after December 27, 2020, unemployed workers who are eligible for unemployment benefits under state law will receive an additional $300 per week in federal Pandemic Unemployment Compensation benefits, a 50% decrease from the $600 per week benefit provided under the CARES Act. This enhanced benefit will be available through March 14, 2021. It is not retroactive to periods prior to December 27, 2020.

The Act also provides an additional 11 weeks of unemployment benefits to individuals who have exhausted the maximum period of regular unemployment benefits under state law. These additional benefits (Pandemic Emergency Unemployment Compensation), which were set to expire on December 31, 2020, are now potentially available through April 5, 2021.

Additionally, the Act similarly extends by 11 weeks (through March 14, 2021) the Pandemic Unemployment Assistance Program, which provides benefits to gig workers and other unemployed individuals who are not otherwise eligible under regular state unemployment rules.

It is not clear when payments made available through these extended programs will begin to be paid to unemployed workers, and we expect that workers in many states will experience delays in receiving new or extended benefits. As with the unemployment benefits previously available under the CARES Act, these enhanced benefits may provide both needed relief to individuals who lost their jobs due to the pandemic (which, in turn, helps employers who are concerned about the impact their business slow-downs had on their employees) and opportunities for individuals who would prefer not to re-enter the workplace (which may cause some staffing challenges).

FFCRA Extensions

As noted above, the Act does NOT mandate that employers provide Emergency Paid Sick Leave or Expanded FMLA leave in 2021—the mandatory paid leave provisions of the FFCRA were not extended. The Act does, however, amend the FFCRA leave tax credit provisions in a manner that allows employers to take tax credits for voluntarily providing leave that would have otherwise qualified for paid leave under the FFCRA. In other words, employers can choose to carry over unused FFCRA leaves into the first quarter of 2021, provide those leaves (following the requirements of the FFCRA), and take a tax credit for the leaves that were provided through March 31, 2021.

Importantly, to take the tax credits, employers must comply with all the requirements of the FFCRA and, presumably, the implementing regulations and guidelines. Employers providing the voluntary leaves should continue to collect the necessary information to support the leaves and must not discriminate or retaliate against employees who take the voluntarily provided leave. In addition, employers cannot take a tax credit for leaves that are beyond what was required by the FFCRA, carried over into 2021. For example, if an employee worked full time and took 40 hours of Emergency Paid Sick Leave in 2020, the employer can voluntarily provide and take a tax credit for up to 40 hours of Emergency Paid Sick Leave in the first quarter of 2021. The employer cannot take a tax credit for leave beyond 80 hours of Emergency Paid Sick Leave taken in 2020 and the first quarter of 2021 combined.

Neither the IRS nor the Department of Labor have issued guidance related to this voluntary extension of FFCRA paid leave or the tax credits. As happened when the FFCRA was enacted, those agencies are likely to issue guidance that provides more clarity on the permissible tax credits employers may take for providing voluntary paid leaves akin to FFCRA leave. We will continue to monitor guidance issued by those agencies and any additional legislative action that address employment-related matters connected to COVID-19. In the meantime, please contact Emmanuel Boulukos, Tami Earnhart or any other member of our Labor, Employment & Immigration Group if you need assistance these or any other employment matters.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
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