At long last, Congress finally reached a deal and passed its second COVID-19 economic stimulus package on Monday night. Despite its whopping 5,593 pages, many analysts feel that the package does not do enough to help struggling individuals and small businesses, while others feel it represents an important step in the direction of recovery.
No FFCRA Extension, But Tax Credits Extended Through March 31st
Perhaps one of the most important things about this package for employers is what it does not include, namely, an extension of paid leave requirements of the Families First Coronavirus Response Act. Say goodbye to the FFCRA – its mandated leave provisions will expire on December 31, 2020.
But what if employers want to continue to provide paid COVID-19-related leave for employees? Under the newly-passed stimulus package (Section 286), if an employer chooses to allow employees to take paid leave for reasons that would have been covered under the FFCRA, the employer can claim the FFCRA’s payroll tax credit for providing this leave through March 31, 2021. Benevolent employers beware, however, that the stimulus package does not appear increase the cap on the total amount of tax credits an employer can claim per employee. Specifically, the tax credits for providing E-PSL is capped at $511 per employee per day and $5,110 in the aggregate (or $200 and $2,000 depending on use) and E-FMLA is capped at $200 per employee per day and $10,000 in the aggregate. This means that tax credits claimed for leave taken before December 31, 2020 will count towards available credits that employers may claim for leave taken through March 31, 2021. Thus, unless we receive contrary guidance from the DOL or IRS, employers should take care to ensure that any voluntarily-provided E-PSL or E-FMLA between January 1 and March 31 does not exceed the aforementioned caps.
The new stimulus package prompts many questions for employers who may currently have employees on paid FFCRA leave. For example, what about an employer who has an employee who started paid leave on December 1 and was not expected to return until after January 1? Could the employer demand that this employee continue their leave unpaid or return to work after December 31, 2020? Sure, but considering that the employer can still claim the tax credit through March 31, 2021, there might not be a compelling reason to do so. Keep in mind, however, that the employee is not entitled to a new, full bank of leave starting on January 1, since, as discussed above, the tax credit the employer claimed for the leave the employee took.
Regardless of whether or not employers choose to voluntarily provide paid leave under the terms of the former FFCRA after it expires on December 31, 2020, employers should still be mindful of any applicable local paid leave regulations and PTO policies, in addition to general FMLA and ADA considerations.
There’s More
Other highlights of the stimulus package for employers include:
· Increased Unemployment Insurance: The package provides an additional $300 a week in federal unemployment benefits through March 14, 2021. The first stimulus deal provided $600 dollars a week in additional unemployment benefits, but this expired in July. The package also extends unemployment insurance benefits to gig workers, contract workers, and self-employed workers under the Pandemic Unemployment Assistance Program.
· Paycheck Protection Program (“PPP”) Updates: Businesses with 300 or fewer employees who can demonstrate at least a 25% reduction in gross revenues in comparable 2019 and 2020 quarters are entitled to a second round of PPP loans. The maximum loan amount is 2.5 times the business’s average monthly payroll costs, up to $2 million. The loan is fully-forgivable if the business spends at least 60% of the loan amount on payroll costs. Additionally, $15 billion is set aside specifically for live entertainment venues and $20 billion is set aside for businesses in low-income communities.
· Direct Payments to Individuals: The package provides direct payments of $600 to individuals who make up to $75,000 a year and families who make up to $150,000 per year.
Bottom Line
After months of arguing and hand-wringing, Congress has finally passed a new stimulus package that provides some direct assistance to individuals and businesses, but eliminates the mandatory paid leave provisions of the FFCRA while still providing a tax credit for those employers who continue to provide it through March 31. To become law, the stimulus package still needs President Trump’s signature, which does not appear to be immediately forthcoming.
President-elect Joe Biden has already announced that he will introduce another stimulus package after he takes office on January 20 so we will continue to watch for more updates.