Employers Can Still Get a Tax Credit for Paid Sick Leave in 2021

The Families First Coronavirus Response Act (FFCRA) became law on April 1, 2020, as a measure to try to address the effect of the pandemic on businesses and employees. It required certain employers (generally those with fewer than 500 employees) to provide their employees with paid sick leave for a number of reasons related to COVID-19. Employers could seek payroll tax credits to offset, dollar-for-dollar, the cost of providing the sick leave. The obligation on the employer to provide that sick leave ends today, December 31, 2020.

However, the new Consolidated Appropriations Act, 2021[1], extends the period during which an employer can obtain the payroll tax credits. Although employers will no longer be required to provide FFCRA sick leave to their employees after January 1, 2021, employers who voluntarily provide such sick leave between January 1, 2021, and March 31, 2021, can still seek payroll tax credits for that leave, just as they would have been able to had the leave taken place before January 1, 2021.[2] 

Please note that the clock for the amount of leave available in 2021 is not reset through this extension (as employers are no longer required to offer the leave after December 31, 2020). This Alert does not address all the specifics of leave under the FFCRA or the Consolidate Appropriations Act, 2021. To learn more, contact our team.

[1] Passed by Congress on December 21, 2020, and signed into law by President Trump on December 27, 2020. https://www.govtrack.us/congress/bills/116/hr133/text

[2] Consolidated Appropriations Act, 2021, Section 286.