Coordinate FFCRA Tax Credits with FMLA

Allen Smith, J.D. By Allen Smith, J.D. February 19, 2021
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​The Families First Coronavirus Response Act (FFCRA) mandatory requirements have expired, but the tax credit for employers that continue to voluntarily provide employees paid leave due to COVID-19 remains in place. Meanwhile, the distinction between emergency paid sick leave (EPSL), emergency family and medical leave (EFML) and Family and Medical Leave Act (FMLA) time off remains significant.

"The distinction is important because, assuming the employer is covered by both the FMLA and the FFCRA credit entitlement, the employer could take tax credits for reasons covered by EPSL and EFML but not reasons that are only covered by FMLA leave, such as the birth or placement for adoption of a child," said Stacy Williams, senior counsel, global compliance, with ADP in Alpharetta, Ga.

For FMLA-covered employers, providing leave for FMLA-covered reasons is mandated, while any leave that's covered only under the FFCRA is discretionary, noted Maura McLaughlin, an attorney with Morgan, Brown & Joy in Boston.

The employer mandate to provide FFCRA paid sick and family leave ended last year, but the Consolidated Appropriations Act of 2021 (CAA) extended the payroll tax credits for employers that choose to provide paid FFCRA-like leave.

As proposed by the Biden administration, revived FFCRA requirements might wind up being expanded mandates. Biden has proposed requiring EPSL and EFML for large employers as well as those with fewer than 500 employees and has recommended removing an exemption that had been in place for businesses with fewer than 50 workers. "If EPSL and EFML obligations are revived, the range of reasons for which an employer will need to provide leave will expand once again," McLaughlin said. "In addition, the FFCRA required that certain EPSL and EFML leave be paid, so if that requirement is revived, employers will need to track and compensate paid leave."

FFCRA Provisions

The FFCRA had two major provisions: the EPSL Act and the EFML Expansion Act. Under the EPSL Act, private employers with fewer than 500 employees and some public employers had to pay sick leave of up to 80 hours, or roughly 10 days, to employees who need to take leave for certain coronavirus-related reasons.

Under the EFML Expansion Act, employees were eligible for an additional 10 weeks of family leave paid at two-thirds of their regular wages to care for a child whose school or place of care is closed or whose child care provider is unavailable because of COVID-19. The FFCRA did not have requirements for private-sector employers with 500 or more employees.

"Employers need to remember that EPSL and EFML are only available to employees working at FFCRA-covered employers; that is, those with fewer than 500 employees," Williams said.

Different Coverage Requirements

The FMLA's coverage requirements differ from the FFCRA's.

To be eligible for FMLA leave, an employee must work at a location that has 50 employees within a 75-mile radius. This so-called 50/75 rule can create confusion for employers that have 50 or more employees total but with no locations that have 50 workers within a 75-mile radius.

"You can see that there is not congruence between the two standards," said Joe Nuzzo, VP counsel, global compliance with ADP in Roseland, N.J. "In particular, the FFCRA applies even to very small employers that may not be used to managing and administering leave entitlements like this."

An employee whose employer has 1,000 employees might be eligible for FMLA leave if the individual eligibility requirements are met. But because the FFCRA would not apply to the employer, the business would not be entitled to take tax credits for voluntarily offering EPSL or EFML, Williams said.

EPSL Overlapping with FMLA

If an employee works for an employer that is covered by both the FMLA and the FFCRA's expanded credits, it is possible that an employee could have a serious health condition that would entitle him or her to traditional FMLA leave and would also make the EPSL tax credit available.

Three of the six reasons for EPSL include when an employee:

  • Has been advised by a health care provider to self-quarantine related to COVID-19.
  • Is experiencing COVID-19 symptoms and is seeking a medical diagnosis.
  • Is caring for an individual subject to self-quarantine as advised by a health care provider.

The FMLA provides up to 12 weeks of unpaid, job-protected leave for eligible employees with a serious health condition or when an employee must care for a child, spouse or parent with a serious health condition.

"Whether the EPSL leave for the employee's COVID-19 illness or to care for a family member with COVID-19 will also qualify for FMLA leave will essentially be dependent on how sick the employee or family member is with COVID-19," said Dena Sokolow, an attorney with Baker Donelson in Tallahassee, Fla.

A serious health condition is defined by the FMLA as an illness, injury, impairment, or physical or mental condition that involves inpatient care or continuing treatment by a health care provider.

"An employee who is asymptomatic or who is home with COVID-19 and not receiving treatments from a health care provider would not qualify for FMLA leave for a serious health condition but could still qualify for EPSL," she said.

"Another consideration is that the EPSL is more expansive than the FMLA in that it covers care for an 'individual' with COVID-19," Sokolow said. The FMLA, by contrast, covers care for certain qualifying family members—child, spouse or parent—with a serious health condition. "An employee who is caring for someone other than a child, spouse or parent as defined by the FMLA would not qualify for FMLA but possibly qualify for EPSL."

EFML Is Distinct from FMLA

The circumstances covered by EFML would not otherwise have been covered by the FMLA because there is no serious health condition, birth or military leave triggering the employee's time off, said Sarah Platt, an attorney with Ogletree Deakins in Milwaukee.

"Employers should keep in mind that FFCRA ended as of Jan. 1, so it's effectively a tax credit statute through March 31," said Jeff Nowak, an attorney with Littler in Chicago. 

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