The recent Appropriations Act signed into Law on December 27th extends the Covid19 sick pay through March 31st on a voluntary basis. The Federal mandate, however, expires on December 31st.
As a reminder, employers with fewer than 500 employees have been required to pay employees who are sick or quarantined for COVID-related reasons. This mandate was created in the Families First Coronavirus Response Act (FFCRA). Under this legislation, full-time employees could receive up to 80 hours of paid leave, with certain pay caps depending upon the reason for the leave. Employees who required leave because of school closing or unavailability of childcare could receive partial pay as well. Employers are mandated to incur the payroll costs, however, reimbursement is available from the federal government in the form of tax credits or refunds.
These paid-leave mandates were scheduled to expire on December 31, 2020 however the Appropriations Act has created an option for employers to voluntarily give these paid leaves through March 31, 2021. The mandate to provide the leave, however, will end on December 31.
To qualify for the federal rebates/tax credits the pay must meet the following requirements:
- If an employee has already exhausted his or her available sick pay in 2020 then no subsidy or credit will be available in 2021. Remember this is employee based so this is a factor even if the employee exhausted their leave at a prior employer.
- All employers should require documentation from the employee supporting the need for leave. If audited by the IRS, the employer will need to establish that it followed all requirements.
- The tax credits/refunds are available for leaves taken through March 31; accordingly, if an employer pays in arrears, then it can claim tax credits for wages paid in April for work performed in March.
If you have any questions about sick pay and the Appropriations Act, feel free to contact us.