The $900 billion COVID-19 relief bill Congress passed last week was signed by President Trump Sunday evening. The bill clarifies that the requirement for certain employers to provide paid emergency sick and family leave ends December 31, 2020. However, for the first three months of 2021, private sector employers with fewer than 500 employees have the option to claim a tax credit to cover the cost of the leave.
What employers need to know
• Employers are not required to continue providing paid emergency sick and family and medical leave as defined by the Families First Coronavirus Response Act (FFCRA). Those who do, however, can claim a tax credit to cover the cost of the leave through March 31, 2021.
• The total amount of the tax credit available to cover the cost of leave does not change for any single individual. No additional credits are available for those who have exhausted the original 80 hours of paid sick leave or the additional 10 weeks of paid emergency family and medical leave.
• Government employers, including municipalities and school districts, were not eligible for FFCRA tax credits originally and will remain ineligible.
• The Coronavirus Aid, Relief and Economic Security (CARES) Act allowed employers to contribute through 2020 up to $5,250 annually toward an employee’s student loan repayment as a tax-free employee benefit. The benefit has been extended through December 31, 2025, and applies to tuition, fees and books as well as loan repayments.
• Sponsors of health and dependent care flexible spending accounts (FSAs) have options to grant participants greater access to pre-tax funds. The use-it-or lose-it rule affecting unused FSA dollars has been suspended temporarily, allowing unused funds to be rolled into 2021 and from 2021 to 2022. Grace periods, which allow funds to be accessed through mid-March can be extended up to 12 months. Employers can also permit 2021 mid-year prospective changes in FSA contribution amounts. The dependent care age limit can be increased from 13 to 14. Employers should consult with their FSA provider for more information.
Other key provisions of the bill
• Adults in certain income levels will receive a one-time $600 stimulus check; additional funding is available for those with children.
• $284 billion will be added to the Paycheck Protection Program.
• Unemployment benefits have been extended and will increase up to $300 per week.
• $25 billion is available for rental assistance and the eviction ban set to expire at the end of 2020 was extended.
• $13 billion was added to the Supplemental Nutrition Assistance Program.
• The employer tax credit provided in the Tax Cuts and Jobs Act of 2017 for employers who provide paid family and medical leave is extended through 2025 and applies to wages starting in 2021.
