Paycheck Protection Program Round 2
On December 27, President Trump signed the COVID-19 relief legislation Congress approved last week, which includes a $1.4 trillion government-funding package and $900 billion earmarked for COVID-19 aid. The Consolidated Appropriations Act, 2021 (H.R. 133) extends the availability of tax credits through March 31, 2021, for employers that continue to provide leave under the terms established by the Families First Coronavirus Response Act, in addition to a number of other takeaways for employers, including:
Expanded unemployment benefits
Under the Act, workers receiving unemployment benefits will receive an additional $300 per week through March 14, 2021. The Act also extends the Pandemic Emergency Unemployment Compensation (PEUC) and the Pandemic Unemployment Assistance (PUA) programs and provides an additional $100 per week for certain individuals earning both wage and self-employment income whose unemployment insurance benefit calculation does not consider self-employment when calculating the benefit amounts.
Paycheck Protection Program (PPP)
Small businesses are eligible for a second PPP loan if they have less than 300 employees and can demonstrate at least a 25% revenue reduction. The Act also expands PPP eligibility to include 501(c)(6) nonprofits.
Flexible Spending Account (FSA) Benefits
Among other things, the Act provides additional relief for FSA benefits and allows employees to roll over any unused amounts in their health and dependent care accounts from the 2020 or 2021 plan years into the next plan year. It also allows employers to permit prospective mid-year election changes in FSA contribution amounts. These changes are optional and, if permitted, require amendments to plan documents.
Tax provisions
The Act extends the Employee Retention Tax Credit through June 30, 2021, and increases the credit rate from 50% to 70% of qualified wages. It also extends the repayment period for deferred payroll taxes until December 31, 2021, instead of April 30, 2021.
Other provisions of the Act of interest to employers include:
- An extension of the Work Opportunity Tax Credit and expanded employer-provided student loan assistance, both through December 31, 2025;
- A temporary rule preventing partial plan terminations for employers with defined contribution plans;
- A measure to curb the practice of surprise medical billing; and
- A temporary allowance for a full deduction for business meal expenses.
FFCRA Expiration
The Families First Coronavirus Response Act (FFCRA) is a temporary law in effect from April 1, 2020 – December 31, 2020. The FFCRA grants paid leave for certain absences caused by the COVID-19 pandemic. As of this notification, the federal government has not extended this law or its leave entitlements beyond December 31, 2020. Therefore, FFCRA leave ends on December 31, 2020.
What does FFCRA expiration and the tax credit extension mean for me and my Company?
The tax credit afforded by employers under the FFCRA has been extended, however, the ability of employees to take time off under the FFCRA has not. It is solely at the discretion of an employer as to whether they want to continue to permit time off as per the FFCRA after the first of the year. If an employer so chooses, it may then take a tax credit for the time given employees.
If an employee has exhausted FFCRA paid leave in 2020, do we offer additional paid leave if we choose to continue providing paid leave as required by FFCRA?
No. The amendment does not increase the total amount of the tax credit available to pay for leave for any single employee. FFCRA sick leave or expanded FMLA leave taken before December 31, 2020, will still count against the total amount of any tax credits that can be claimed for leave taken through March 31, 2021.
Thus, FFCRA sick leave or expanded FMLA leave taken before December 31, 2020, will still count against the total amount of time an employee may qualify for in order for the Company to get reimbursed. For example, if an employee took 80 hours of paid sick leave in 2020 then the employee will be considered to have exhausted their FFCRA paid sick leave and are no longer eligible for FFCRA paid sick leave for 2021.
Do I have to notify employees about FFCRA expiring?
It is recommended to communicate with your employees about what the Company’s intentions are (whether or not the Company chooses to continue FFCRA) and what leave rights employees are afforded. Guardian HR has created such notice, “Families First Coronavirus Response Act Expiration Notice (FFCRA)” available in the Forms Library.
GUARDIAN HR’s AVAILABLE RESOURCES
- Partnership with Trivent Safety Consulting https://guardian-hr.com/safety-services/
- Families First Coronavirus Response Act Expiration Notice (FFCRA) (Forms Library > Coronavirus > FFCRA – Families First Coronavirus Response Act)
- FFCRA Leave Administration Packet; (Forms Library > Coronavirus > FFCRA – Families First Coronavirus Response Act > FFCRA Administration (Request for leave, Packets, Statements)
- FFCRA Administration (Request for leave, Packets, Statements) Resources > (Forms Library > Coronavirus > FFCRA – Families First Coronavirus Response Act > FFCRA Administration (Request for leave, Packets, Statements)
Should you have any issues logging into the client portal, please email support@guardian-hr.com for assistance.
This a constantly evolving area, with new guidance being issued nearly every day. Guardian HR will continue to monitor the rapidly developing COVID-19 situation and provide updates as appropriate. For clients with access to the Forms Library, you will find the ‘CORONAVIRUS’ folder including additional.
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