On December 27, 2020, President Donald Trump signed into law the Consolidated Appropriations Act of 2021 (The Act) that includes government funding and a pandemic aid package. The Act comes as the previous relief measures created by Families First Coronavirus Response (FFCRA), CARES and presidential memos were set to expire at the end of 2020. The Act includes several forms of stimulus and support, including extensions and changes to the earlier COVID-related legislation. Below are some pertinent parts of The Act businesses should be aware of.
Extension of FFCRA Sick and Family Leave
In March 2020, the FFCRA required employers with fewer than 500 employees to provide specified paid sick leave to employees affected by COVID-19 and provided affected employers with a corresponding employment tax credit. Originally, these provisions were in effect through December 31, 20202020.
Here are the updates from The Act:
California Supplemental COVID-19 Paid Sick
In California, the FFCRA’s deadline is important because California’s Supplemental COVID-19 Paid Sick Leave program was tied to the FFCRA’s expiration. In September 2020, the California Legislature enacted AB 1867, which mandated employers with 500 or more employees to provide up to two weeks of supplemental paid sick leave for certain qualifying reasons. AB 1867 stated that the supplemental paid sick leave program expires when the FFCRA does. Because the FFCRA mandate was not extended by the Consolidated Appropriations Act of 2021, it’s probable that California’s AB 1867 will expire when the FFCRA does on December 31, unless California passes additional legislation. Employers should still continue to monitor the Labor Commissioner’s AB 1867 guidance for any agency interpretation on how the FFCRA expiration affects California law.
Additionally, A number of local city and county agencies enacted ordinances this year that provided supplemental COVID-19 paid sick leave with their own rules and expiration dates unrelated to state or federal law.
Employee Social Security Tax Deferral Repayment Deadline Extended to December 2021
Per the August 8 Presidential Memorandum, employees are allowed to defer their portion of social security tax through the end of 2020. The Act has extended the recollection period from April 30, 2021 to December 31, 2021. These deferred taxes must be repaid before January 1, 2022.
Extension and Enhancement of Employee Retention Credit
Employee retention credits are extended through June 30, 2021 with additional enhancements.
Paycheck Protection Program Funding
The Act established a “PPP second draw,” extending the PPP program and permitting certain small employers and industries to apply for a second forgivable PPP loan. The Act extends the covered period of all PPP loans through March 31, 2021.
Eligibility for a second draw is limited to small businesses with 300 or fewer employees that have sustained a 25 percent revenue loss in any quarter of 2020. Applicable businesses must have used or will use the entire amount of their first PPP loan.
Forgivable expenses are expanded to include:
Expansion of Unemployment Insurance Benefits
The Act has restored Federal supplemental unemployment insurance benefits of $300 per week on top of state benefits paid after December 26, 2020, until March 14, 2021. This creates a combined maximum benefit period of 50 weeks, which was previously set at 39 weeks. It includes a three-week phase out for benefits on claims that haven’t reached the 50-week cap.
The Act provides authority to states to waive overpayments made without fault on the part of the individual. Additionally, it limits retroactivity for additional $300 benefit to payments due after December 1, 2020.