FFCRA Benefits Become Optional and Unemployment Benefits Change With New Stimulus Package

On December 27, 2020, President Donald Trump signed the fourth major COVID-19 response bill into law. The stimulus package includes focused relief in a variety of areas (see our December 21, 2020 post), but two important elements are worth highlighting for employers. First, there have been several changes to pandemic-related unemployment insurance benefits since guidelines were first provided last spring. Second, the emergency paid sick leave and expanded family and medical leave benefits provided under the Families First Coronavirus Response Act (FFCRA), explained here, expired on December 31, 2020 and were not extended, but employers who opt to offer them remain eligible for tax credits.

Unemployment Insurance (UI) Benefits Supplement and Extension

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provided eligible recipients of state unemployment benefits with an additional $600 per week in federal benefits, which expired in July 2020. The new stimulus package provides eligible individuals who are already collecting state-provided unemployment benefits with an additional $300 per week in federal benefits ($300 less than the last stimulus relief package) for up to 11 weeks through March 14, 2021. These payments, however, are not retroactive to July 2020.

The new stimulus package also extends the Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) programs. PUA provides benefits to individuals who are not eligible for regular unemployment compensation or extended benefits under state or federal law or PEUC, including those who have exhausted all rights to benefits. It also covers individuals who have not historically been eligible for unemployment benefits, including individuals who are self-employed, those seeking part-time employment, those lacking sufficient work history, independent contractors, and some “gig” workers. PEUC provides “eligible individuals with up to 13 additional weeks of benefits to individuals who have exhausted their regular unemployment compensation entitlement.”

In addition, the package increases to 50 weeks the maximum number of weeks individuals may claim benefits through a combination of either state and PEUC or PUA benefits. Lastly, the package provides an additional $100 per week for certain “mixed earners” – individuals who earn both W-2 and 1099 income.

FFCRA Benefits Become Voluntary

The FFCRA’s mandatory paid leave requirements expired on December 31, 2020 and were not extended in the new stimulus package, relieving employers of the obligation to fund an employee’s emergency sick time or family leave. However, employers who voluntarily continue to provide emergency paid sick leave (EPSL) and emergency paid family leave (“EFMLA”) through March 31, 2021 will continue to receive a dollar-for-dollar tax credit.

A few points of interest:

  • Employees who have already exhausted their EPSL entitlement under the FFCRA are not entitled to additional paid EPSL leave beginning January 1, 2021.
  • It appears that an employer will not be entitled to a tax credit for paid leave voluntarily provided in excess of the employee’s paid leave entitlement.
  • It is unclear whether employees who have exhausted their 12-week EFMLA leave entitlement would be eligible for additional leave if their employer’s FMLA 12-month period resets before March 31, 2021.

We anticipate that the Department of Labor and/or the Internal Revenue Service (IRS) will publish guidance regarding these open questions. For now, employers must decide whether to make FFCRA benefits available to their employees for the next three months. As with most decisions employers have faced during the pandemic, this decision depends on a combination of financial and human interest considerations.

If you have any questions regarding this blog, please contact any attorney in the Gibbons Employment & Labor Law Department.

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