FFCRA leave tax credits likely extended to September 30, 2021

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On February 27, 2021 and March 6, 2021 the House and Senate, respectively, passed versions of the American Rescue Plan Act of 2021, both of which extend the Families First Coronavirus Relief Act’s (FFCRA) tax credit for paid leave related to COVID-19. While the FFCRA mandatory leave provision expired December 31, 2020, Congress previously extended the employer tax credits for voluntarily providing such leave to March 31, 2021. There are differences between the House and Senate versions of the American Rescue Plan Act that must be reconciled, but if the extension survives that process it will mean qualified employers may take a credit for paid leave under the same terms as in the FFCRA.

This extension is particularly important for California employers because state and some local regulations require employers to offer paid sick leave to employees for reasons related to COVID-19. For example, emergency Cal/OSHA regulations require most California employers (including dealerships) to provide paid leave to employees that cannot work due to a COVID-19 quarantine unless the employer can demonstrate that the exposure is not work related. While there are questions regarding the authority of Cal/OSHA to impose this requirement, this leave may qualify for a tax credit with the federal extension. Consult your tax professional to determine if the tax credit is applicable in any specific circumstance.

In addition, there are local regulations to consider. For example, Los Angeles County passed an ordinance requiring both large and small employers in unincorporated areas to provide paid Covid-19 related leave as of January 1, 2021. The ordinance covers persons who perform any work within the unincorporated parts of the County. San Jose has a similar ordinance that is enforceable by a private right of action. San Francisco extended its sick leave mandate through April 12 and may extend it further. With this patchwork of local laws, all employers should understand the requirements in their jurisdiction.