By Tracey I. Levy
As a post-script to our last blog post, the latest federal COVID-19 relief package, which was signed into law on December 27, 2020, includes a short-term extension of the FFCRA tax credit that offers some additional financial relief for New York State employers. As we previously discussed, the paid leave requirements of the FFCRA are set to expire December 31, 2020, and the new COVID-19 relief package allows those requirements to sunset. However, those employers that voluntarily elect to continue to provide the paid leave that was available under the FFCRA, under that law’s eligibility requirements, can continue to claim a federal payroll tax credit through March 31, 2021 to offset the cost of that leave. New York employers do not have an option with regard to providing COVID-19 leave, and therefore the extension of the FFCRA credit may be a valuable benefit to manage the associated costs.
There are some notable limitations on which employers can benefit from the federal tax credit:
- Large Employers
Employers with more than 500 employees are subject to the New York State paid leave requirements, but were not subject to the FFCRA paid leave requirement and therefore cannot claim the credit;
- Multiple Quarantines for the Same Employee
To the extent the reasons for leave under the FFCRA and New York State law have overlapped, the FFCRA tax credit was limited to a total of ten days of paid leave, per employee. However, the New York State law does not appear to place a limit on the number of times an employee can receive paid leave, provided each leave is in accordance with a government-mandated quarantine or isolation order. Once an employer has claimed the FFCRA tax credit for an employee, it appears that it cannot be claimed again for a repeat occurrence of quarantine.
New York State employers should consult with their tax advisor with regard to the availability of the tax credit in specific circumstances.