On December 27, 2020, President Trump signed The Consolidated Appropriations Act, 2021, which is the latest COVID-19 emergency relief package providing support for small businesses, schools, health care providers, renters, direct stimulus payments, vaccine distribution, and more.
There are a few key provisions affecting employers, including:
- Unemployment benefits. Federal supplemental unemployment benefits will be extended to March 14, 2021, at $300 per week. The bill continues to allow for extended unemployment benefits to individuals in nontraditional employment situations (e.g., small business owners, gig workers) and provides additional weeks of federally funded unemployment benefits once state benefits are exhausted.
- Paid family leave and paid emergency sick leave. Mandated benefits under FFCRA ended on December 31, 2020; however, covered private employers (not public employers) can voluntarily provide paid sick and family leave benefits under their own policy as long as it mirrors the FFCRA provisions (if not already exhausted by employees) through March 31, 2021, and still be able to take the associated tax credit. The same daily limits and eligibility requirements from the expired FFCRA would need to apply to the paid leave benefits in order for the tax credits to qualify. MRA created Five Steps for Handling FFCRA Expiration to assist employers with their decisions.
- Employee retention tax credit. The refundable employee retention tax credit, which was established in the CARES Act, was enhanced and extended through June, 2021. It now covers employers with 500 or fewer employees and provides a refundable payroll tax credit of 70 percent of qualified wages, up to $10,000 per employee per quarter.
- Paycheck Protection Program (PPP). Additional funding for a second round of PPP loans will be available. In addition, the bill specifies that business expenses paid for by PPP loans in 2020 are tax-deductible—a change in direction from prior IRS guidance. Employers should partner closely with their accounting team in navigating the intricacies of the PPP. MRA developed a Paycheck Protection Program Q&A for HR Professionals to answer frequently asked questions.
- Employer-provided student loan repayment for employees. The CARES Act allowed employers to contribute up to $5,250 toward an employee’s student loan. This provision was extended so payments are excluded from the employee’s income between March 27, 2020, and December 31, 2025.
- Work Opportunity Tax Credit (WOTC). This is a federal tax credit available to employers for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment, such as ex-felons, veterans, food-stamp recipients, the ong-term unemployed, and individuals with disabilities. The WOTC was set to expire at the end of 2020, however this bill now extends it through December 31, 2025.
Employers are strongly encouraged to communicate with employees on how absences related to COVID-19 will be handled in 2021. MRA has developed a sample communication memo that members can customize to assist in this process. For ideas on how organizations are managing time away from work due to COVID-19, download Managing COVID-19 Absences in 2021.