On December 27, President Donald Trump signed the latest coronavirus relief package into law. Among the more than 5,000 pages of text are three provisions that will impact employers in 2021. First, the law did not extend the leave mandates of the Families First Coronavirus Response Act but did extend the FFCRA’s tax credit until March 31, 2021. In other words, the FFCRA’s leave requirements are now voluntary. Those employers who elect to continue allowing employees to take leave consistent with the FFCRA will still be entitled to a dollar-for-dollar refundable payroll tax credit until March 31, 2021. Based on the language of the law, it appears that employees do not receive additional allotments of FFCRA leave. Therefore, the available leave and corresponding credit will be capped at a maximum of 80 hours of emergency paid sick leave and 10 weeks of partially paid expanded family and medical leave. 

Second, the law provides additional unemployment assistance in the wake of the expiration of the CARES Act’s unemployment benefits on December 26. Specifically, the new law extends an additional 11 weeks of benefits to individuals receiving assistance through their state programs or the Pandemic Unemployment Assistance Program available to independent contractors and gig workers. The law also reinstates a federal supplement of $300 per week to individuals receiving state unemployment benefits or the Pandemic Unemployment Assistance Program. 

Third, the law extends and expands the Employee Retention Credit. To start, that tax credit is now available until July 1, 2021. Next, the law significantly expands the maximum amount of the credit to $14,000 per employee for the first two quarters of 2021, even if the employer received the $5,000 maximum credit in 2020. The law also reduces the eligibility requirements by requiring only a 20% reduction in gross receipts compared to the same quarter in 2019, rather than the original requirement of a 50% reduction in receipts. 

Originally, employers with more than 100 employees were only entitled to take the credit on wages paid to employees who were not providing services, whereas employers with fewer than 100 employers could take the credit for all wages paid. Under the new law, this employee threshold has been increased to 500 employees, which will allow many more employers to take advantage of the full credit. 

Finally, the law alters the relationship between the Employee Retention Credit and the Paycheck Protection Program. Originally, companies receiving a PPP loan were disallowed from taking the ERC. Now, companies receiving a PPP loan may take the ERC so long as the tax credit is not claimed for wages covered by a PPP loan that has been forgiven. This change is retroactive to March 12, 2020, so companies that previously received a PPP loan may consider filing an amended payroll tax return to claim the credit.