Should My Business Continue to Offer COVID-19 Paid Leave?
HR considerations for evaluation before making a decision
Recently, we wrote an article on what FFCRA expiring after 2020 means for HR. One of the most significant updates is that employers will no longer be required to offer EPSL and EFMLA this year - however it's now optional. Given that, many employers are wondering if they should offer it or not. In this article, we’ll highlight the considerations for whether it may or may not make sense to continue offering COVID-19 paid leave in the new year, and how to prepare for it if you do.
What do the FFCRA’s updates mean for EPSL and EFMLA in 2021?
Families First Coronavirus Response Act (FFCRA)-covered employers can choose to extend two different types of emergency paid leave through March 31, 2021 - but it is optional, not mandatory. These types of leave are Emergency Paid Sick Leave (EPSL) and Emergency Family Medical Leave (EFMLA).
This offers employees paid leave if they're unable to work or telework due to:
Being subject to a federal, state, or local quarantine order related to COVID-19;
Having been advised by a health care provider to self-quarantine;
Experiencing symptoms of COVID-19 and is seeking a diagnosis;
Caring for an individual that is subject to an order for quarantine;
Caring for the employee's child because the child's regular caregiver is unavailable or the child's school is closed.
If you're a private business or nonprofit with less than 500 employees and you choose to do so, you can take tax credits for leaves taken between January 1st, 2021 and March 31, 2021.
This means that if an employer chooses to provide paid leave to an employee for a reason that qualifies under FFCRA eligibility rules in Q1 of 2021, they can take payroll tax credits. However, businesses who make the choice to extend the leaves must comply with the corresponding compliance requirements and rules regarding eligibility and record-keeping.
Record-keeping is critical because of the FFCRA limits - which covers up to 80 hours of emergency paid sick leave and up to twelve weeks of paid emergency family and medical leave. These limits apply to the payroll tax credits, and impact the leave that may be available this year. And in a related vein, paid leave that doesn't qualify for the credits should be tracked separately.
This can include documenting and maintaining records of: the employee's name, date for which leave is requested, qualifying reason for the leave, and statement that the employee is unable to work.
For the tax credits, employers should be prepared to maintain: documentation to demonstrate how the amount of leave was determined, how the amount of qualified health expenses were determined, and copies of IRS Forms 7200 and 941. Be sure to consult with the IRS as needed - and remember that GoCo's Compliance and HR support center helps you stay up to date with 2021 COVID legislation and related information, as well as providing advisors that can give guidance on HR-related things.
What do employers and HR need to stay mindful of in how FFCRA’s expiration interacts with existing FMLA policies?
The EFMLA under FFCRA counts against an employee's regular FMLA entitlement. In other words, the FFCRA limited regular FMLA and EFMLA to a combined total of 12 weeks.Therefore, if an employee took 4 weeks of FFCRA FMLA in 2020 for a qualified reason, they could potentially have only up to 8 weeks of unpaid FMLA leave in 2021.
Another factor that determines leave eligibility is that when employers are covered under both FFCRA and FMLA, the "12 weeks in 12 months'' clocks aren't always aligned - it depends on what 12-month period the employer uses for measuring the availability of FMLA. This could be a calendar year, a fiscal year, another fixed 12-month period (such as employee anniversary date), a twelve-month period measured forward from the use of FMLA, or a rolling 12-month period measured backward from the use of FMLA.
This means that depending on how an employer determines its FMLA leave year, an employee could qualify for a new bucket of FMLA leave on January 1, 2021, leaving them with an additional twelve weeks of FMLA under the FFCRA to use through March 31, 2021.
GoCo can help with the COVID-19 leave tracking feature by allowing you to manage all EFMLA and EPSL with the click of a button in GoCo’s all-in-one HR platform - in the new year, regardless of the leave.
Since it's no longer mandatory, what should you consider when deciding if you should/can offer COVID-19 paid leave through the new year?
How is your business doing economically? What grants can you apply for to help pay for this employee leave if reimbursement tax credits expire? If offering the paid leave will cause hardship, how can you manage costs by communicating with key vendors and landlords?
Offering leave will incentivize people to stay home if they're concerned that they may have COVID-19. Failing to offer leave may encourage people to come in, and potentially spread illness - ultimately impacting a larger number of staff. Does your current staffing model account for potential mass illness?
Choosing not to provide leave may lead to employees feeling demoralized, upset, or fearing workplace illness and contagion at the hands of their colleagues. Do you have strategy and messaging in place to address these fears and concerns?
Ultimately, if you choose to offer paid leave, there are a number of steps that you should be sure to take.
1. Get clarification: Consult with the relevant professionals to ensure that you understand the implications and compliance requirements.
2. Inform people: Alert your staff of the decision as early as possible - so that they can act promptly if needed or if an emergency arises.
3. Establish (or continue) a universal form: Ensure that everyone reports the same information in a standardized format for proper documentation.
From an operational standpoint, HR managers will need to consider the administrative burden that may come from tracking and managing COVID-19 related paid leave, as well as the filing process for credits. Implementing and maintaining a COVID-19 leave policy means staying on top of leave balances, documentation data, required reasons, and more. Modern HR software like GoCo comes built with COVID-19 paid leave tracking features to streamline processes. HR professionals are able to track time-off requests, approvals, and supporting documents are collected and tracked digitally, which takes away the burden of compliance for managers.