Item floats in front of the allays when the item is held in the off-hand.
Reproduce using the following command:
/summon minecraft:allay ~ ~ ~ {HandItems:[{},{id:grass_block,Count:1b}]}
If "LeftHanded = 1b", then use the following command to reproduce:
/summon minecraft:allay ~ ~ ~ {LeftHanded:1b,HandItems:[{},{id:grass_block,Count:1b}]}
This issue is an extension of MC-249803.