by Teresa R. Tracy
The Federal Families First Coronavirus Act (FFCRA) expired December 31, 2020. This leave was extended through March 31, 2021 for employers who voluntarily decided to extend it under the COVID-related Tax Relief Act of 2020 (Tax Relief Act), which was enacted in December 2020. The American Rescue Plan Act (ARPA) further extends the ability of FFCRA-covered employers to voluntarily extend this leave and codifies the related tax credits for employers that offer paid sick and family leave to eligible employees. ARPA became effective April 1, 2021. It extends the provisions created by the Families First Coronavirus Act (FFCRA) and the Tax Relief Act through September 30, 2021 and expands the qualifying reasons to use mandatory Emergency Paid Sick Leave (EPSL) and Emergency Family Medical Leave (EFML), both of which had otherwise expired on December 31, 2020, but were extended on a voluntary basis through March 31, 2021 through the Tax Relief Act.
LEAVE OF ABSENCE PROVISIONS
What ARPA does not do:
What ARPA does:
Thus, an employer who voluntarily elects to continue EPSL or EFML under ARPA can receive a 100% tax credit for up to 10 days of paid EPSL, capped at $511/day if the leave is used for one of the expanded eligibility reasons for EPSL discussed above or for absences related to COVID-19 for the employee. The leave is capped at $200/day if the paid sick leave is for the remaining permissible reasons under FFCRA, including absences to care for another individual for COVID-19 related reasons. In addition, these employers can also receive a 100% tax credit for up to 12 weeks of EFML, capped at $200/day and $12,000 in the aggregate.
The first two weeks of EFML are no longer unpaid, allowing employees to qualify for paid leave for all 12 weeks of EFML, subject to a corresponding tax credit.
Employers who choose to begin providing, or continue providing, paid sick leave get a “reset,” i.e., beginning April 1, 2021, employees who meet the COVID-related eligibility reasons are able to take an additional 10 days of sick leave. Eligible employees would also be allowed to use any remaining available EFML if the employer voluntarily agrees to provide FFCRA leave.
It is important to consider a new non-discrimination provision: an employer will not be able to claim the tax credit if it discriminates in favor of highly compensated employees, full-time employees, or on the basis of employment tenure when granting leave. An employer who voluntarily agrees to provide FFCRA leave under ARPA should grant leave across the board.
It is anticipated that the DOL will issue regulations in the near future. The IRS has issued a fact sheet to provide guidance on how to claim tax credit for the expanded FFCRA leave under ARPA for leave taken from April 1, 2021 through September 30, 2021.
 The FFCRA required all private employers with fewer than 500 employees and all public employers to provide 10 days of paid sick leave and up to 10 weeks of paid family leave to employees under certain pandemic-related circumstances. These mandatory leaves expired on December 31, 2020. The Tax Relief Act extended eligibility for EPSL and EFML through March 31, 2021, with an accompanying tax credit for private employers who voluntarily agreed to do so.
This article is made available for educational purposes and to provide general information on current legal topics, not to provide specific legal advice. The publication of this article does not create any attorney-client relationship and should not be used as a substitute for competent legal advice from a licensed professional attorney.