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:
- It does not reinstate the FFCRA’s mandated leaves of absence. Therefore, despite this new law, an employer is not required to provide emergency paid leave to employees in 2021.
- It does not expand employer coverage under the FFCRA. Therefore, if an employer remains too large to have been covered under the FFCRA (500+ employees at the time of the leave), the employer is not required to provide leave, nor will the federal government provide any tax credit or other reimbursement for the cost of voluntarily providing leave.
- It may allow state and local government employers to recoup the cost of emergency paid leave using new tax credits.
What ARPA does:
- It allows FFCRA-covered employers, on a voluntary basis, to provide compliant paid leave beginning April 1, 2021 through September 30, 2021.
- If a FFCRA-covered employer voluntarily decides to provide compliant paid leave during the operative time period of ARPA:
- It increases the amount of wages that the employer can claim for paid family leave tax credit from $10,000 to $12,000 per employee.
- It allows an employer to claim the paid family leave tax credits for leave taken for any of the existing FFCRA-qualifying EPSL reasons. This means that leave for the following reasons now qualify for both EPSL and paid EFML tax credits:
- The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- The employee is caring for an individual who is subject to a qualifying quarantine or isolation order or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is caring for their son or daughter whose school or place of care has been closed or childcare provider is available, due to COVID-19 precautions;
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
- It expands the tax credit-qualifying leave (EPSL and EFML) reasons to include:
- The employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19, where the employee has been exposed to COVID-19 or the employer has requested such test or diagnosis;
- The employee is obtaining immunization related to COVID-19;
- The employee is recovering from any injury, disability, illness, or condition related to the COVID-19 immunization.
- It provides an additional two-week (up to 80 hours) emergency paid sick leave entitlement for each eligible employee, effective April 1, 2021. This allows an employer who elects to provide leave under this law to claim tax credits for additional leave taken by employees who previously used FFCRA-covered emergency paid sick leave prior to April 1, 2021.
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.