President Biden has signed into law the American Rescue Plan Act of 2021 (the ARPA). Among other things, the ARPA incentivizes employers to continue to provide COVID-19 paid sick leave by extending the Families First Coronavirus Response Act (FFCRA) tax credits through September 30, 2021.
As we blogged about here, the requirement to provide emergency paid sick and emergency paid family and medical leave (EFMLA) leave under the FFCRA ended on December 31, 2020. As of January 1, 2021, covered employers were permitted to voluntarily extend paid sick leave (80 hours at full pay up to a cap) and EFMLA (12 weeks at 2/3 pay up to a cap) and receive a corresponding payroll tax credit through March 31, 2021.
As a result of the ARPA, covered employers may again voluntarily extend paid sick and EFMLA and receive a tax credit for qualifying leave that is taken between April 1, 2021 and September 30, 2021. But this time, there are a few changes.
*New* FFCRA Qualifying Reasons
The ARPA adds qualifying reasons for the tax credit for an employee who is:
- subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- subject to the advice of a health care provider to self-quarantine related to COVID-19;
- experiencing COVID-19 symptoms and is seeking a medical diagnosis;
- caring for an individual subject to an order to quarantine or isolate or in self-quarantine;
- caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.
- *new* obtaining a COVID-19 vaccination;
- *new* recovering from an injury, disability, illness or condition related to a COVID-19 vaccination; or
- *new* seeking or awaiting the results of a COVID-19 test or diagnosis because either the employee has been exposed to COVID-19 or the employer requested the test or diagnosis.
*New* FFCRA Paid Sick Leave Bank
The ARPA also reloads the allotment of 80 hours of paid sick leave per employee for qualifying FFCRA leave starting April 1, 2021. This means that even if an employer has already taken an FFCRA tax credit for paid sick leave paid to an employee before April 1, 2021, the employer may “reset” the employee’s paid sick leave allotment effective April 1, 2021, and seek a tax credit for an additional 80 hours of paid sick leave.
However, the ARPA does not reload any new allotment of EFMLA, which remains capped at 12 weeks; however, the qualifying reasons for EFMLA will now include any of the eight qualifying reasons noted above. The ARPA also provides that the first two weeks of EFMLA can be paid, and it increases the maximum amount of FFCRA tax credits for such leave from $10,000 to $12,000 annually per employee.
*New* Anti-Discrimination Provision
Additionally, the new law clarifies that employers cannot discriminate in granting paid sick leave or EFMLA to different classes of employees based on status as highly compensated employees, full-time employees, or employees on the basis of employment tenure with such employer.
Aside from changes to the FFCRA, the new law also includes other important elements that impact employers, including subsidies for certain employer-paid COBRA premiums, extensions of the employee retention tax credit and federal unemployment insurance, and expanded subsidies to reduce Affordable Care Act premiums.
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