The American Rescue Plan Act of 2021 (ARPA) extends tax credits to those employers who voluntarily choose to provide paid leave benefits to employees under the Families First Coronavirus Response Act (FFCRA).

As you may recall, beginning January 1, 2021, employers with fewer than 500 employees could voluntarily provide paid leave to employees according to the FFCRA for certain qualifying reasons and receive tax credits for the paid leave.  The ARPA has extended employers’ eligibility for tax credits through September 30, 2021.  However, the ARPA contains new non-discrimination rules stating that FFCRA tax credits will not be made available to employers who discriminate in favor of highly compensated employees, full-time employees, or employees on the basis of tenure.

The ARPA also expanded the list of qualifying reasons for taking paid leave under the FFCRA.

APRA Original Qualifying Reasons for FFCRA Leave

The original qualifying reasons for FFCRA leave included leave for an employee who is unable to work (or unable to telework) for any of the following reasons:

1. The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
2. The employee has been advised by a healthcare provider to self-quarantine related to COVID-19.
3. The employee is experiencing COVID-19 symptoms and is seeking a medical diagnosis.
4. The employee is caring for an individual subject to an order described in (1) or in self-quarantine as described in (2).
5. The employee is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.

ARPA New Qualifying Reasons for FFCRA Leave

The APRA’s new additional qualifying reasons for FFCRA leave include leave for an employee who meets any of the following criteria:

1. The employee is obtaining a COVID-19 vaccination.
2. The employee is recovering from an injury, disability, illness or condition related to a COVID-19 vaccination.
3. The employee is 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.

The ARPA also resets the allotment of 80 hours (10 days) of Emergency Paid Sick Leave (EPSL) per employee beginning on April 1, 2021.

The ARPA does not create any new allotment of Expanded Family and Medical Leave (EFMLA) entitlement, which is capped at 12 weeks of leave in accordance with the Family and Medical Leave Act (FMLA). However, the ARPA does expand an employee’s eligibility to take EFMLA.  Previously, employees could only qualify for EFMLA according to reason 5 above – leave to care for children whose school or place of care was closed or unavailable for reasons related to COVID-19.  Beginning April 1, 2021, employees may now qualify for EFMLA leave for all of the eight qualifying reasons listed above.

Employers who are voluntarily providing paid leave benefits under the FFCRA are encouraged to review and revise their policies to ensure they will continue to qualify for tax credits in light of these new changes.