As part of the American Rescue Plan Act of 2021 (ARPA), the $1.9 trillion COVID-19 relief bill signed by President Biden on March 11, 2021, employers with fewer than 500 employees may continue receiving tax credits for voluntarily offering employees paid leave under the Families First Coronavirus Response Act (FFCRA). As explained in a prior Alert, the terms of the FFCRA expired on December 31, 2020, and employers are no longer required to provide paid leave. Under the newly-signed ARPA, employers are able to receive tax credits until September 30, 2021, if they choose to continue providing leave under the FFCRA’s Emergency Paid Sick Leave (EPSL) and expanded Family and Medical Leave (E-FML), respectively. Additionally, the ARPA enhances EPSL and E-FML in a number of material ways.
The following is a summary of key changes to the FFCRA, which become effective April 1, 2021:
- EPSL and E-FML Remain Voluntary - The ARPA allows employers to choose whether to continue providing leave under EPSL and E-FML. Employers with fewer than 500 employees who elect to offer qualified leave are eligible to receive tax credits until September 30, 2021.
- Expansion of Qualifying Reasons - In addition to the qualifying reasons under the EPSL and E-FML (covered in our prior alerts, available here and here), the ARPA extends qualifying reasons to include:
- Seeking or awaiting the results of a COVID-19 diagnosis;
- Obtaining a COVID-19 immunization;
- Recovering from any injury, disability, illness, or condition related to a COVID-19 immunization.
Under the ARPA, employees may now use E-FML for the same qualifying reasons as the EPSL, including the above-mentioned newly-added qualifying leave expansions.
- Restart of 10-Day Limit for Paid Sick Leave - The ARPA resets the number of days available for the employment tax credit. Employers may receive a tax credit for employees who have already used at least 10 days of EPSL leave. Beginning April 1, 2021, the 10-day limit will be reset, and any days taken previously are not counted toward the 10-day limit.
- Enhanced E-FML - E-FML originally required a total of 12 weeks of leave, with 10 weeks being paid at two-thirds of regular wages (up to $200 per day). The ARPA, however, allows employers to voluntarily offer E-FML as a paid benefit for the full 12 weeks. Because E-FML is an expansion of FMLA, the amount of E-FML that can be used by an employee may depend on the amount of FMLA otherwise available to the employee.
- Additional Non-Discrimination Rules - Employers who choose to provide FFCRA leave are prohibited from discriminating in favor of highly compensated employees, full-time employees, or on the basis of employment tenure.
