American Rescue Plan Act of 2021
On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (ARPA), which extends and expands the ability of certain private employers to receive refundable tax credits for voluntarily offering paid sick and family leave related to COVID-19.
The FFCRA and the First Extension
Last year, Congress passed the Families First Coronavirus Response Act (FFCRA) which, in part, required employers with fewer than 500 employees to provide two weeks of emergency paid sick leave (EPSL) for employee who are not able to work due to specific COVID-19-related reasons, as well as a temporary expansion of coverage under the Family and Medical Leave Act (FMLA) which allowed employees to take their 12 weeks of FMLA leave to manage school and child care closures associated with COVID-19. For the purpose of this article, we will call such family leave Emergency Family and Medical Leave (EFML). These requirements expired on December 31, 2020, but, due to the December stimulus bill, covered employers could still voluntarily allow employees to use any remaining EPSL or EFML and receive a corresponding tax credit through March 31, 2021.
The New Expansion and Extension
The ARPA extends that available tax credit for employers voluntarily giving employees remaining EPSL or EFML through September 30, 2021. The ARPA also adds the following:
New/Reset Bank of EPSL & EFML:
Employers may grant a new 10-day bank of EPSL and 12-week block of EFML starting April 1, 2021 for employees who qualify.
New Reasons for EPSL & EFML:
Originally, the following were qualifying absences for employees to receive paid leave under the FFCRA:
Employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
A health care provider recommends that the employee self-quarantine;
Employee is experiencing COVID-19 symptoms;
Employee is caring for a family member in quarantine;
Employee’s child’s school or childcare provider is unavailable because of COVID-19 precautions.
The ARPA adds two new reasons:
Employee is getting a COVID-19 vaccine.
Employee is recovering from adverse reactions to the vaccine.
The ARPA also clarified that EFML can be used for the same purposes as EPSL and is not limited to taking care of others.
Expansion of EFML
The ARPA clarified that it allows tax credits for up to 12 weeks of EFML at 2/3 the employee’s regular rate, up to $200 a day and a total of $12,000. It is not limited to 10 weeks.
Under the ARPA, the tax credit will not be available to employers who offer the paid leave in a manner that discriminates in favor of highly compensated employees, full-time employees, or employees on the basis of tenure.
Again, this is not a mandatory program; however, employers who choose to offer EPSL or EFML should be aware of the above changes and make sure that they are following the program requirements or risk losing their tax credits and opening themselves up to claims of discrimination.
Additionally, the Department of Labor has maintained an FFCRA Q&A page, to which it is likely to add further information regarding the ARPA, so there may be more guidance available there in the coming weeks.