American Rescue Plan Act Extends FFCRA Tax Credits and Expands Employee Options
President Biden signed the eagerly-anticipated $1.9 trillion COVID-19 stimulus plan, the American Rescue Plan Act of 2021 (the “ARPA”). While households across the country look forward to stimulus checks, the ARPA also renewed the Families First Coronavirus Relief Act’s (“FFCRA”) voluntary tax credit for paid sick and family leave through September 30, 2021 and made other important changes.
The FFCRA continues to apply to private employers with fewer than 500 employees nationwide. While the requirement to provide FFCRA leave expired December 31, 2020, employers were able to voluntarily provide FFCRA leave through March 31, 2020 and offset the cost of this leave (and certain healthcare-related expenses) through a payroll tax credit. The ARPA again extends employers’ ability to offer this paid leave to employees, and to offset their costs through a tax credit. The tax credit now expires September 30, 2021.
Importantly, the ARPA states that employees are entitled to a new bank of FFCRA 80 hours of paid sick time and ten weeks of family leave on April 1, 2021. This means that if employers voluntarily provide FFCRA after this date, employees who took FFCRA leave before April 1, 2021, may take it again.
Also of note, the ARPA extends the qualifying reasons for which FFCRA leave is available. Employers can obtain FFCRA tax credits for employees who request time off for the following COVID-19 related reasons:
- Vaccination or vaccination side effects;
- Complying with federal, State or local quarantine or isolation orders (including for example Cal/OSHA regulations barring employees from the workplace after they have been exposed to COVID-19);
- Self-quarantine under the advice of a health care provider;
- Caring for an individual complying with federal, State or local quarantine or isolation orders or self-quarantining under the advice of a health care provider;
- Experiencing symptoms and seeking a diagnosis or test;
- Seeking a test or awaiting a diagnosis after being exposed to COVID-19;
- Seeking a test or awaiting a diagnosis after an employer’s request for the same; and
- Caring for a child whose school or childcare has closed, or child care provider is otherwise unavailable, due to COVID-19 precautions.
Finally, the ARPA increases the cap on the amount of emergency FMLA pay an employee may receive under the FFCRA. The maximum tax credit for EFMLA is now $200.00 per day, or $12,000.00 total per employee for family leave wages, up from the previous $10,000.00 cap.
Employers should carefully consider whether to voluntarily extend FFCRA leave in light of these changes. We recommend employers review and update their forms and policies related to sick and family leave to conform to the renewed FFCRA and ensure that record-keeping practices are accurately tracking employee sick and leave time.
Contact the Firm’s COVID-19 Task Force for assistance. As with all new legislation and COVID-19 related news, we will monitor and share updates from federal and State agencies as they are published. For information regarding the broader impact of the ARPA on businesses and individuals, see AALRR alert American Rescue Plan Dispatches Aid to Businesses and Individuals.