Feds Promote Expanded Paid Leave with Tax Credits, Through September 30, 2021

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARPA), extending payroll tax credits provided under the federal Families First Coronavirus Response Act (FFCRA) into Fall, 2021.

The FFCRA, which expired December 31, 2020, required two types of COVID-related paid leave:

(1) up to 80 hours of emergency paid sick leave on any one of six criteria (subject to a quarantine or isolation order; advised by a health care provider to self-quarantine; experiencing symptoms, etc.) (Emergency PSL); and

(2) up to 10 weeks more of partially paid emergency family and medical leave to care for a child whose school or place of care is closed due to COVID-19 related reasons (E-FMLA Leave).

See, Federal Coronavirus Workplace Relief – New Paid Sick Leave, Family Leave and Tax Credits Effective April 2, 2020 (March 23, 2020)

To promote an employer’s continuing voluntary provision of such paid leave benefits, the ARPA permits participating businesses to take tax credits on expanded sets of criteria for these two types of COVID-related covered leaves between April 1, 2021 and September 30, 2021.

Employers who choose to provide such optional benefits must comply with all applicable ARPA rules to qualify for the tax credits, including:

• “Reset” additional allotments of emergency paid leave: Eligible employees shall now receive a fresh 80 hours of Emergency PSL and up to an additional 12 weeks of partially-paid E-FMLA Leave between April 1 and September 30, 2021 even if they previously exhausted such allotted leaves under the FFCRA.

• Expanded grounds for Emergency PSL: Employers who opt in for these ARPA credits must provide emergency paid sick leave on time missed ● on any of the six grounds in the FFCRA, plus ● to get a COVID vaccine, ● to recover from adverse effects of the vaccine, or ● while seeking or awaiting the results of a COVID test/diagnosis due to workplace exposure or at the employer’s discretion.

• Expanded grounds for E-FMLA: Employers who opt in for the credits must provide emergency partially paid family leave for an employee caring for a child whose school or place of care is closed due to COVID-19 related reasons (the prior qualification for such leave under the FFCRA) or who meets any of the now-expanded PSL leave grounds, including the original six grounds in the FFCRA or ● any of the three new criteria in the above Emergency PSL bullet point.

• Increased emergency paid family leave tax credit: The ARPA increases emergency family leave paid wages from $10,000 per employee to $12,000.

• Non-discrimination requirement: Employers must provide these paid leave benefits to all workers across the boards. Thus, employers may not grant these benefits based on high earnings, full-time status or seniority. (The FFCRA is silent on this point.)

Thus, participating employers should update their policies and forms and consult with legal and tax advisors for assistance complying with these provisions of the ARPA.

See also:

• Once Certain Constant: Change – New Retroactive Paid Pandemic Leave Requirements. Revisions Coming 2021 Handbook & Forms (March 19, 2021)
• Stay-Away Exclusion Pay Required Pandemic Wages for Positive Test or Workplace Exposure (March 18, 2021)
• What’s New 2021: Paid Pandemic Leave In The New Year – Some Benefits Optional, Some Mandatory (January 15, 2021)

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth
March 25, 2021