On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (“the Rescue Plan”). Employers should be aware of the key employment provisions of the Rescue Plan in managing their workforce and in evaluating and implementing their COVID-19 workplace policies and procedures.
Notably, the $1.9 trillion COVID-19 relief package includes provisions extending and expanding the Families First Coronavirus Response Act (“FFCRA”). Here is what employers should know.
FFCRA Paid Leave Tax Credit Extension
Under the Rescue Plan, employers with fewer than 500 employees may continue to voluntarily provide emergency paid sick leave, and emergency family and medical leave benefits, under FFCRA. As you may recall, the mandate that employers provide such paid leave ended December 31, 2020. (The ability to recoup the cost of FFCRA leave was previously extended in December 2020 through March 31, 2021.) Under the new legislation, if employers opt to voluntarily provide FFCRA benefits to eligible employees, they will continue to receive reimbursement in federal tax credits (up to $200 or $511 per employee per day, as applicable, depending on the reason for leave) through September 30, 2021.
Amendments to the FFCRA
In addition, employers who voluntarily provide FFCRA benefits under the new legislation should note the following amendments (effective April 1, 2021):
- New Qualifying Reasons for FFCRA Leave: In addition to the six reasons for leave previously set forth in the FFCRA, an employee now qualifies for paid sick time if the employee is unable to work (or unable to telework) due to a need for leave because the employee is:
- obtaining an immunization related to COVID-19 or recovering from any injury, disability, illness or condition related to such immunization; or
- seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19, when such employee has been exposed to COVID-19 or the employer has requested such test or diagnosis.
Previously, leave under the FFCRA was not available if the employee was not exhibiting symptoms and had not been ordered to quarantine by the government or a doctor but was being tested at the employer’s request.
- Reset of Paid Sick Leave: The new law provides a refreshed bank of 10 additional days of paid sick leave as of April 1, 2021, for which the tax credit may be recovered. Therefore, employees who already exhausted all leave available under the original FFCRA can use additional leave between April 1, 2021, and September 30, 2021.
- Emergency Family and Medical Leave Tax Credit Expansion: Employers may claim tax credits for emergency FMLA leave arising from any of the reasons set forth in the FFCRA. Previously, tax credits taken by employers to cover the cost of providing emergency FMLA leave was only available if the employee was unable to work (or telework) to care for their child whose school or place of care has been closed or was unavailable due to the public health emergency. The Act also removes the two week waiting period on emergency FMLA leave and raises the aggregate cap on emergency FMLA leave from $10,000 to $12,000.
- Non-Discrimination Rules: The Rescue Plan now imposes non-discrimination rules, so employers may not discriminate in offering leave in favor of highly compensated or full-time employees or based on tenure.
Employers who opt to voluntarily continue to offer employees benefits under the FFCRA should update their policies in accordance with the new law. If you have any questions regarding the new legislation, please contact ALG.