American Rescue Plan Extends FFCRA Tax Credit, But Not the Mandate
Originally published on March 23, 2021
Updated on August 16th, 2022
On March 11, 2021, President Biden officially signed into law the American Rescue Plan Act of 2021 (ARPA). While the ARPA did not extend the mandate to provide leave under the now-expired Family First Coronavirus Response Act (FFCRA), it does incentivize small and midsize employers to continue providing paid time off for COVID-related reasons. The ARPA also expanded the reasons for taking such leave.
ARPA Expands Employer Tax Credits and Qualifying Reasons for Emergency Paid Sick Leave
The FFCRA mandate expired on Dec. 31, 2020. However, the Consolidated Appropriations Act of 2021 signed into law on Dec. 27 extended the FFCRA tax credits through March 31, 2021 for eligible employers who want to continue providing the leave voluntarily.
Now, under ARPA, tax credits continue to be available for paid sick leave and paid family leave through Sept. 30, 2021. The new law also added the following reasons employees can use this leave:
- Obtaining a COVID-19 immunization
- Recovering from an injury, disability, illness or condition related to COVID-19 immunization
- Seeking or awaiting the results of a COVID-19 test or diagnosis because either the employee has been exposed to COVID or the employer requested the test or diagnosis
The ARPA has also increased the amount of wages that an employer can claim for paid family leave credit from $10,000 to $12,000 per employee. The number of days of paid leave a self-employed individual can claim has also increased from 50 to 60 days.
Additionally, the ARPA resets the 10-day limit on the maximum number of days for which an employer can claim the sick leave credit as of April 1. Any days an employee took prior to April 1, 2021 will not count toward the cap following that date.
Finally, the ARPA includes a non-discrimination requirement. Employers may not claim the tax credit on any paid leave in any calendar quarter if the employer discriminates in favor of highly compensated employees, full-time employees or based on employment tenure.
Here’s What Stayed the Same with FFCRA Leave Benefits
As a reminder, in addition to the new reasons for COVID-related leave stated above, an employee qualifies for paid sick leave (and the employer is eligible for the tax credit) if the employee is unable to work or telework due to any of the following COVID-related conditions:
- Is subject to quarantine or an isolation order
- Was told to self-quarantine by a healthcare provider due to COVID-19
- Is experiencing symptoms of COVID-19 and seeking a medical diagnosis
- Caring for an individual subject to a quarantine or isolation or has been advised to self-quarantine
- Caring for a son or daughter whose school or place of child care is closed due to COVID-19
- Is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
An employee qualifies for the expanded FMLA if the employee is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.
Applicability of tax credits under the ARPA are subject to IRS guidance. As it did in response to the Consolidated Appropriations Act of 2021, we expect the IRS will issue additional FAQs in the near future. Stay tuned for more information from your HR consultants; in the meantime, please reach out to us if you have questions.
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