What Employers Need to Know About the American Rescue Plan Act & Paid Leave
The Families First Coronavirus Response Act (FFCRA) was passed in March 2020 and stated that employers with fewer than 500 employees were required to provide paid leave to eligible employees. Those businesses with employees unable to work for various COVID-19 related reasons were able to get a tax credit under the Emergency Paid Sick Leave Act (EPSLA) and the Emergency Family and Medical Leave Expansion Act (EMFLEA).
These provisions ended on December 31, 2020; however, employers could still voluntarily choose to provide paid leave and receive tax credits through March 31, 2021. The American Rescue Plan Act of 2021 (ARPA), which President Biden signed on March 11, 2021, has extended the period through which employers may choose to voluntarily provide FFCRA paid sick or paid family leave through September 30, 2021. It also made some additional changes that benefit both employer and employee.
Families First Coronavirus Response Act (FFCRA) of 2020
Under the Emergency Paid Sick Leave Act in 2020, employees were granted 10 days (80 hours) of emergency paid sick leave. Any employers who chose to stop paying for leave at the original December 31, 2020, cutoff date were unable to receive tax credits for employee leave after the date. The employees forfeited any remaining leave time.
The FFCRA allowed employers to voluntarily choose to provide paid leave in exchange for tax credits through March 31, 2021. However, employees still had 10 days total to use throughout the original and voluntary time.
The following were listed as qualifying reasons for leave related to COVID-19:
- The employee is subject to a government quarantine or an isolation order related to COVID-19.
- The employee has been advised by a healthcare provider to self-quarantine due to COVID-19.
- The employee has symptoms of COVID-19 and is seeking a medical diagnosis.
- The employee is caring for an individual subject to either (1) or (2).
- The employee needs to care for a child whose school or place of care is closed or whose childcare provider is unavailable due to coronavirus.
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
Under the Emergency Family and Medical Leave Expansion Act (EFMLEA), the above reasons were added as grounds for FMLA leave. However, the employee was required to take the first ten days as unpaid leave. Subsequently, the employer had to provide leave at two-thirds of the employee’s regular rate of pay, capped at $200 per day and $10,000 total, which corresponded to the caps on the tax credits provided to offset the costs of this legislation.
Note: There were no non-discrimination provisions in the original FFCRA.
American Rescue Plan Act (ARPA) of 2021
The American Rescue Plan Act has extended the period through which employers can volunteer to provide paid leave through September 30, 2021.
Employees may take an additional 10 days (80 hours) of paid sick leave from April 1, 2021, through September 30, 2021. In other words, “the clock has been reset” on emergency paid sick leave.
Under the American Rescue Plan Act, the following reasons for paid leave have been added:
- Obtaining COVID-19 immunization
- Recovering from an injury, disability, illness, or condition related to the immunization
- Seeking or awaiting the result of a COVID-19 test or diagnosis when the employee has either been exposed to COVID-19 or the employer has requested the test or diagnosis
The American Rescue Plan Act & Paid Leave
The American Rescue Plan Act has increased the amount of EFMLEA leave that may be paid. Employers may choose to make all 12 weeks of EFMLEA leave paid and may qualify for tax credits for the entire 12 weeks. In addition, the caps for the tax credits have increased from $10,000 to $12,000. Employees are still entitled to be paid at two-thirds of their regular rate with a $200 daily cap. An employer can always agree to provide additional compensation but will not be entitled to a tax credit for any payments above two-thirds of the regular rate.
The American Rescue Plan Act has added non-discrimination provisions that prohibit the tax credits for any employer who discriminates with respect to leave under both the EPSLA and the EFMLEA:
- In favor of highly compensated employees
- In favor of full-time employees
- On the basis of employment tenure
What is Not Included in the American Rescue Plan?
- No Increase to Federal Minimum Wage
- No Elimination of Tip Credit
- No Paid Leave Entitlement
How ESS Can Help You
Employer Support Services (ESS) guides clients regarding what qualifies as EPSLA/EMFLEA leave. Our team can assist you with tracking time off and calculating the appropriate rate of pay. We also help with benefits paperwork by sending out all necessary notices and handle enrollments and terminations. Contact us today for our services at 225-364-3000.