As of this afternoon, the American Rescue Plan Act of 2021 has passed both houses of the U.S. Congress and now moves to President Biden’s desk. Among several economic and healthcare related appropriations, the Act addresses employee leave related to COVID-19. Under the Act, the leave provisions of the Families First Coronavirus Response Act (FFCRA) are extended on a voluntary basis through September 30, 2021.
As you may recall, the FFCRA was signed into law last March and required employers with less than 500 employees to provide paid sick leave and expanded FMLA leave for several qualifying reasons related to COVID-19. That version of the Act expired on December 31, 2020. Congress then extended the leave provisions through March 31, 2021, but only on a voluntary basis, and continued to offer payroll tax credits for employers choosing to provide such leave. Now, the American Rescue Plan Act of 2021 again extends the FFCRA leave provisions, on that same voluntary basis, through September 30, 2021.
- Just as before, employers are not required to provide paid sick and FMLA leave, but if they do so voluntarily under the FFCRA, they are entitled to tax credits through September 30, 2021.
- For those employers that opt to provide paid sick leave, a new 10-day bucket of emergency paid sick leave will be available to employees starting April 1, 2021.
- The definition of qualifying paid family leave now will allow employers to obtain payroll tax credits for all qualifying uses of paid sick time, including for leave provided if an employee is subject to a quarantine or isolation order due to COVID-19 or is caring for someone in a similar situation.
- The paid sick and paid FMLA tax credits are extended to allow for leave taken to obtain a COVID-19 vaccine or recover from any injury, disability, illness, or condition related to the COVID-19 vaccine.
- The limit on the tax credit for paid family leave wages is increased, allowing credit on up to $12,000 in paid family leave wages. (Currently, the tax credit for paid FMLA is limited to $200 per day, and $10,000 total per employee.)
- A nondiscrimination rule has been added, establishing that employers cannot claim the payroll tax credits if paid leave provided to employees discriminates in favor of highly compensated or full-time employees, or discriminates on the basis of an employee’s tenure with the employer.
Overall, the new provisions of this Act maintain the voluntary nature of employer provided paid sick and FMLA leave. As the Act is signed into law, our attorneys will continue to monitor its implications for employers and keep you updated. Please reach out if you have any questions.