Background

Congress enacted the Families First Coronavirus Response Act (FFCRA) in March 2020, requiring employers with fewer than 500 employees to provide employees with short-term paid sick leave for various reasons related to COVID-19. Fortunately, businesses can receive tax credit reimbursements for FFCRA payroll.

Although mandatory FFCRA paid leave ended on December 31, 2020, Congress provided employer’s with the choice of providing FFCRA paid sick leave until March 31, 2021.

Extension to September 30, 2021

With the recent passage of the American Rescue Plan Act of 2021 (ARPA), employers opting to provide FFCRA paid leave may now receive tax credit reimbursements through September 30, 2021.

The clock begins anew on April 1, 2021. Even if an employer claimed a tax credit for providing FFCRA paid leave to an employee before April 1, 2021, the employer may choose to provide up to ten (10) days of paid sick leave to that same employee beginning April 1, 2021. Employers may also claim a tax credit for providing up to twelve (12) weeks of paid family leave.

Expansion of Qualifying Reasons for Paid Sick Leave and Paid Family Leave

Prior to April 1, 2021, an employee could only qualify for FFCRA paid leave under six possible reasons:

1. the employee is subject to a federal, state or local quarantine or isolation related to COVID-19;
2. the employee has been advised by a healthcare provider to self-quarantine;
3. the employee is experiencing COVID-19 symptoms and seeking a diagnosis;
4. the employee is caring for an individual who is subject to quarantine or is self-quarantining;
5. the employee is caring for a child whose school or place of care is closed (or child care provider is unavailable) because of COVID-19; or
6. the employee is experiencing any other substantially similar condition specified by the US Secretary of Health and Human Services.

Beginning April 1, 2021, employers may provide FFCRA paid leave for three additional reasons:

1. if an employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 and after an exposure to COVID-19 or test or diagnosis at the employer’s request;
2. if an employee is obtaining immunization related to COVID-19; or
3. if an employee is recovering from any injury, disability, illness, or condition related to a COVID-19 immunization.

Under ARPA, an employee may qualify for either FFCRA sick leave or FFCRA family leave under any of the above nine (9) reasons.

Additional Non-Discrimination Rules

Businesses who choose to provide paid leave must also abide by new non-discrimination rules. FFCRA tax credits are not available to employers who discriminate:

1. in favor of highly compensated employees,
2. in favor of full-time employees, or
3. on the basis of an employee’s tenure with the company.

In the event an employer offers FFCRA paid sick leave to its employees, the employer would be wise to apply it in a uniform and non-discriminatory manner.