On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARPA) into law, providing an estimated $1.9 trillion in stimulus to aid in the COVID-19 pandemic. Among the various relief provisions are updates to the Families First Coronavirus Response Act (FFCRA) paid leave requirements. While there is no mandate for employers to continue providing FFCRA leave, an employer who chooses to do so can still take the associated tax credits for an additional period of time, subject to certain provisions.
The following is a list of the different ways the ARPA extended and expanded the FFCRA.
- Tax Credits Extended: The ARPA extends tax credits available to employers who voluntarily provide FFCRA in 2021 from March 31, 2021, to September 30, 2021.
- New Qualifying Reasons: The FFCRA originally had six qualifying reasons when it was introduced. Under the ARPA, tax credits are now available for providing FFCRA leave under any of the original six reasons, as well as new qualifying reasons, including absences related to receiving a COVID-19 vaccine. These include situations where:
- the employee is seeking or awaiting the results of a diagnostic test or medical diagnosis for COVID-19, or their employer has requested such a test or diagnosis;
- the employee is obtaining immunization related to COVID-19; or
- the employee is recovering from any injury, disability, illness, or condition related to such immunization.
- Additional Emergency Paid Sick Leave: The ARPA resets a 10-day limit for emergency paid sick leave starting April 1, 2021, and through September 30, 2021. This means that if employees previously exhausted their entitlement to paid sick leave under the FFCRA, they now have another 10 days to use, and employers will be eligible for a tax credit if they choose to voluntarily provide the leave. At this time, we are awaiting further guidance from the Department of Labor regarding the additional time, as 10 days could technically be more than 80 hours if an employee works more than eight hours a day. Regardless, ARPA does provide for the additional bucket of leave, but to reiterate, providing this additional leave is not required.
- Non-Discrimination Requirement: Employers who choose to provide the qualifying paid leave under the FFCRA and want to qualify for the tax credit are prohibited from discriminating in favor of highly compensated employees, full-time employees, or on the basis of employment tenure.
The additional tax credit benefits if employers choose to voluntarily extend FFCRA leave can—to the extent possible—complement similar leave benefits. For example, California, like many other states, has imposed COVID-19 related paid sick leave obligations on employers. Specifically, beginning March 29, 2021, California employers with more than 25 employees nationally will have to provide their California employees with up to 80 hours of COVID-19 related paid leave pursuant to a recent bill signed by the California governor on March 19, 2021. The reasons for which an employee can take COVID-19 paid sick leave under California’s law generally align with the reasons permitted under the FFCRA, including the additional qualifying reasons provided for under the ARPA. The leave is retroactive to January 1, 2021, and the statute expires on September 30, 2021.
California’s supplemental paid sick leave may run concurrently with other forms of COVID-19 paid leave, including FFCRA, if certain conditions are met. So long as the FFCRA leave is provided for reasons overlapping with the California supplemental paid sick leave, the two “buckets” of leave can run contemporaneously. An employer can thus use paid leave provided under FFCRA as an offset if that leave (1) was provided to an employee for any of the California law’s covered reasons and (2) compensates the covered employee in an amount equal to or greater than the amount of compensation for COVID-19 supplemental paid sick leave to which the covered employee is entitled.
Similarly, Colorado extended paid leave requirements under the Healthy Families and Workplaces Act (HFWA) beginning in July 2020 and has since extended benefits into 2021. Specifically, employers with 15 or more employees must provide up to 80 hours of COVID-19 paid leave for the same qualifying reasons as those under the FFCRA. For employers that do decide to voluntarily extend FFCRA leave, any tax credits that could be sought under the FFCRA could be used to cover costs for HFWA paid sick leave and offer an opportunity to recoup the cost of the leave.
We will continue to monitor other state laws and regulations related to COVID-19 paid sick leave obligations, and we expect that the Department of Labor will release additional guidance soon, further clarifying the changes under the ARPA.