On March 11, 2021, President Joe Biden signed the American Rescue Plan (Plan) into law. Among other things, the Plan provides additional stimulus payments to qualifying Americans, extends federal unemployment benefits, provides more Paycheck Protection Program money, and extends the Families First Coronavirus Response Act (FFCRA) tax credit for providing paid leave to employees.
The FFCRA Leave Entitlement
The FFCRA required employers with fewer than 500 employees to provide paid leave to eligible employees who were unable to work or telework because the employee:
- was subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- had been advised by a health care provider to self-quarantine related to COVID-19;
- was experiencing COVID-19 symptoms and was seeking a medical diagnosis;
- was caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
- was caring for a child whose school or place of care was closed (or childcare provider was unavailable) for reasons related to COVID-19; or
- was experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
The American Rescue Plan
Under the FFCRA, employers were entitled to fully refundable tax credits to cover the cost of the leave paid for these periods of time during which employees were unable to work. Mandatory paid leave; however, expired on December 31, 2020. Under one of President Trump’s last actions as president, he extended the tax credit for employers until March 31, 2021. The leave was voluntary, but if an employer provided leave consistent with the FFCRA, then the employer was entitled to the tax credit.
The Plan signed by President Biden now extends this timeline to September 30, 2021 for an employer to receive a tax credit for providing voluntary leave for the FFCRA-related reasons. The Plan also provides the tax credit for employers who provide leave to employees:
- Who are getting vaccinated;
- Who are recovering from any injury, disability, illness, or condition related to such vaccination; or
- Who are 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).
As employees in the United States continue to get vaccinated, this incentive for employers to provide paid time off will aid in the continued fight against COVID-19.