The latest COVID-19 relief law, the American Rescue Plan Act of 2021 (ARPA), extends the payroll tax credit for emergency paid sick leave and expanded Family Medical Leave Act (FMLA) leave first enacted by the Families First Coronavirus Relief Act (FFCRA).
The FFCRA required many employers to offer these COVID-19-related leaves between April 1 and December 31, 2020. Beginning January 2021, FFCRA leave is optional, but employers that elect to provide FFCRA-based leave may take a payroll tax credit to cover wages paid. The December stimulus bill extended these tax credits through March 31, 2021; now, the ARPA extends the credits through September 30, 2021.
In addition, the ARPA both expands and limits employers’ eligibility for tax credits in the following material ways:
While these tax credits make the decision to extend FFCRA more attractive, there are other considerations that may weigh for or against extending the leave. These considerations are likely to be employer-specific, given the nature of the work and workforce, the number of employees who are expected to have a qualifying need, and the risk that an employee will work when they may be exposing others, to avoid financial hardship.