With the end of 2020 came the end of mandated leaves under the Families First Coronavirus Response Act (FFCRA). The end of the mandates, though, did not mean the end of the FFCRA. Instead, Congress has extended and expanded the leave provisions of the FFCRA, permitting qualifying employers to offer expanded FMLA (EFMLA) and emergency paid sick leave (EPSL) on a voluntary basis and to continue to claim the associated tax credits.
The FFCRA in its original form required public and private employers with fewer than 500 employees to provide both paid and unpaid leave to employees with certain pandemic-related absences. The mandatory nature of these leave entitlements expired on December 31, 2020. Through the Comprehensive Appropriation Act 2021, Congress extended the ability of covered employers to allow employees to use any remaining leave balances and to access the payroll tax credits intended to cover the costs of these leaves through March 31, 2021. With the recent passage of the American Rescue Plan Act (ARPA), Congress further extended the provisions of the FFCRA until September 30, 2021, as well as expanding some of its key provisions.
Leave-Qualifying Reasons. Congress added three new leave-qualifying reasons to the six reasons already included in the FFCRA:
Moreover, whereas the use of EFMLA was previously limited solely to the provision of child care due to school or day care closure, the ARPA allows the use of EFMLA for any of the reasons that qualify for EPSL, including the three new reasons listed above.
Available EPSL Hours. The ARPA refreshed the bank of EPSL available to employees. Beginning April 1, 2021, employees at qualifying, voluntarily complying employers have access to 80 hours of EPSL. This includes employees who had exhausted their EPSL leave prior to April 1.
Paid EFMLA. Previously, the first two weeks of EFMLA were unpaid, though an employee with EPSL could use available EPSL to cover some or all of these two weeks. Under the ARPA, all 12 weeks of EFMLA are paid. To ensure that the available tax credits matched with this expanded paid leave option, the ARPA increased the maximum tax credit allowable per employee for EFMLA from $10,000 to $12,000 beginning April 1, 2021. Practically speaking, this means that an employee who had used all 12 weeks of EFMLA prior to April 1 with two of those weeks being unpaid could qualify for two additional paid weeks of EFMLA.
Anti-retaliation Provisions. Employers choosing to voluntarily offer FFCRA benefits should keep in mind the anti-retaliation provisions included in the ARPA. An employer offering benefits under the FFCRA will be disqualified from receiving the accompanying payroll tax credit if the employer either (1) fails to comply with the FFCRA, including its anti-retaliation provisions or (2) discriminates in favor of highly compensated employees, full-time employees or employees on the basis of employment tenure with respect to leave.
With the extension and expansion of the FFCRA, the ARPA provides a valuable tool for qualifying employers to continue to offer paid pandemic-related leaves to employees while funding these benefits through tax credits. Employers who choose to take advantage of these benefits, though, should not forget the key compliance requirements upon which the availability of the offered tax credits apply.