The Families First Coronavirus Response Act (“FFRCA”), which required that employers of fewer than 500 employees provide Emergency Paid Sick Leave (“EPSL”) and Expanded Family and Medical Leave (“EFML”) to eligible employees for designated COVID-19-related purposes, ended by its terms on Dec. 31, 2020. Although many expected the FFCRA protections to be extended due to the continuing pandemic, only a portion of the FFCRA was extended, through March 31, 2021, via the Consolidated Appropriations Act of 2021 (the “CAA”), signed into law on Dec. 27, 2020 (see our prior client alert on this topic here). The American Rescue Plan Act of 2021 (“ARPA”), signed into law on March 11, 2021, further extended and modified the FFCRA.
What does ARPA do? ARPA does not extend the mandate that covered employers provide EPSL or EFML. It does, however, make available to covered employers continuing payroll tax credits for EPSL and EFML through Sept. 30, 2021 (the tax credit previously expired on March 31, 2021, under the CAA).
How can employers qualify for the payroll tax credit? Notably, the payroll tax credit will apply only to employers previously covered by the FFCRA and employees eligible for leave under the terms of the FFCRA, as revised by ARPA (as outlined below). Prior FFCRA documentation requirements remain in effect for an employer to claim the expanded payroll tax credits offered by ARPA. (See our prior client alert on this topic here.)
How much leave must be provided? Covered employers may voluntarily continue to provide EPSL, provided that, to be eligible for the payroll tax credit, an employer must provide a new bank of up to 10 days of EPSL, available for use by employees between April 1 and Sept. 30, 2021. In addition, through Sept. 30, 2021, employers may voluntarily continue to provide employees with the remainder of the EFML to which they would have been entitled under the FFCRA and CAA. Like the CAA, ARPA appears to allow the decisions to continue EPSL and EFML to be made independently; in other words, an employer may elect to continue EPSL, but decline to extend EFML.
For what purposes can eligible employees use FFCRA leave under ARPA? Employees may use leave for the reasons originally specified in the FFCRA, i.e., when an employee is unable to work because the employee is quarantined, experiencing COVID-19 symptoms and seeking a medical diagnosis, has the need to care for an individual subject to quarantine, or must care for a child whose school or child care provider is closed or unavailable due to COVID-19. In addition, ARPA permits employees to use EPSL to obtain a COVID-19 vaccine, to recover from adverse reactions to a COVID-19 vaccine, and to seek and await the results of a diagnostic test or medical diagnosis of COVID-19 if the employee has been exposed to COVID-19 or his or her employer has requested such test or diagnosis.
In addition, ARPA greatly expanded the available use of EFML (up to 12 weeks) to include all of the new bases outlined above for using EPSL (whereas the FFCRA and CAA strictly limited permissible use of EFML to the inability to work due to closure of a child’s school or place of care).
How has the tax credit changed under ARPA? Notably, under ARPA, employers may claim a tax credit for the first two weeks of EFML leave (which previously had been unpaid under the FFCRA and CAA), with an increased EFML tax credit cap of $12,000, versus the prior cap of $10,000.
What should employers do? Covered employers should determine whether they will make available to employees a new bank of EPSL and/or allow employees to continue to use any EFML remaining as of Dec. 31, 2020, which they may permit until Sept. 30, 2021. Consistent guidelines should be used, as availability cannot be decided on a case-by-case basis; ARPA specifically prohibits discrimination in application of its voluntary provisions in favor of highly compensated employees, full-time employees, or employees with longer tenure. Employers should also consistently apply any leave policy to similarly situated employees outside of the categories enumerated in ARPA.
An employer can elect to make one type of leave, such as EPSL, available, but not the other. However, given the continuing payroll tax credit, the employer can provide employees with a virtually no-cost benefit by continuing to provide both EPSL and EFML. The employer must, however, ensure that employee eligibility requirements are being met and leaves are properly documented in order to maximize the tax benefit. Regardless of what the employer chooses to do, the policy should be clearly and promptly communicated to all employees.
Consider the interplay between various leave laws: Whether employers elect to continue offering EPSL or EFML, they should keep in mind the interplay with paid COVID-19-related leave under state and local law, as well as paid and unpaid leaves available under the Family and Medical Leave Act (“FMLA”), other applicable laws and employer policies. Where state and local laws provide paid leave for reasons that overlap with the FFCRA, it makes sense for employers to continue to offer EPSL and EFML in order to obtain the payroll tax credit that is not available when leave is provided only under state or local law. Employers should be sure to designate the leave as EPSL/EFML in such circumstances, and maintain proper documentation.
Moreover, some leaves are permitted to run concurrently, while others are not. Employers should review applicable rules, and expressly designate concurrently running leave periods where permitted. Also, remember that, even if an employee is no longer eligible for EPSL/EFML, the FMLA and/or other leave laws may apply.
These ever-changing laws create a landscape that is difficult to navigate. Keeping apprised in a timely manner of the legal requirements, employer options and legal and financial implications is critical. For example, the United States Department of Labor (the “DOL”) has been tasked with issuing implementation regulations or other guidance regarding the FFCRA implications of ARPA; however, it has not yet done so. Employers should continue to monitor for updates.
Our experienced legal counsel can assist in determining how best to proceed and in crafting comprehensive policies to effectuate employer decisions.