Under the Families First Coronavirus Response Act (“FFCRA”), private employers with 500 or less employees (“Covered Employers”) were required to provide paid leave to employees who were unable to work or telework due to certain COVID-19 related reasons (“FFCRA Leave”) between April 1 and December 31, 2020.
Though the requirement to provide FFCRA Leave expired on December 31, 2020, the second stimulus bill extended the availability of payroll tax credits to Covered Employers who voluntarily continued to provide FFCRA Leave to employees through March 31, 2021.
Effective today, the American Rescue Plan Act of 2021 (the “ARP Act”) - i.e. the recent $1.9 trillion stimulus bill – now extends these tax credits for employers that voluntarily provide FFCRA Leave between April 1 and September 30, 2021.
Covered Employers who voluntarily provide up to 80 hours of “Emergency Paid Sick Leave” and/or up to 12 weeks of partially-paid “Emergency FMLA Leave” in accordance with the provisions of the FFCRA, as summarized in our previous alert, and as amended by the second and third stimulus bills, can apply for payroll tax credits to recoup the out-of-pocket cost of FFCRA Leave paid through September 30, 2021.
Emergency Paid Sick Leave Provisions
Beginning April 1, 2021, the ARP Act essentially “resets” an employee’s Emergency Paid Sick Leave usage to zero. Accordingly, employers may offer employees up to an additional 80 hours of Emergency Paid Sick Leave and receive tax credits for those additional hours, even if an employee previously used up their available Emergency Paid Sick Leave. However, employees who were offered FFCRA leave before March 31, 2021 but didn’t use it won’t be allowed to carry-over any unused Emergency Paid Sick Leave beyond April 1, 2021 – they will just be entitled to up to 80 hours if their employer chooses to offer Emergency Paid Sick Leave.
Further, in addition to the qualifying reasons for use of Emergency Paid Sick Leave set out in the FFCRA, Emergency Paid Sick Leave may now be used by employees who are unable to work or telework because they are (1) obtaining the COVID-19 vaccine; (2) recovering from any adverse reactions/side effects related to the COVID-19 vaccine; or (3) seeking or waiting for the result of a COVID-19 diagnostic test or awaiting a medical diagnosis after the employee has been exposed to COVID-19 or the employer has requested such test.
If the employer chooses to offer Emergency FMLA after April 1, 2021, all 12 weeks of Emergency FMLA may now be paid and employers can now recoup up to $200/day, up to a total of $12,000. Previously, the first two weeks of any Emergency FMLA was unpaid, unless the employee substituted Emergency Paid Sick Leave or other available paid time off, and the tax credit cap was $10,000 in the aggregate.
Additionally, Emergency FMLA Leave may now be used for any of the same reasons that qualify for Emergency Paid Sick Leave. That is, if the employee exhausted 80 hours of Emergency Paid Sick Leave but still needs time off due to an otherwise qualifying reason, the employer can offer extended Emergency FMLA.
It is unclear from the text of the ARP Act whether the 12-week Emergency FMLA allotment resets on April 1, 2021 if an employee has already used all previously-available Emergency FMLA, as with Emergency Paid Sick Leave. We await guidance from the Department of Labor and/or the Internal Revenue Service on that issue.
The ARP Act makes clear that should an employer choose to provide FFCRA Leave, the employer cannot discriminate in granting Emergency Paid Sick Leave or Emergency FMLA only to highly compensated employees, full-time employees, or to certain employees on the basis of employment tenure with the employer. If the employer does so, the tax credits will not be available.
However, it appears that an Employer may choose to only offer Emergency Paid Sick Leave or Emergency FMLA, and if offering one is not required to offer both.
While we anticipate further guidance on these expanded provisions from the Department of Labor and/or Internal Revenue Service. In order to claim tax credits, employers will need to continue to comply with the documentation and recordkeeping requirements, previously summarized here.
Employers planning to provide FFCRA Leave on a going-forward basis should ensure their policies regarding FFCRA Leave are in writing, and are updated as needed to address these new provisions.
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If you have questions or would like additional information, please contact any of our Labor & Employment attorneys or the primary EGS attorney with whom you work.