On March 11, 2021, President Biden signed H.R. 1319, entitled "American Rescue Plan Act of 2021," into law. The new law provides additional relief to address the continued impact of COVID-19. Below is a summary of what employers need to know about it.
Significant to employers, the American Rescue Plan extends the Family First Coronavirus Response Act (FFCRA) tax credit provisions, again, through September 30, 2021. The FFCRA originally expired on December 31, 2020; however, employers who voluntarily continued to provide emergency paid sick leave and emergency family and medical leave received tax credit through March 31, 2021. Now, again, the American Rescue Plan extends the tax credit for the voluntary provision of the leave through September 30, 2021. (Interestingly, prior versions of this bill included mandatory paid leave for employees who needed to be absent due to COVID-19 including to get vaccinated.)
Employers who voluntarily provide FFCRA leave will be credited one hundred percent for all qualifying wages under the FFCRA. Therefore, if an employer is already providing leave under state, county or local paid sick leave ordinance for reasons that also qualify under the FFCRA (for example, under Cal-OSHA's COVID-19 Emergency Prevention Emergency Temporary Standards), such employers should consider voluntarily providing leave under FFCRA to take advantage of tax credits and recoup the cost of the leave already required to be provided under other laws.
Furthermore, the American Rescue Plan adds the following:
Employers can voluntarily provide an additional 10 days of FFCRA paid sick leave beginning April 1, 2021, and would be eligible for a tax credit for doing so. This is because the American Rescue Plan resets the 10-day limit for the tax credit for paid sick leave under FFCRA beginning April 1, 2021.
Tax credits are available for paid sick leave and paid family leave for the following additional 3 reasons:
- The employee is seeking or awaiting the results of a test for or medical diagnosis of COVID-19 and such employee has been exposed to COVID-19, or the employee's employer has requested such test or diagnosis;
- The employee is obtaining immunization related to COVID-19; or
- The employee is recovering from any injury, disability, illness, or condition related to such immunization.
- No tax credit is available if an employer, in determining availability of the paid leave, discriminates in favor of highly compensated employees, full-time employees or employees on the basis of tenure with the employer.
- Eligible employees who lost their jobs or hours were reduced because of the COVID-19 pandemic and want to remain on their employer's health insurance will be able to remain on COBRA at no cost, from April 1, 2021 through September 30, 2021. Employers, insurers, or multiemployer plan sponsors must pay eligible employees’ COBRA premiums but may offset the cost by claiming a new federal payroll tax credit. Thus, employers should update or have their COBRA administrators update required COBRA notices.
Stay tuned for subsequent legislation by the Biden Administration as there are talks of new legislation that may resurrect certain pieces of the American Rescue Plan that did not get signed into the final bill, such as an FFCRA leave mandate.
We will continue to monitor major COVID-19 related developments that impact the workplace. If you have any questions about the matters discussed in this issue of Compliance Matters, please call your firm contact at 818-508-3700 or visit us online at www.brgslaw.com.
Richard S. Rosenberg
Katherine A. Hren
Janet S. Soultanian
Ballard Rosenberg Golper & Savitt, LLP