The American Rescue Plan Act (ARPA), enacted March 11, 2021, includes changes to emergency paid sick leave and paid family leave under the Families First Coronavirus Response Act (FFCRA). The ARPA extended the tax credits through Sept. 30, 2021, for employers that continue to provide FFCRA leave voluntarily (beyond the Dec. 31, 2020, expiration date) and made changes to tax credit eligibility for both types of FFCRA leave.
Voluntary Emergency Paid Sick Leave
The ARPA permits the FFCRA tax credit for a new bank of emergency paid sick leave, beginning April 1, 2021. The amount of the new leave is 80 hours per employee. The ARPA also added COVID-19 testing and vaccination as qualifying reasons for the voluntary leave, meaning tax credits may be taken for paid sick leave provided for these new reasons.
Voluntary Paid Family Leave
The ARPA expands the FFCRA family leave tax credit by allowing the credit to apply to:
- Family leave taken for FFCRA emergency paid sick leave reasons
- Family leave taken for reasons related to COVID-19 testing and vaccination
The ARPA also increases the family leave wages eligible for the tax credit to $12,000 (up from $10,000) per employee, and it strikes the FFCRA requirement that the first two weeks of family leave be unpaid.
Action Steps
Employers that want to provide FFCRA leave to their employers should become familiar with the ARPA changes to ensure eligibility for the tax credits provided by the law. Employers should also look for expected official guidance on implementing the ARPA.
Highlights
FFCRA Leave Remains Voluntary
ARPA did not reinstate the FFCRA employee leave mandates.
Tax Credit Extension
Employer tax credits are extended through Sept. 30, 2021, for wages, health plan expenses and Medicare tax for FFCRA leave provided voluntarily.
FFCRA Paid Leave
The FFCRA employer tax credits apply to 80 new hours of paid sick leave per employee, 12 weeks of paid family leave, and to leave for new reasons.
Important Dates
April 1, 2021 – ARPA changes to FFCRA leave take effect.
Sept. 30, 2021 – Tax credits for FFCRA leave expire.
