FFCRA Provisions in the American Rescue Plan (March 11, 2021)
The American Rescue Plan Act was passed by Congress on March 10, 2021 and is anticipated to be signed by President Biden on March 12, 2021. Among its many provisions is a temporary extension of the Families First Coronavirus Response Act (FFCRA) tax credit to employers who voluntarily provide employee paid sick and family leave for certain COVID related reasons.
The provisions of the FFCRA requiring employers to provide paid sick and family leave for COVID related reasons expired on December 31, 2020. Many anticipated that the American Rescue Plan Act would reinstate the mandatory paid sick and family leave provisions. However, this Act does not reinstate the mandatory paid leave provisions of the FFCRA but does temporarily extend the tax credits available to employers who voluntarily provide paid sick and family leave to employees for qualifying reasons from April 1, 2021, to September 30, 2021.
These tax credits are available to employers who provide paid sick and family leave to employees for the qualifying reasons set forth under the FFCRA. The American Rescue Plan Act resets the 10-day limit for the tax credit for paid sick leave beginning April 1, 2021.
The American Rescue Plan Act also expands the qualifying reasons for voluntary paid sick and family leave to include the following:
- Leave taken if the employee is seeking or awaiting the results of a diagnostic test for, or a 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; or
- Leave taken if the employee is obtaining immunization (vaccination) related to COVID-19 or recovering from any injury, disability, illness, or condition related to such vaccination.
The limits on the amount of wages eligible for tax credits (voluntarily paid for sick and family leave for qualifying COVID related reasons) remains the same as set forth in the FFCRA, except that the aggregate amount for paid family leave is increased to $12,000.
The American Rescue Plan Act adds a non-discrimination requirement, providing that no tax credit shall be allowed for any employer if the employer, in determining availability of the paid leave, discriminates in favor of highly compensated employees, full time employees, or employees based on tenure with such employer.
While this legislation does not extend the mandatory paid leave requirements, the Biden administration has indicated that they will continue to pursue other paid leave provisions, such as paid FMLA leave. Also, employers should always consider the requirements of state and local legislation applicable to their organizations.