Hitting the ‘Reset’ Button on Paid Leave Under the American Rescue Plan by Lane Powell

Hitting the ‘Reset’ Button on Paid Leave Under the American Rescue Plan by Lane Powell

Employees may be eligible for additional paid leave for COVID-19 reasons, but only if their employer voluntarily agrees to extend such leave granted under the American Rescue Plan Act of 2021, signed into law by President Biden on March 11. This Act extends the paid leave that first became available under the Families First Coronavirus Relief Act (FFCRA) of 2020. Unlike the mandatory FFCRA leave, however, the American Rescue Plan gives employers the option of whether to offer this leave to their employees. Like the FFCRA, the American Rescue Pl­­an provides tax credits to employers who offer paid sick and family leave to their employees. 

The FFCRA required all employers with fewer than 500 employees to provide 10 days of paid sick leave and up to 10 weeks of paid family leave to employees under certain pandemic-related circumstances. Mandatory emergency paid sick leave (EPSL) and emergency family and medical leave (EFMLA) expired on December 31, 2020. Federal legislation later extended tax credits for private sector employers who granted such leave through March 31, 2021.

The FFCRA’s mandate to provide paid leave has not been revived. But the American Rescue Plan extends eligibility for EPSL and EFMLA leave through September 30, 2021, with an accompanying tax credit for employers who voluntarily agree to do so. Employers can receive a 100 percent tax credit for up to 10 days of paid sick leave, capped at $200 per day. Employers can also receive a 100 percent tax credit for up to 12 weeks of emergency paid family leave, capped at $200 per day and $12,000 in the aggregate.

The American Rescue Plan also made some other important changes to the landscape of COVID-related leave:
 

  • Both public and private employers are eligible for tax credits commencing April 1, 2021. Tax credits expired on December 31, 2020, for public sector employers.
     
  • Eligible reasons for taking EPSL or EFMLA leave have expanded to include:
     

    • When an employee is seeking or awaiting the results of a test for or a diagnosis of COVID-19;
       
    • When an employee is obtaining the COVID-19 vaccine; and
       
    • When an employee is recovering from any injury or condition related to immunization.
       
    • Additionally, emergency family leave can now be taken for all of the reasons that an employee might take emergency sick leave under the FFCRA, including:
       

      • becoming subject to quarantine or isolation order;
         
      • being advised by a health care provider to quarantine;
         
      • experiencing COVID-19 symptoms and seeking a medical diagnosis;
         
      • caring for someone subject to a COVID-19 quarantine or advised to quarantine;
         
      • caring for a son/daughter whose school/care provider is closed or unavailable due to COVID-19; or
         
      • experiencing any other substantially similar condition specified by the Secretary of the Department of Health and Human Services.
         
  • And finally, the first two weeks of EFMLA are no longer unpaid, allowing employees to qualify for paid leave for all 12 weeks of emergency family leave, subject to a corresponding tax credit.

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March 17, 2021