April 6, 2021
As part of the American Rescue Plan Act of 2021 (ARP) that was recently passed, a revised version of the Emergency Family and Medical Leave (EFML) was extended. Originally included in the Families First Coronavirus Response Act (FFCRA), and then revised under the Consolidated Appropriations Act (CAA), it detailed employers’ obligations to allow employees time needed to cope with COVID-related issues, as well outlined what situations would qualify.
In the initial language of the FFCRA that expired December 31, 2020, it stated that employers were mandated to give employees paid time off and that they would then receive a payroll tax credit to reimburse them. This language was changed to “voluntary” with the passing of the CAA and extended until March 31, 2021, meaning that the employer was no longer legally required to provide these paid sick days after December 31, 2020. The ARP kept the payroll tax credits provided in the CAA and further extended them to employers though September 30, 2021.
Eligible employers include any business or tax-exempt organization with less than 500 employees. These employers can claim these credits based on the qualifying paid leave they provide between April 1, 2020 and September 30, 2021. Similar credits are available to self-employed individuals based on comparable qualifying circumstances.
What are the changes to Paid Sick Leave?
Starting on April 1, 2021 the ARP resets the 10 day limit, up to 80 hours, for paid sick leave. If an employee had previously used all of their paid sick leave provided by the FFCRA, they now have an additional 10-day/80-hours of paid leave for use. Additionally, the ARP extends the EFML to any qualifying circumstance covered under paid sick leave. This means if an employee qualifies for paid sick leave and needs their leave extended past the 10 day period, the employee could potentially take up to an additional 12 weeks of EFML, or other leave covered by the FMLA, if they have not already used any of that leave in the covered period.
What are the qualifying reasons for paid sick leave?
The CAA provided that employers who allowed paid time off for the following were able to receive Payroll Tax Credits:
· Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay (employer credit caps at $511 per day) when the employee is unable to work because they are quarantined and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
· Two weeks (up to 80 hours) of paid sick leave (employer credit caps at $200 per day) at two-thirds the employee’s regular rate of pay because they are unable to work due to a legitimate need to care for an individual subject to quarantine*, or to care for a child 17 years of age or younger, whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition.
· Up to an additional 12 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a legitimate need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
*Following Federal, State, or local government order or advice of a health care provider.
The ARP provides these additional qualifying reasons for paid sick leave:
· Obtaining a COVID-19 vaccine and recovering from any illness or condition related to receiving that vaccine;
· Obtaining a COVID-19 diagnosis or waiting for the results of a diagnosis if the employee has been exposed to COVID-19 or the employer requests a test be performed.
Other changes to paid sick leave
There are some other noteworthy changes provided by the ARP. One major change is that the requirement that the first two weeks of the EFML be unpaid has been eliminated. Under
the ARP, any qualified employee is eligible for a full 12 weeks of paid leave if they have not previously used any EFML or other leave under the FMLA). The total available for the EFML increased from $10,000 to $12,000.
The ARP also includes non-discrimination language for paid sick leave and EFML. If an employer chooses to provide FFCRA leave, but discriminates who is eligible for that leave based on things such as favoring highly compensated employees, full-time employees or on the basis of tenure they may not be able to qualify for any tax credits for paid sick leave.
As the requirements detailed for paid sick leave by the ARP don’t become effective until April 1, 2021, we can still expect that further guidance may be offered by the IRS and/or Department of Labor. Please contact your Faw Casson advisor with any questions about how this may apply to your specific situation.