New FFCRA Extension and Expansion Goes Into Effect
The mandatory paid leave requirements under the Families First Coronavirus Response Act (FFCRA) expired on December 31, 2020 and was previously extended through March 31, 2021 for those employers who voluntarily chose to provide paid leave benefits to their employees for reasons related to COVID-19. The cost of all qualifying leave was fully reimbursable through the payroll tax credit.
The America Rescue Plan of 2021 (ARPA) recently passed under the Biden Administration extends and expands FFCRA’s emergency paid sick leave (EPSL) and expanded family and medical leave (EFMLA). Again, the new leave is not mandated, and employers who choose to participate will be fully reimbursed through the payroll tax credit but there are noteworthy differences. Here is what you need to know:
- Effective Dates: April 1, 2021 through September 30, 2021
- Amount of EPSL Resets: Effective April 1, 2021, employees are allowed up to 80 hours of EPSL (regardless of any leave taken prior to April 1, 2021).
- Reasons for EPSL Expanded: In addition to prior COVID-19 related reasons under the FFCRA, employees can now be paid for (a) getting a COVID-19 vaccine; (b) recovering from adverse reactions to the vaccine; and (c) waiting the results of a COVID diagnosis or test (after exposure to COVID-19 or at the employer’s request). Payments are capped at $511 per day for all EPSL reasons.
- Amount of EFMLA Resets: Effective April 1, 2021, employees are now allowed up to 12 weeks of paid EFMLA—up from 10 weeks of paid leave previously provided (again, regardless of any leave taken prior to April 1, 2021)
- Reasons for EFMLA Expanded: EFMLA is no longer limited to reasons related to a school or childcare closure and may now be used for any of the reasons for which EPSL may be used. The EFMLA rate of pay continues to be two-thirds of the employee’s regular rate of pay (up to $200 per day regardless of the reasons for the leave) but the cap has been increased from $10,000 to $12,000.
- Nondiscrimination mandate: The new law mandates that employers may not claim the tax credit if certain employees (i.e., highly compensated employees, full-time employees or employees with greater seniority) are treated more favorably than other employees with respect to the paid leave benefits.
As more Americans get vaccinated and employers look for ways to safely bring their workers back to the workplace, many employers may consider voluntarily continuing their compliance with the paid leave requirements, and have the government pay for it. Updates related to the change in law is not yet available but may soon be available on the IRS website at https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs