Starting April 1, employers can offer employees additional paid leave for certain COVD-19 related absences – and claim more tax credits in return.
Under the recently passed American Rescue Plan Act of 2021 (ARPA), Congress has extended the voluntary Families First Coronavirus Response Act (FFCRA) paid leave program through the end of September.
Background – Families First Coronavirus Response Act
The FFCRA required most private employers with fewer than 500 employees to provide employees with paid leave for certain COVID-19 related absences. This included (1) up to 80 hours of emergency paid sick leave and (2) up to 10 additional weeks of expanded Family Medical Leave Act (FMLA) leave.
This program was mandatory from April 1, 2020 to December 31, 2020. In return, employers could claim a refundable tax credit equal to 100% of mandated leave pay to each employee, so long as they obtained, created, and retained proper documentation.
Starting January 1, 2021, the FFCRA program became voluntary and was extended through March 31, 2021. Employers could still claim tax credits for FFCRA paid leave provided after 2020, but they were no longer required to offer it. One major caveat was that this extension did not renew the available tax credits. An employer who had claimed the maximum amount for an individual employee in 2020 could not claim any more in 2021.
New Tax Credits
The ARPA has hit the reset button on FFCRA tax credits. Starting April 1 through September 30, employers can claim tax credits on up to 10 days of FFCRA leave per employee – regardless of whether that employee previously took FFCRA leave in 2020. Employers can also receive a tax credit for providing up to 12 weeks of expanded FMLA leave.
Again, the credit is equal to 100% of leave pay, subject to certain caps. FFCRA pay is generally capped at $511 or $200 per day per employee, depending on the reason for leave and the allowable rate of pay. Expanded FMLA leave is capped at $200 per day, with an aggregated cap of $12,000.
Beginning April 1, the qualifying reasons for FFCRA leave have been expanded to include:
- When an employee is seeking or awaiting the results of a COVD-19 test either (1) following exposure to COVID-19 or (2) at the employer’s request;
- When an employee is obtaining a COVID-19 vaccination; and
- When an employee is recovering from any side-effects of COVID-19 vaccination.
Coverage for expanded FMLA has also been increased. Previously, expanded FMLA leave was only available to employees due to a bona fide need to care for a child whose school or child care provider was closed or unavailable for reasons related to COVID-19. Under the ARPA, expanded FMLA leave now covers all of the qualifying reasons for FFCRA leave – including the new reasons detailed above. In addition, ARPA removes the two-week, unpaid waiting period for emergency FMLA pay.
New Non-Discrimination Rules
Employers planning on taking advantage of the new tax credits under ARPA should also be aware of new restrictions. In order to claim tax credits, employers must ensure that their FFCRA program is not designed in a way that unfairly favors highly compensated employees, full-time employees, or tenured/untenured employees.
As we all work towards a COVID-free future, Critchfield, Critchfield & Johnson can help your business and its employees get the most from the FFCRA. From answering questions to drafting company policy documents to helping establish employee education programs, Critchfield is here to help your business navigate the ever-changing legal hurdles of the COVID-19 pandemic.
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