The American Rescue Plan and the Families First Coronavirus Response Act

On March 10, Congress passed the American Rescue Plan Act of 2021, and President Biden signed it into law the next day. There are several provisions of the American Rescue Plan that relate to employment law. The focus of this bulletin is its impact on the Families First Coronavirus Response Act.

After December 31, employers were no longer required to provide leave under the FFCRA. However, the Consolidated Appropriations Act of 2021 extended through March 2021 tax credits for covered employers who voluntarily provided paid sick leave and expanded family and medical leave to their employees.

With March 31 fast approaching, employers were wondering what would happen with the FFCRA. The American Rescue Plan does not make FFCRA leave mandatory, but it further extends the tax credit for private sector employers with fewer than 500 employees through September 30, 2021. The American Rescue Plan also makes some additional revisions to the FFCRA.

For employers who choose to voluntarily offer FFCRA leave, the tax credits are available for all of the “old” FFCRA-qualifying reasons, and for these additional reasons:

• The employee is obtaining a COVID-19 vaccination.

• The employee is recovering from any illness, injury, condition, or disability related to receiving the vaccine.

• The employee is seeking or waiting for test results or a medical diagnosis for COVID-19, or the employer has requested the employee to obtain a COVID test or diagnosis.

In addition, effective April 1 and through September 30, employers may voluntarily offer 10 new days (up to 80 new hours) of paid sick leave to employees, and will be eligible to receive the tax credit for this as well. The Internal Revenue Service has not yet updated its FAQs to reflect these changes, apart from an introductory paragraph and encouragement to check for updates.

The Emergency Family and Medical Leave Expansion Act originally applied only to absences from work that were related to school closings. The American Rescue Plan expands the leave to include all qualifying reasons for which an employee could take paid sick leave under the FFCRA. Additionally, all 12 weeks of EFMLA may be paid, including the first two weeks, which were previously unpaid. The tax credit for qualifying EFMLA leave is calculated at two-thirds of the employee's regular rate of pay. Essentially, the tax credits for EFMLA leave have been expanded from $10,000 to $12,000 per employee.

The American Rescue Plan prohibits employers from claiming the tax credit if the employer discriminates with respect to leave: (1) in favor of highly compensated employees, (2) in favor of full-time employees, or (3) on the basis of employment tenure.

Next steps

• Employers should decide whether to voluntarily offer the new FFCRA leave provided for under the American Rescue Plan. Again, the tax credits are available to private sector employers with fewer than 500 employees.

• Employers who do decide to offer FFCRA leave should consider implementing policies and administrative procedures to track the leave time taken by employees, assuming they have not already done so.

• Employers should check in regularly for updates from the U.S. Department of Labor and the IRS.

If you have any questions about the Families First Coronavirus Response Act or other employment law questions, please contact the Constangy attorney of your choice.

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