The FFCRA provides businesses with tax credits to cover certain costs of providing employees with required paid sick leave (“PSL”) and paid expanded family and medical leave (“EMFLA”) for reasons related to COVID-19, from April 1, 2020, through September 30, 2021. The tax credits had previously been set to expire as of March 31, 2021, but the ARPA extended the credits through September 30, 2021.
However, the FFCRA’s requirement to provide employees with paid PSL or EFMLA does not extend beyond December 31,2020. It is up to employers to decide if they will voluntarily provide paid PSL and EMFLA wages for which they may receive tax credits.
Wages covered by EFMLA credit have been increased from aggregate $10,000 to $12,000 per individual for Q2 and Q3 calendar quarters of 2021.
The American Rescue Plan Act (ARPA) further provides that tax credits for employers who voluntarily provide PSL or EFMLA for employees who are:
- Obtaining vaccinations related to COVID-19;
- Recovering from any injury, disability, illness or condition related to COVID-19 related vaccination; or
- Seeking or awaiting results of a COVID-19 test.
The ARPA prohibits employers seeking the PSL or EFMLA tax credits from discriminating against its employees in providing such paid leave on the basis of (i) tenure, (ii) high compensation, or (iii) full time status.
The ARPA also resets the 10-day limit for paid sick leave under the FFCRA starting on April 1, 2021. Meaning employers can voluntarily decide to provide employees with an additional 10 days of paid PSL starting on April 1, 2021.
The FFCRA entitles employers to receive a tax credit for the full amount of: (i) qualified PSL wages, (ii) qualified EFMLA wages, (iii) allocable heath plan expenses, and (iv) the employer’s share of Medicare tax.
Qualified PSL wages are wages that the FFCRA requires an employer to pay to an employee who is unable to work or telework because of either the employee’s personal health status (that is, the employee is under COVID-19 quarantine or self-quarantine or has COVID-19 symptoms and is seeking a medical diagnosis) or the employee’s need to care for others (that is, the lll employee is caring for someone with COVID-19 or for a child whose school or place of care is closed or child care provider is unavailable).
Qualified EFMLA wages are wages that the FFCRA requires an employer to pay to an employee who is unable to work or telework because the employee is caring for a child whose school or place of care is closed or child care provider is unavailable due to COVID-19-related reasons.