As shared in a prior post, the Families First Coronavirus Response Act (FFCRA) expired on December 31, 2020. At the end of 2020, Congress extended the employer tax credit that supported the use of FFCRA-like leave to employers who wanted to voluntarily provide FFCRA-like paid leave after December 31st, 2020 through March 31, 2021.
The American Rescue Plan
Signed on March 11, 2021, the American Rescue Plan extends the tax credit for voluntarily providing FFCRA-like leave through September 30, 2021, and makes the following changes:
- Extends the tax credits available for employers who voluntarily provide FFCRA-like leave from March 31, 2021 to September 30, 2021.
- Resets the 10-day limit for the tax credit for paid sick leave under the FFCRA effective April 1, 2021. As a result, an employer may voluntarily provide an additional 10 days of FFCRA-like paid sick leave beginning April 1, 2021 through September 30, 2021, and would be eligible for an employment tax credit for doing so. This is voluntary. Employers may opt to not participate.
- Expands the tax credits to be available for paid sick leave and paid family leave provided by the employer for additional qualifying reasons including:
- an employee is obtaining immunization (vaccination) related to COVID-19;
- an employee is recovering from any injury, disability, illness, or condition related to such vaccination; or
- an employee is seeking or awaiting the results of a diagnostic test or medical diagnosis for COVID-19 (or their employer has requested such a test or diagnosis).
- Adds non-discrimination rules to provide that no tax credit is available if the employer, in determining the availability of the paid leave, discriminates against highly compensated employees, full-time employees, or employees based on tenure with the employer. Employers who elect to voluntarily provide paid sick or family leave similar to FFCRA, should do so in an equitable manner, without discriminating against categories of workers.
If you elect to continue allowing FFCRA-like leave, update your policies and forms, and communicate the changes to your employees accordingly. For additional information see IRS COVID-19 Leave FAQs.