American Rescue Plan Act of 2021, Extended FFCRA Tax Credits

Posted on March 12, 2021


President Biden Signs the American Rescue Plan Act of 2021 into Law, Extends FFCRA Tax Credits

On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (“the Act”), a $1.9 trillion COVID-19 relief package intended to provide continued economic relief to individuals, businesses, and state and local governments during the COVID-19 pandemic.

Of interest for covered employers is the Act’s extension of the Families First Coronavirus Response Act’s (FFCRA) tax credit provisions.

The FFCRA expired on December 31, 2020 – and with it, covered employers’ obligation to provide emergency paid sick leave and emergency family and medical leave. However, Congress then extended the tax credit for employers who voluntarily continued to provide paid leave consistent with what the FFCRA had required through March 31, 2021. The most recent Act once again extends the availability of such tax credits for employers who voluntarily provide FFCRA-like leave, now through September 30, 2021.

The Act also implements the following changes to the extended FFCRA tax credits, which take effect on April 1, 2021:

  • Expands the covered reasons for sick leave. Under the Act, should an Employer wish to take advantage of the tax credits, the employer may do so by providing leave to employees for the original six reasons outlined under the FFCRA as well as to employees who are: (i) obtaining an immunization related to COVID-19 or recovering from any injury, disability, illness or condition related to such immunization; or (ii) seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19, when such employee has been exposed to COVID-19 or the employer has requested such test or diagnosis;
  • Expands Emergency Family and Medical Leave Tax Credits. Previously, tax credits taken by employers to cover the cost of providing emergency FMLA leave was only available if the employee was unable to work (or telework) to care for their child whose school or place of care has been closed or was unavailable due to the public health emergency. Now, employers may claim tax credits for emergency FMLA leave arising from any of the reasons set forth in the FFCRA (including the two expanded reasons described above). The Act also removes the two week waiting period on emergency FMLA leave and raises the aggregate cap on emergency FMLA leave from $10,000 to $12,000;
  • Re-sets the 10-day limit for the tax credit for paid sick leave effective April 1, 2021. In order to qualify for the tax credit, employers who voluntarily extend FFCRA leave must provide employees up to 10 days emergency paid sick leave regardless of whether that employee had previously taken similar leave prior to April 1, 2021; and
  • Adds non-discrimination rules. The Act outlines that no tax credit is available if the employer, in determining availability of the paid leave, discriminates against highly compensated employees, full-time employees, or employees on the basis of tenure with the employer.

Read the Act in its Entirety Here

If you have any questions or concerns, please contact one of our labor & employment attorneys or call (814) 459-2800.

For more information, please contact Sarah Holland.