Business owners must be aware of their obligations regarding the provision of emergency paid sick leave and emergency family and medical leave under the newest Covid-19 relief legislation.
As you are likely aware, the Federal Families First Coronavirus Response Act (FFCRA) expired on December 31, 2020 and after that date employers were no longer required to provide emergency paid sick leave and emergency family and medical leave. However, employers had the option of voluntarily continuing to provide the leave and still claim a tax credit through March 31, 2021.
While there was initial discussion of extending and expanding mandatory emergency paid leave obligations through the American Rescue Plan, the House version of the COVID-19 relief bill does not include any extension or expansion of the employer obligation to provide paid leave. However, for employers wishing to continue to voluntarily offer the leave, the legislation does extend the tax credit for through September 30, 2021 and makes other related changes.
Some of the key provisions related to leave included in the relief bill are as follows:
The tax credits available for employers who voluntarily provide FFCRA leave are extended from March 31, 2021 to September 30, 2021.
The tax credits are available for paid sick leave and paid family leave provided for the additional following qualifying reasons:
~ the employee is obtaining immunization (vaccination) related to COVID-19;
~ the employee is recovering from any injury, disability, illness or condition related to such vaccination; or
~ the 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).
Non-discrimination rules were added to provide 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. In other words, all classes and categories of employee must be treated equally in order to obtain the tax credit.
The leave time available to employees who have already taken paid sick leave is effectively extended as the legislation re-sets the 10-day limit for the tax credit for paid sick leave under the FFCRA beginning April 1, 2021. As a result, an employer could voluntarily provide an additional 10 days of FFCRA paid sick leave beginning April 1, 2021 and would be eligible for a tax credit for doing so. This provision does not mandate that employers provide any such additional leave.
It is imperative that employers be aware of state and local COVID-19 paid leave obligations, which may impose obligations beyond the requirements and time limitations of the FFCRA.
Finally, it appears that the Biden administration is still pursuing an extension of the employer mandate to provide paid FFCRA leave, so stay tuned and we’ll keep you updated.
If you have any questions about how your company’s leave options under the American Rescue Plan, feel free to contact us.