ARPA Changes to FFCRA Leave Provisions | M3 Insurance

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ARPA Changes to FFCRA Leave Provisions

COVID-19, Employee Benefits, News/Education

The American Rescue Plan Act (ARPA) includes information regarding changes to the original Families First Coronavirus Response Act (FFCRA) paid leave provisions applicable to private employers with 500 or less employees. These paid leave provisions expired on December 31, 2020. However, the available tax credits were originally extended to March 31, 2021. Although more detailed information is expected from the regulatory agencies regarding the changes to FFCRA paid leave in the ARPA, here is what we know now:

Emergency Paid Sick Leave Act (EPSLA)

The EPSLA originally provided up to ten (10) days of paid leave for the following reasons:

  • Employee is subject to quarantine for COVID-19 (full pay)
  • Employee is advised to self-quarantine due to concerns related to COVID-19 (full pay)
  • Employee has symptoms related to COVID-19 and is seeking a diagnosis (full pay)
  • Employee is caring for an individual subject to quarantine or advised to quarantine (2/3 pay)
  • Employee is caring for a child if the school or place of care is closed due to COVID-19 precautions (2/3 pay)
  • Employee is experiencing any other similar condition as defined by HHS or DOL (2/3 pay)

The ARPA adds the following additional reasons for EPSLA leave:

  • Employee is seeking or awaiting the result of a diagnostic test for, or a medical diagnosis of, COVID-19 and such employee has been exposed to COVID-19;
  • Employee’s employer has requested such test or diagnosis;
  • Employee is obtaining immunization related to COVID-19;
  • Employee is recovering from injury, disability, illness or condition related to the COVID-19 immunization

All additional reasons added by the ARPA would qualify the employee for full pay.

The available leave has a 10 day limit for EPSLA and is applied by calendar year. In application, this means that employees would have a new 10 day allotment of EPSLA starting on January 1, 2021, without regard to any leave taken in the first quarter (January – March 2021). Therefore, employees would be eligible for an additional 10 days of EPSLA leave as of April 1, 2021 if the employer chooses to provide the paid leave.

Employers are not mandated to provide any additional EPSLA paid time off in 2021. However, if an employer voluntarily offers the EPSLA leave, the 10-day limit would restart on April 1, 2021. This resetting of EPSLA leave would apply regardless of whether or not paid leave was provided in the first quarter of 2021. The tax credits for this leave are available until September 30, 2021. It appears that employers do not need to provide the paid leave until September 30, 2021 and can provide additional time as they deem appropriate.

Tax credits available to employers that provide the leave will be taken against employer Medicare payroll taxes. The ARPA indicates that the tax credits are not available to certain governmental employers, including the “government of the United States or to any agency or instrumentality thereof” but does not specifically state if they are available for state and local governments.

Employers are not eligible for EPSLA tax credits if they discriminate in favor of highly compensated employees, full-time employees or employees on the basis of length of service in applying the provisions of the EPSLA.

Emergency Family and Medical Leave Expansion Act (EFMLEA)

The EFMLEA originally expanded the current federal Family and Medical Leave Act (FMLA) by expanding FMLA leave for “a qualifying need related to a public health emergency”. The only original qualifying reason for the paid leave was for those employees that were unable to work or telework due to a need to care for a child under the age of 18 due to closures of schools or care providers related to the COVID-19 health emergency. 

ARPA expands the original EFMLEA by adding all EPSLA qualifying reasons. In other words, employees can now qualify for EFMLEA paid leave for the same reasons they would qualify for EPSLA paid leave. In addition, ARPA eliminated the requirement that the first two weeks of the twelve weeks be unpaid and increased the maximum amount of pay from $10,000 to $12,000 in aggregate.

Employers are not required to provide any additional EFMLEA paid time off in 2021. However, if they do the tax credits are now available until September 30, 2021. It appears that employers do not need to provide the paid leave until September 30, 2021 and can provide any additional time as they deem appropriate.

Tax credits available to employers that provide the leave will be taken against employer Medicare payroll taxes. The ARPA indicates that the tax credits are not available to certain governmental employers, including the “government of the United States or to any agency or instrumentality thereof” but does not specifically state if they are available for state and local governments.

Key Takeaway

The American Rescue Plan Act is mostly focused on financial relief for individuals, employers and units of government. We anticipate multiple federal agencies to develop further interpretative rules and implementation processes to clarify this new law. We will provide pertinent information as updates are made available.

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