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IRS Issues FFCRA Paid Leave FAQ

COVID-19, Employee Benefits

On July 29, 2021, the Internal Revenue Service (IRS) updated its Frequently Asked Questions regarding the Families First Coronavirus Response Act (FFCRA) paid leave as expanded by the American Rescue Plan Act (ARPA). The FFCRA paid leave provisions allow employers with 500 or less employees to provide paid leave to their employees for COVID-19 related issues. The provision of FFCRA paid leave is currently voluntary for employers until September 30, 2021.

The FFCRA paid leave provisions allow employers to provide paid leave and receive tax credits for the amounts paid for the following reasons:

  • The employee is under a federal, state, or local quarantine or isolation order related to COVID-19;
  • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  • The employee is:
    • experiencing symptoms of COVID-19 and seeking a medical diagnosis,
    • seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and the employee has been exposed to COVID–19 or the employee’s employer has requested the test or diagnosis, or
    • obtaining immunization related to COVID–19 or recovering from any injury, disability, illness, or condition related to the immunization;
  • The employee is caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  • The employee is caring for the child of the employee if the school or place of care of the child has been closed, or the childcare provider of the child is unavailable, due to COVID–19 precautions; or
  • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services (HHS) in consultation with the Secretary of the Treasury and the Secretary of Labor.

In this new guidance the IRS notes that the Secretary of HHS has specified, after consultation with both the Secretaries of Treasury and Labor, that a substantially similar condition is one in which the employee takes leave:

  • To accompany an individual to obtain immunization related to COVID-19, or
  • To care for an individual who is recovering from any injury, disability, illness, or condition related to the immunization.

An “individual” is defined as an immediate family member, someone who regularly resides in the employee’s home or a similar person with whom the employee has a relationship that creates an expectation that the employee would care for the person. It does NOT include person with whom the employee has no personal relationship.

The amount of pay available to the employee for these additional reasons is two-thirds of their regular rate of pay.

Takeaway

Employers were not required to provide FFCRA paid leave beyond December 31, 2020. However, employers are allowed to voluntarily provide the leave and receive tax credits. This new guidance provides employers with additional opportunities to offer the paid leave.

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