The American Rescue Plan Act was passed and signed into law by President Biden on Mar. 11, 2021. The Act extends and expands payroll tax credits until Sept. 30, 2021, for employers who voluntarily provide paid sick and family leave under the Families First Coronavirus Response Act (FFCRA). As more employers consider whether to provide this paid leave, and therefore be eligible for the payroll tax credits, additional questions have arisen.
1. Are we required to offer both emergency paid sick leave and emergency family medical leave, or can we offer one over the other to our employees?
The Act provides payroll tax credits to employers that voluntarily provide paid leave. Because of the voluntary nature of the Act, there are differing interpretations of the legislation. Some believe employers can offer either paid sick leave or paid family leave or both. Based on our interpretation, the best practice at this time is to offer both types of paid leave to ensure compliance with the text of the legislation and be eligible for the payroll tax credit. However, we anticipate and expect the Department of Labor (DOL) will provide additional guidance on this issue.
2. If our company voluntarily decides to offer emergency paid sick leave until Sept. 30, 2021, are we required to reset the 80 available hours each employee can take?
Yes. If you voluntarily provide additional paid leave under the Act, you must “reset” a new allotment of hours to each employee. Specifically, you must offer an additional 80 hours per full-time employee, an equivalent of 10 days. Any paid leave provided in 2020 cannot be counted toward the new allotment.
3. Are we required to offer the full 80 hours per every employee, or can we provide fewer hours?
Because of the voluntary nature of the Act, there are differing interpretations. While there is no guidance on this issue, we believe it is a best practice for an employer to provide the full 80 hours to every full-time employee to comply with the text of the legislation and be eligible for the payroll tax credits. Part-time employees are eligible for a pro-rated amount of leave based on the average number of hours worked within a two-week period. While we do not recommend reducing the number of hours offered to full-time employees, if your company does choose to make that business decision, you should give appropriate notice to employees well in advance of implementing the plan. Again, we anticipate the DOL may provide additional guidance on this issue.
4. If our company voluntarily opts-in and provides emergency paid sick and family leave to our employees, are we permitted to opt-out before Sept. 30, 2021?
Again, there is no guidance on this issue. In fact, the DOL never addressed this question in response to the Consolidated Appropriations Act, which initially extended the FFCRA paid sick and family leave provisions on a voluntary basis from Jan. 1 to Mar. 31, 2021. Due to the voluntary nature of the legislation, there are differing interpretations. Based on our interpretation, the best practice at this time is to offer the full amount of leave. Specifically, if you decide to opt-in and provide paid leave, you should offer leave from Apr. 1 to Sept. 30, 2021, to ensure compliance with the Act and qualify for the available tax credits. Again, we anticipate the DOL may provide additional guidance on this issue.
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5. The Act expands the qualifying reasons an employee may take emergency paid leave to include receiving the Covid-19 vaccine and related complications due to receiving it. Can these additional qualifying reasons be retroactively applied?
The Act does not directly address this. However, from our interpretation of the legislation, these new qualifying reasons are not retroactive. Thus, the additional qualifying reasons begin on Apr. 1, 2021.
6. If we offer emergency paid sick and family leave, what is the available payroll tax credit that we can receive as an employer?
It depends on the leave offered. For emergency family medical leave, you can receive a tax credit for up to 12 weeks of paid family leave. The total cap for family leave increased to $12,000 per employee. The available credit per employee is limited to two thirds of the employee’s regular rate of pay, up to a maximum of $200 per day.
For emergency paid sick leave, pay calculations depend on the nature of the absence. Paid sick leave tax credits are based on an employee’s regular rate of pay and are capped at either $511 or $200 per day. The $511 cap applies for any of the expanded reasons described in the Act, which includes immunization, testing, and related vaccine complications. This cap further includes absences due to quarantining and experiencing Covid-19 symptoms. For any other reason, you can receive two thirds of the employee’s regular rate of pay, up to a maximum of $200 per day.
Please note: This information is intended to provide only general information based upon our current interpretation of the Act. No federal agency, including the DOL, has issued guidance on this legislative action as of the date of writing this (Mar. 23, 2021).