What Employers Need to Know About the American Rescue Plan Act

By Clay Creps

The American Rescue Plan Act (ARPA), which became law on March 11, 2021, extends the incentive to employers to provide paid time away from work for COVID-related reasons. This article examines this law.

In response to the pandemic, Congress enacted the FFCRA, under which employers of fewer than 500 employees (“qualified employers”) were required to provide up to two weeks of paid leave under the Emergency Paid Sick Leave Act (EPSL) and up to 10 weeks of paid family leave under the Emergency Family and Medical Leave Act (EFMLA) to employees who were unable to work for certain COVID-19 related reasons. The FFCRA provided employers with a corresponding payroll tax credit which offset the employer’s costs for providing the paid leave. 

The FFCRA expired on December 31, 2020, and employers were no longer required to provide either Emergency Paid Sick Leave or Extended FMLA leave which was paid. At that time, Congress enacted the Consolidated Appropriations Act of 2021, which extended the payroll tax credits for employers that voluntarily chose to provide paid leave under the FFCRA framework. This expired on March 31, 2021.

Now, ARPA extends that incentive through September 30, 2021. To be clear, ARPA does not require employers to provide paid leave under FFCRA-type circumstances.  Rather, it provides an incentive for employers to do so voluntarily. Thus, when an employer provides paid leave, it is eligible to take a tax credit for the amounts paid to employees.

Like all things in the pandemic, which has necessitated flexibility and constant adjustments, ARPA has adapted as well. It impacts both EPSL and EFMLA.

With respect to EPSL, employees get a new two-week allotment of potential paid leave, regardless of whether an employee had previously used part or all of the original EPSL.  That is, as of April 1, 2021, each employee has a bank of two weeks of EPSL. Further, ARPA has expanded the qualifying reasons for EPSL. In addition to the original qualifying reasons, there are three new qualifying reasons: (1) obtaining a COVID-19 immunization; (2) recovering from an injury, disability, illness or condition related to the immunization (i.e. side effects of the vaccine) or (3) seeking or awaiting the result of a COVID-19 test or diagnosis when the employee has either been exposed to COVID-19 or the employer has requested the test or diagnosis. The original qualifying reasons (which still apply)  include when an employee: (1) is subject to a federal, state or local quarantine or isolation related to COVID-19; (2) has been advised by a healthcare provider to self-quarantine; (3) is experiencing COVID-19 symptoms and seeking a diagnosis; (4) is caring for an individual who is subject to quarantine or is self-quarantining; (5) is caring for a child whose school or place of care is closed (or child care provider is unavailable) because of COVID-19 or (6) is experiencing any other substantially similar condition specified by the US Secretary of Health and Human Services.

The amount of pay the employee may receive, and for which the employer will be eligible to receive a tax credit, depends on the qualifying reason (nothing is ever simple!). The amount is capped at $511 per day for the three new qualifying reasons, the employee is subject to governmental or medical provider directed quarantine, or has COVID-19 symptoms and is seeking a diagnosis. For the remaining qualifying reasons, the amount is capped at $200 per day.

Previously, paid EFMLA could be taken only by employees caring for children whose places of care or schools were closed, or whose care provider was unavailable for COVID-related reasons. ARPA expands this, beginning April 1, 2021, to include all of the original EFMLA reasons and any EPSL qualifying reasons. Originally, EFMLA required two weeks of unpaid leave. Under ARPA, all 12 weeks can be paid. Lastly, ARPA increases the maximum cap per employee from $10,000 to $12,000.

We will continue to keep you advised of developments.

This update is prepared for the general information of our clients and friends. It should not be regarded as legal advice. If you have questions about the issues raised here, please contact any of the attorneys in our Labor & Employment Practice Group, or the attorney with whom you normally consult.

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