Tax Credit Prolonged for COVID-Associated Sick Go away/Household Go away

By Last updated Mar 20, 2021

On March 11, 2021, the American Rescue Plan Act (“ARPA”) came into effect. While most of the media attention has been on the stimulus payments to individuals and the overall cost of the law, this legislation has also expanded tax credits for small businesses that offer voluntarily paid sick leave and family leave for employees struggling with the coronavirus Pandemic. In addition to expanding the availability of tax credits, ARPA also expanded the situations where employees are eligible for both types of vacation to include situations related to receiving a COVID-19 vaccine or diagnosis.

Families First Coronavirus Response Act (“FFCRA”) requirements

Last spring, in response to the coronavirus pandemic, Congress enacted the FFCRA, which required private employers with fewer than 500 employees to provide:

Up to two weeks (80 hours) of paid sick leave at the worker’s regular pay for workers disabled due to a government-imposed quarantine, a health care provider mandated quarantine, or COVID-related symptoms and searches for a diagnosis;

Up to two weeks (80 hours) of paid sick leave at two-thirds of the employee’s regular wage for employees who are unable to work due to the need to care for a quarantined person, a child whose school or school needs care, childcare facility due to COVID -19 or closed due to staff in “substantially similar condition” to that indicated by the Minister of Health and Human Services; and

Up to a further 10 weeks of paid family and sick leave at two-thirds of the employee’s regular pay for employees who have been employed for at least 30 calendar days and are unable to work due to a good need to look after a child.School or childcare is closed due to COVID-19.

The requirement that insured employers must provide these benefits expired on December 31, 2020. However, under the legislation passed in late 2020, Congress stipulated that employers who volunteered these benefits could continue to receive tax credits for the cost of providing the extra vacation March 31, 2021. September 2021 while making some minor but significant changes to vacation benefits. Again, it is important to remember that the provision of paid sick leave and extended family and sick leave remains voluntary.

Changes to paid sick leave and extended family and medical leave under ARPA

In addition to extending the tax credit eligibility period to cover voluntary paid employee leave, ARPA also made a number of other changes to paid sick leave and expanded family and sick leave benefits.

FirstARPA extends the situations in which an employee is entitled to paid vacation to employees who are looking for or waiting for the results of a COVID-19 test, to employees who are receiving a COVID-19 vaccine, and to employees who are due Its not working the effects of a COVID-19 vaccine. In addition, ARPA extends family and emergency medical leave eligibility to include all conditions for which an employee would be entitled to paid sick leave. Now employees can get up to 14 weeks of paid vacation if they are subject to a government or health care provider mandated quarantine, or if they complete COVID-19 – two weeks on their regular pay as emergency paid leave and up to 12 weeks on two-thirds of their regular pay Pay as family and sick leave.

SecondARPA “updates” the entitlement for paid leave from April 1, 2021. This means that an employee who has exhausted his entitlement to paid sick leave or extended family and sick leave is entitled to additional leave from April 1, 2021. This allows employers to claim tax credits for an additional two weeks of paid sick leave and ten weeks of family and sick leave.

thirdARPA increases covered pay tax credit for extended family vacation from $ 10,000 to $ 12,000 per employee.

FourthARPA places certain limits on obtaining credit if an employer does not offer a uniform vacation policy. No tax credits are available for employers who offer FFCRA paid vacation only to highly paid or full-time employees, or who offer the vacation on a tenure basis. Put simply, if employers do not make voluntary leave available to all of their employees, regardless of their occupation or seniority, they may not be eligible for tax credits.

FifthARPA provides reimbursement to employers subject to a collective agreement for contributions to retirement plans and apprenticeship programs that are accrued on paid sick leave and extended family leave of employees. Organized employers may be eligible for more loans than before.

The bottom line

ARPA is extending the availability of employer tax credits for paid sick leave and FFCRA family and emergency sick leave provisions to September 30, 2021 while making some changes to the rules for vacation days. However, the provision of paid sick leave or paid family leave and medical emergency to employees remains voluntary.

In addition, we can expect further guidance from the Ministry of Labor for the implementation of these new regulations.