ARPA Extends Tax Credit for Employers and Expands {Qualifications} for FFCRA Depart

The American Rescue Plan Act of 2021 (ARPA) provides tax credits to those employers who voluntarily choose to provide employees with paid vacation benefits under the Families First Coronavirus Response Act (FFCRA).

As you may recall, starting January 1, 2021, employers with fewer than 500 employees could, for certain qualifying reasons, provide voluntary paid vacation to employees under FFCRA and receive tax credits for the vacation with pay. ARPA has extended employers’ eligibility for tax credits until September 30, 2021. However, the ARPA includes new anti-discrimination rules that state that FFCRA tax credits will not be made available to employees or employees on a tenure basis to employers who discriminate in full-time favor of highly paid workers.

ARPA also expanded the list of legitimate reasons for taking paid vacation under the FFCRA.

APRA Original qualification reasons for the FFCRA vacation

The original qualifying reasons for the FFCRA vacation included vacation for an employee who is unable to work (or cannot telework) for any of the following reasons:

1. The employee is subject to a federal, state, or local quarantine or isolation order in connection with COVID-19.
2. The employee was instructed by a healthcare provider to quarantine themselves in connection with COVID-19.
3. The employee has COVID-19 symptoms and is seeking a medical diagnosis.
4. The employee looks after a person who is subject to an order described in (1) or in self-quarantine as described in (2).
5. The employee is caring for a child whose school or care facility is closed for reasons related to COVID-19 (or the child care worker is not available).

ARPA New Qualification Reasons for FFCRA Vacation

APRA’s new additional qualifying reasons for FFCRA leave include leave for an employee who meets any of the following criteria:

1. The employee receives a COVID-19 vaccination.
2. The employee is recovering from an injury, disability, illness, or condition related to a COVID-19 vaccination.
3. The employee is looking for or waiting for the results of a COVID-19 test or diagnosis because either the employee has been exposed to COVID-19 or the employer requested the test or diagnosis.

The ARPA will also reset the allocation of 80 hours (10 days) of paid sick leave (EPSL) per employee from April 1, 2021.

The ARPA does not create a new allocation of Expanded Family and Medical Leave (EFMLA) entitlements, which are limited to 12 weeks of vacation under the Family and Medical Leave Act (FMLA). However, the ARPA extends an employee’s eligibility to participate in EFMLA. Previously, employees could only qualify for EFMLA under Reason 5 above – caring for children whose school or care facility was closed or unavailable for reasons related to COVID-19. Effective April 1, 2021, employees can qualify for the EFMLA vacation for any of the eight qualifying reasons listed above.

Employers who volunteer vacation benefits under the FFCRA are encouraged to review and revise their policies to ensure they continue to receive tax credits in the face of these new changes.