The American Rescue Plan Act Incentivizes Employers To Proceed Paid FFCRA Depart – Employment and HR

The American Rescue Plan Act of 2021 (“ARPA”), which went into effect March 11, 2021, expands and expands the ability of an employer to grant tax credits for employee paid vacation under the Families First Coronavirus Response Act (“FFCRA”) receive.

I. Background

Under the FFCRA, employers with fewer than 500 employees (“Qualified Employers”) were required to take up to 2 weeks of paid leave under the Paid Sick Leave Act (“EPSL”) and up to 10 weeks of paid family leave under the FFCRA Emergency-Related Act Family and Medical Leave (“EFMLA”) for employees who were unable to work due to certain COVID-19 reasons. The FFCRA provided employers with an appropriate tax credit that offset the employer’s cost of providing paid vacation.

When the FFCRA expired on December 31, 2020, employers no longer had to take paid EPSL or EFMLA vacation. However, the Consolidated Appropriations Act of 2021 (the “CAA”) extended payroll tax credits for employers who
voluntary chose to grant FFCRA-style paid vacation until March 31, 2021.

II. ARPA expands and expands the FFCRA

Similar to the CAA, ARPA incentivizes qualified employers to continue offering (or starting) the type of paid vacation previously required under the FFCRA by adding an additional 6 to the payroll tax credits for that vacation from March 31 to September 30 Months to be extended. 2021. Qualified employers are not obliged as such, but they can voluntary Decide to grant employees paid vacation for FFCRA-qualified reasons and in return receive wage tax credits for this vacation until September 30, 2021.


According to ARPA, qualified employers can make EPSL available to an employee for 2 weeks between April 1 and September 31, 2021, even if the employee has already taken all or part of the employee’s original EPSL vacation. Likewise, employees who have not used all of the original 2 weeks of EPSL by April 1, 2021 may not “carry over” this previous vacation beyond March 31, 2021. Simply put, ARPA resets each employee’s EPSL balance to 2 weeks from April 1, 2021.

In particular, ARPA is expanding the EPSL Qualification Reasons, starting April 1, 2021, with three very popular employee absenteeism reasons not previously covered by the FFCRA: (1) Receiving a COVID-19 immunization; (2) recovering from an injury, disability, illness, or condition related to immunization (i.e. side effects of the vaccine); or (3) looking for or waiting for the result of a COVID-19 test or diagnosis if the employee is either has been exposed to COVID-19 or the employer requested the test or diagnosis. Previously, under the FFCRA, qualifying grounds for providing EPSL were limited to the employee’s incapacity for work because the employee: (1) is subject to quarantine or isolation at the federal, state, or local levels in connection with COVID-19; (2) Has been advised to self-quarantine by a health care provider; (3) suffers from symptoms of COVID-19 and seeks a diagnosis; (4) looks after a person who is being quarantined or who is self-quarantining; (5) is caring for a child whose school or care facility is closed (or whose childcare facility is unavailable) due to COVID-19; or (6) has another substantially similar condition as determined by the U.S. Secretary of Health.

Employers offering voluntary EPSLs may receive a tax credit of $ 511 per day at the employee’s regular wage rate if the employee is on leave for the newly added qualifying reasons because the employee is under state quarantine or quarantine directed by a medical provider or because the employee has symptoms of COVID-19 and is seeking a diagnosis. If an employee takes vacation for any of the remaining EPSL qualification reasons, the payroll tax credit will remain capped at two-thirds of the employee’s regular wage and capped at $ 200 per day.


Previously, the EFMLA vacation could only be taken by employees caring for children whose schools or childcare facility were closed, or whose caregiver was not available for reasons related to COVID-19. However, beginning April 1, 2021, ARPA will expand the EFMLA Vacation Qualifying Reasons to include the original EFMLA Qualifying Reasons and one of the EPSL Qualifying Reasons. In addition, ARPA removes the requirement that the first two weeks of EFMLA vacation not have to be paid. As a result, employers can now voluntarily grant EFMLA paid leave for up to 12 weeks and receive the appropriate tax credit. ARPA is also increasing the cap on total paid vacation from $ 10,000 to $ 12,000, so employers can now receive an additional $ 2,000 in payroll tax credits per employee for the EFMLA qualifying vacation.

III. Next Steps

ARPA does not oblige employers to grant paid leave. However, employers should evaluate and comply with any applicable state or local laws that may require paid vacation.

In addition, qualified employers who decide to voluntarily offer (or begin to offer) FFCRA leave to employees should ensure that all workers are offered leave. ARPA mandates that FFCRA vacation, if offered, must be offered to all employees and not be limited to highly paid, full-time, or permanent employees. Employers should also update their FFCRA leave forms and policies to ensure that documentation requirements continue to be followed and met. Based on the Department of Labor’s response to previous FFCRA revisions, it is very similar for guidelines to be issued before the effective date of April 1, 2021. Employers should continue to search for published guidelines and / or updated FAQs from the DOL and consult an experienced labor law attorney for assistance in interpreting the impact of ARPA on their paid vacation practices

The content of this article is intended to provide general guidance on the subject. A professional should be obtained about your particular circumstances.

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