On March 10, Congress passed America’s 2021 bailout bill, and President Biden signed it the next day. There are several provisions of the American Rescue Plan that pertain to labor law. This bulletin focuses on the implications for the Family First Coronavirus Response Act.
After December 31, employers were no longer required to grant FFCRA vacation. However, the Consolidated Funds Act of 2021 extended tax credits to March 2021 for insured employers who gave their employees voluntarily paid sick leave and extended family and sick leave.
As March 31 approached, employers wondered what would happen to the FFCRA. The US bailout does not require FFCRA vacation, but extends the tax credit for private sector employers with fewer than 500 employees until September 30, 2021. The US bailout also includes some additional changes to the FFCRA.
For employers who voluntarily offer FFCRA leave, the tax credits are available for all “old” FFCRA qualification reasons and for the following reasons:
The employee receives a COVID-19 vaccination.
The employee is recovering from any illness, injury, condition, or disability related to receiving the vaccine.
The employee is looking for or waiting for test results or a medical diagnosis for COVID-19, or the employer has asked the employee to have a COVID test or diagnosis.
In addition, from April 1 through September 30, employers can voluntarily offer 10 new days (up to 80 new hours) of paid sick leave to employees and are also entitled to the tax credit for them. The Internal Revenue Service has not yet updated its FAQs to reflect these changes, apart from an introductory paragraph and a prompt to check for updates.
The law extending family and medical leave originally only applied to absences from work related to school closings. The American Rescue Plan adds any legitimate reasons an FFCRA employee might take paid sick leave to vacation. Additionally, EFMLA can be paid every 12 weeks, including the first two weeks that were not previously paid. The tax credit for a qualifying EFMLA vacation is calculated at two-thirds of the employee’s regular wage. In essence, EFMLA vacation tax credits increased from $ 10,000 to $ 12,000 per employee.
The American Rescue Plan prohibits employers from receiving the tax credit if the employer discriminates on vacation: (1) in favor of high-paid workers, (2) in favor of full-time workers, or (3) on the basis of employment tenure.
Next Steps
Employers should decide whether to volunteer the new FFCRA vacation included in the American Rescue Plan. Here too, the tax credits are available to private employers with fewer than 500 employees.
Employers who choose to take an FFCRA vacation should consider implementing policies and administrative procedures to keep track of vacation time taken by workers, if they have not already done so.
Employers should check regularly for updates from the US Department of Labor and the IRS.
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