I noted in my last paid leave update, I reported that over 400,000 American lives had been claimed by the pandemic. Just a couple of months later, that number now exceeds half a million. Even as individuals get vaccinated and workplaces reopen, paid leave remains an important issue for the American workforce.
First, a recap…
Mandatory paid leave requirements under the FFCRA expired on December 31, 2020. Thereafter, the Consolidated Appropriations Act did not extend the mandatory benefits, but did permit employers to take the federal tax credits to cover leave costs if the employer chose to offer leave under one or both FFCRA programs. The availability of those tax credits under the appropriations bill will end March 31, 2021.
The American Rescue Plan…to the rescue
On March 11, 2021, President Biden signed the American Rescue Plan Act (ARPA) of 2021, which will extend those federal tax credits to employers with fewer than 500 employees if the employer voluntarily chooses to provide emergency paid sick leave (“EPSL”) and/or emergency FMLA leave (also often called “expanded FMLA” or “EFMLA”) in accordance with the FFCRA. These federal tax credits will be available for qualifying leave taken from April 1, 2021 through September 30, 2021.
Under the original FFCRA, there were 6 qualifying reasons for EPSL, and one qualifying reason for EMFLA (#5, below):
- Employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- Employee has been advised by a health care provider to self-quarantine due to concerns related to COVID 19;
- Employee is experiencing COVID-19 symptoms AND is seeking a medical diagnosis;
- Employee is caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID 19;
- Employee is caring for a child whose school or place of care is closed or whose childcare provider is unavailable due to COVID-19;
- Employee is experiencing other conditions similar to COVID-19, as identified by the Secretary of Health and Human Services (to date, no other conditions have been identified or authorized for coverage under FFCRA).
Beginning April 1, 2021, under the American Rescue Plan, all six reasons will remain viable covered uses for EPSL. In addition, all six reasons will also constitute a qualifying reason to take leave under EFMLA. Additionally, reason #3, had been expanded to include:
- Leave where the employee is seeking or awaiting results of a diagnostic test for, or a medical diagnosis of, COVID-19 and was either exposed to COVID-19 or the employer requested such test or diagnosis; or
- Leave to obtain a COVID-19 immunization or to recover from any injury, disability, illness, or condition related to such immunization.
In addition to these expanded qualifying reasons and extended coverage under EFMLA, there are other notable points in ARPA:
- The initial period of unpaid leave under EFMLA is eliminated: Starting April 1, 2021, the entire 12-week period of EFMLA is paid leave, and the overall amount of pay employees can receive increases from $10,000 to $12,000 (because of the additional 2 weeks of paid EFMLA). The actual pay rate (2/3 the employee’s regular rate) and daily pay cap ($200) for EFMLA remain unchanged. Likewise, the pay rate for EPSL (either 2/3rd or 100%, depending on qualifying reason) and daily pay cap ($511) remains the same.
- A new bucket of up to 80 hours of EPSL is available for employees to use between April 1, 2021, and September 30, 2021. A proportionate amount is available for non-full-time employees. This new bucket of leave is in addition to the EPSL leave that had been previously available to employees. Note, however, that any prior EPSL leave that an employee has remaining as of March 31, 2021, will not carry over and cannot be used in the April 1, 2021 to September 30, 2021 time period. Also note that if an employee exhausted their initial allotment of EPSL leave before March 31st, any additional leave that the employer-provided before April 1, 2021 does not qualify for the new tax credits.
- The ARPA contains a non-discrimination provision. To qualify for the tax credits between April 1 and September 30, 2021, an employer may not discriminate as to which employees will be eligible for the voluntary leave. For example, employers may not claim tax credits for leave if they discriminate in favor of highly compensated employees or full-time employees or based on length of service.
- Other FFCRA rules remain unchanged. For wages to qualify for the new tax credits, employers should operate as though FFCRA rules still apply. This includes threshold questions such as which employers are covered, employee eligibility rules, documentation rules, etc.
While employees will have access to a new bucket of up to 80 hours of EPSL to use for covered purposes between April 1st and September 30th it is not clear whether the EFMLA leave bucket will also be refreshed. Many employees may have already used their 12 weeks of FMLA/EFMLA for the employer’s measurement year, and it is unclear whether the ARPA would replenish the EFMLA allotment as of April 1st. Employers, business leaders, and legal counsel have called upon the DOL to provide clarification. AI counsel will pass along any developments as they occur.
Employers should remember, however, that leave under ARPA remains voluntary, and therefore employers have flexibility – for example, employers may choose to offer EPSL only, but not EFMLA, or limit the number of hours, days, or weeks that are provided to employees under either or both programs if employers are exercising any limitations in a non-discriminatory manner.