New Information as of March 2021
The American Rescue Plan Act (ARPA), which is the latest bill to address the ongoing economic impacts of COVID-19, has been signed into law.
The American Rescue Plan Act is in many ways an extension of the current tax credit scheme for Emergency Paid Sick Leave (EPSL) and Emergency Family and Medical Leave (EFMLA) under the Families First Coronavirus Response Act (FFCRA). The FFCRA required many employers to provide EPSL and EFMLA in 2020, but became optional when it was extended to cover January 1 through March 31, 2021.
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Optional Extension of Sick and Family Leaves
The new extension under ARPA takes effect April 1, 2021, and lasts through September 30, 2021. Like the current version, it remains optional. In addition, tax credits are available but only to employers with fewer than 500 employees and up to certain caps.
To receive the tax credit, employers are required to follow the original provisions of the FFCRA. For example, they can’t deny EPSL or EFMLA to an employee if they’re otherwise eligible, can’t terminate them for taking EPSL or EFMLA, and have to continue their health insurance during these leaves.
Request a free copy of the EPSL and EFLMA forms here.
Emergency Paid Sick Leave (EPSL) Changes
Here are the key changes to EPSL, in effect from April 1 through September 30, 2021:
- Employees can take EPSL for reasons related to vaccination, including time off to get the vaccine and to recover from any related side effects.
- Employees can take EPSL when seeking or waiting for a COVID-19 diagnosis or test result if they’ve been exposed to COVID-19 or the employer has asked the employee to get a diagnosis or test. (Previously, time spent waiting on test results was not necessarily covered, which seemed like an oversight.)
- Employees will be eligible for a new bank of two weeks on April 1. That means 80 hours for full-time employees and a prorated amount for part-time employees. Unused hours from before April 1 will not carry over.
- Employers can’t provide EPSL in a manner that favors highly compensated employees or full-time employees or that discriminates based on how long employees have worked for the employer.
Emergency Family and Medical Leave (EFMLA) Changes
Here are the key changes to EFMLA, in effect from April 1 through September 30, 2021:
- EFMLA can now be used for any EPSL reason, in addition to the original childcare reasons. This includes the two new EPSL reasons noted above.
- The 10-day unpaid waiting period has been eliminated.
- The aggregate cap on EFMLA has been increased to $12,000 (from $10,000). This change accounts for the additional 10 days of paid time off—the daily cap of $200 remains the same.
- The law isn’t clear whether employees are entitled to a new 12-week bank of EFMLA. We will update the FFCRA Laws page as information becomes available.
- Employers can’t provide EFMLA in a manner that favors highly compensated employees or full-time employees or that is based on how long employees have worked for the employer.
- If quarantined or isolated subject to federal, state, or local quarantine or isolation order
- The employee is advised by a health care provider to self-quarantine because of COVID-19
- When the employee is:
-Experiencing symptoms of COVID-19 and seeking a medical diagnosis
-Seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 because they have been exposed or because their employer has requested the test or diagnosis
-Obtaining a COVID–19 vaccination or recovering from any injury, disability, illness, or condition related to the vaccination
- The employee is caring for another person who is isolating or quarantining on government or doctor’s orders (2/3 pay)
- When caring for a child whose school or place of care is closed due to COVID-19 (2/3 pay)
Employees and employers will—in most cases—want to exhaust EPSL first, since it has a higher tax credit, except when used for care for others.
ERG Payroll & HR Services Offers a free download for the EPSL/EFLMA Request Form. Get it Here!
Tax Credit Review
The tax credits remain unchanged, except for the increased aggregate cap for EFMLA.
- The credit available for most EPSL uses is up to 100% of an employee’s regular pay, with a limit of $511 per day and an aggregate cap of $5,110 per employee. If an employee is using EPSL for childcare purposes, or to care for another person, the daily limits are the same as for EFMLA.
- The credit available for EFMLA is up to 2/3 of an employee’s regular pay, with a limit of $200 per day and an aggregate cap of $12,000 per employee.
Employers can also claim a credit for their share of Medicare tax on the employee’s wages and the cost of maintaining the employee’s health insurance (qualified health plan expenses) during their absence.
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