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Hidden in the American Rescue Plan Act: More Reasons for Employees To Take FFCRA Leave and More Time for Employers To Receive Tax Credits

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Hidden in the American Rescue Plan Act: More Reasons for Employees To Take FFCRA Leave and More Time for Employers To Receive Tax Credits

While many Americans are receiving their $1,400 payments from the American Rescue Plan Act (“ARPA”), signed into law on March 11, 2021, employers should be paying attention to the somewhat buried language regarding Families First Coronavirus Relief Act (“FFCRA”) tax credits.

Does the ARPA Require Paid Leave?

No. It was just over a year ago when the FFCRA was first passed granting paid leave to the qualified employees of employers with fewer than 500 employees and the FFCRA leave mandate expired at the end of 2020. Any paid leave provided by employers after December 31, 2020, has been entirely voluntary, and it continues to be so. However, the December 2020 stimulus package extended the FFCRA tax credits for employers who chose to voluntarily continue providing paid FFCRA leave until March 31, 2021.

Now, the ARPA has extended these tax credits from April 1, 2021, until September 30, 2021, but providing paid leave remains voluntary.

How Can Employers Take Advantage of the FFCRA Tax Credits?

Private sector[1] employers wishing to take advantage of the FFCRA tax credits must comply with all of the FFCRA leave requirements. In other words, they have to provide emergency paid sick leave (“EPSL”) and emergency paid family medical leave (“EPFMLA”) for all of the reasons in the original FFCRA, as well as the expanded reasons in the ARPA. For a recap of how the FFCRA works, see our post here.

First, the ARPA expanded the reasons an employee may take EPSL. In addition to the original five reasons an employee could take EPSL under the FFCRA,[2] an employee can now take EPSL for three new reasons: (1) the employee is awaiting the results of a diagnostic test for COVID-19 after being exposed to COVID-19 or was tested at the employer’s request, (2) the employee is receiving their COVID-19 vaccination, or (3) the employee is recovering from any condition related to receiving their COVID-19 vaccination.

Next, the ARPA resets employees’ EPSL “banks” as of April 1, 2021. In other words, an employer can claim FFCRA tax credits for employees who take EPSL after April 1, even if those employees exhausted their EPSL prior to March 31.

The ARPA also expands the reasons for which employees can take EPFMLA to include all of the same reasons as EPSL. Before April 1, employees could only take EPFMLA for childcare difficulties due to school closures or childcare provider unavailability. Under the ARPA, employees can now take EPFMLA for any one of the eight reasons available for EPSL. Finally, the cap on the EPFMLA tax credit and employer can claim has been raised from $10,000 per employee to $12,000 per employee and the requirement for an initial two weeks of unpaid leave has been removed.

The ARPA does not create any obligations on employers to provide paid leave to their employees, however, it does offer reimbursement for those who are willing to provide FFCRA leave to their employees voluntarily through September 2021, so long as those employers also comply with the requirements of the FFCRA. Employers who have continued to voluntarily provide FFCRA leave should evaluate whether they want tos continue to do so through September, and if so, they should reexamine their policies to ensure all ARPA expansions are accounted for. Employers who have not voluntarily provided FFCRA leave after December 31, 2020, may want to reevaluate that decision in light of the time employees need to receive their vaccination and the varying range of side effects experienced due to vaccinations. The expanded FFCRA tax credits may be beneficial in assisting some employers to manage the ever-present COVID-19 related absences.

Employers with questions about their current FFCRA leave policies should contact Mel Muskovitz, Andrea Frailey, or any of the Dykema Labor and Employment Law attorneys.


[1] Public sector employers are still not entitled to any FFCRA tax credits.

[2] (1) Self-isolation because they have the coronavirus disease; (2) Obtaining a diagnosis because they are exhibiting symptoms of COVID-19; (3) Complying with an order from a health-care provider requiring them to stay away from work; (4) Caring for a family member who is facing any of the above; or (5) Caring for children if schools are closed or because a caregiver is unavailable because of the ongoing public health emergency.

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