The following is a guest blog by Greater Mankato Growth member, Blethen Berens. In it they highlight two important elements of the American Rescue Plan as it relates to employee leave.
On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (hereinafter referred to as the “ARPA”). ARPA provides, among other things, important changes to the paid sick leave and expanded family and medical leave originally provided for under the Families First Coronavirus Response Act (FFCRA) for employers with less than 500 employees. The most important thing to note is that these leave options are completely voluntary for employers: Employers are not required to offer either emergency paid sick leave or paid FMLA leave to their employees under ARPA, but there are tax incentives available to encourage employers to voluntarily offer this paid leave.
Paid Sick Leave
The first important update is to paid sick leave. Under the FFCRA, employers had to grant 80 hours of paid sick leave if an employee was unable to work because the employee:
- Is subject to a federal, state, or local quarantine or isolation related to COVID-19;
- Has been advised by a health care provider to self-quarantine related to COVID-19;
- Is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
- Is caring for an individual subject to an order described in (1) or self-quarantine as described in (2); or
- Is caring for a child whose school or childcare provider is closed or unavailable for reasons related to COVID-19.
Employees unable to work because of reasons (1), (2), and (3) above are entitled to pay at their regular rate or the applicable minimum wage, whichever is higher, up to certain limits. Employees unable to work because of reasons (4) or (5) above are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to certain limits.
Under ARPA, employers may offer their employees up to an additional 80 hours of paid sick leave and receive tax credits for allowing this leave. ARPA also provides for two additional “qualified reasons” for leave, which fall under (3), above. Those reasons are if an employee: (i) is obtaining a vaccination related to COVID-19 or recovering from any injury, illness, disability, or condition related to such a vaccination, or (ii) is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19, when the employee has been exposed to COVID-19 or the employer has requested such a test or diagnosis.
Expanded Family and Medical Leave
A second important update relates to expanded FMLA leave. Previously, under the FFCRA, emergency FMLA benefits were only available to an employee if their child’s school or place of care was closed or unavailable due to COVID-19. Under ARPA, employers may offer employees up to 12 weeks of paid FMLA leave arising from any of the reasons that an employee can take paid sick leave, described above, including the two new reasons provided in ARPA. If an employer chooses to offer the expanded FMLA leave, ARPA also increases the amount of wages for which an employer may claim a tax credit from $10,000 to $12,000 annually per employee.
ARPA also contains nondiscrimination rules for all employers who choose to offer paid sick leave and/or expanded FMLA leave under ARPA. Employers who offer either paid sick leave or expanded FMLA leave cannot discriminate in granting such leave (1) in favor of highly compensated employees, (2) in favor of full-time employees, or (3) on the basis of employment tenure. This means that if an employer chooses to offer either form of paid leave, the leave must be offered to all employees, including new hires and part-time employees.
Timing and Implementation
The expanded tax credits for employers under ARPA are available only for leave taken from April 1, 2021 through September 30, 2021. This means that any leave taken by employees for the two new reasons (vaccination and waiting for COVID-19 test results or diagnosis) does not qualify for the tax credit unless taken on or after April 1, 2021. As previously mentioned, because this leave is completely voluntary, ARPA provides employers many options (and combinations of options) but no requirements related to emergency or expanded leave. For example, an employer could choose to offer expanded sick leave but not FMLA leave, or vice versa. It is also important to note that even if an employer chose not to extend FFCRA leave from December 2020 to March 2021, it can still choose to offer ARPA leave and take advantage of the tax credits.
Employers should consult with their legal counsel and accountants/tax advisers to help determine how to best utilize the expanded leave and accompanying tax credits. Decisions about whether to grant leave under ARPA should be made in time to communicate policies to all employees ahead of April 1, 2021. If you have any questions about ARPA, its provisions, or how to craft and implement compliant policies, reach out to one of the employment law attorneys at Blethen Berens – Julia Corbett, Beth Serrill, or Alyssa Nelson.