If you are a private employer with under 500 employees, were you aware you can voluntarily extend FFCRA paid leave from April 1 through September 30, 2021 and still receive a tax credit?
This is now allowed under the American Rescue Plan Act (“ARPA”), which was enacted on March 11, 2021.
However, be cautious. ARPA changes the rules for Emergency Paid Sick Leave (“EPSL”) and Emergency FMLA Extension (“EFMLA”). If these rules are not followed, no tax credit will be available.
Highlights of these changes are below.
Under the EPSL, in addition to the previous 6 reasons for leave, you must allow leave for 3 more reasons, namely:
- When the employee is seeking or awaiting results of a COVID-19 test or diagnosis;
- When the employee is obtaining a COVID-19 vaccine;
- When the employee is recovering from an injury, disability, illness, or condition related to the COVID-19 vaccine.
EPSL also includes a fresh 10-day bank of leave effective April 1, 2021.
Under the EFMLA, which previously was limited to leave needed to care for children due to COVID-19 related school and place of care closures or unavailable care providers, will now include “all” of the EPSL reasons for leave, including the 3 additional reasons.
EFMLA also gets rid of the first 10 days of unpaid leave, starts paid leave immediately, and increases the maximum paid leave over 12 weeks from $10,000 to $12,000.
Additionally, both EPSL and EFMLA provide new non-discrimination rules, stating that tax credits are not available if employers discriminate in favor of highly compensated individuals, full-time employees, or employees based on tenure.
Questions arising include whether employers can pick and choose which parts of this voluntary FFCRA extension to apply.
- Can we extend paid sick leave without the fresh 10-day bank?
- Can we extend either EPSL or EFMLA without the new reasons?
- Can we extend EPSL but not the EFMLA (or vice versa)?
Given the wording of ARPA, picking and choosing whether to apply the new reasons for leave or the fresh 10-day bank does not appear to be an option. Strict compliance is required.
However, whether an employer can extend that EPSL but not the EFMLA (or vice versa) is not as clear. While it appears to be allowable, we are anxiously awaiting updated government guidance and clarification.
In the meantime, if you intend on providing FFCRA paid leave starting April 1st, be prepared to apply it with an “all or nothing” approach.
As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.
Fraser Trebilcock is committed to providing you valuable information. Please watch for upcoming alerts on these and other topics.
We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or email@example.com.
Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or firstname.lastname@example.org.