The American Rescue Plan Act (Act) was signed into law on March 11th. Employers should be aware of significant provisions contained in the Act that relate to workplace policies and practices. A summary of some key points is provided below.
Extension and Expansion of Paid Leave Availability and Payroll Tax Credits
The American Rescue Plan Act allows employers to continue to offer the paid leave provisions created by the Family First Coronavirus Response Act (“FFCRA”) through September 30, 2021.
The FFCRA, enacted into law on March 18, 2020, required covered employers (e.g., most private employers of less than 500 employees and public employers) to provide employees with paid leave for qualifying COVID-19 related absences through December 31, 2020. The FFCRA also made tax credits available to employers that provided paid leave pursuant to the requirements of the FFCRA.
The Consolidated Appropriations Act, 2021, enacted in December 2020, permits employers to voluntarily continue to offer the FFCRA paid leave provisions to employees who had not exhausted their leave entitlements before December 31, 2020 through March 31, 2021. Employers that chose to continue the paid leave provisions can also claim tax credits up to the amounts permitted for corresponding payments made through March 31, 2021.
New Allotment of Paid Sick Leave – Pursuant to the American Rescue Plan Act, employers can voluntarily offer employees a new allotment of up to 80 hours (10 days) of qualifying paid sick leave and claim corresponding tax credits.
Eliminates Requirement that First 10 Days of Expanded Family and Medical Leave be Unpaid – The American Rescue Plan Act eliminates the requirement that the first 10 days of paid expanded family and medical leave be unpaid. The first two weeks of paid expanded family and medical leave (which were unpaid under the FFCRA) can now be paid at 2/3 of the employee’s regular rate of pay, increasing the maximum amount and tax credit limit for paid expanded family and medical leave from $10,000 to $12,000 per employee.
Additional Reasons for Paid Leave Available – The American Rescue Plan Act also creates additional bases for paid sick leave. An employee can be eligible for paid leave if the employee is:
1. absent from work to receive a COVID-19 vaccine;
2. recovering from complications related to receiving a COVID-19 vaccine; or
3. awaiting the results of a test or potential diagnosis for COVID-19.
Disqualification from Receipt of Payroll Tax Credits for Discrimination or Retaliation – Under the American Rescue Plan Act, employers are not eligible to receive payroll tax credits if they discriminate in providing leave or fail to comply with the anti-retaliation provisions and requirements of the FFCRA.
Employee Retention Credit – The American Rescue Plan Act extends and expands availability of the employee retention credit established by the Coronavirus Aid, Relief, and Economic Security Act and extended by the Consolidated Appropriations Act of 2021 for qualifying wages paid to employees through the end of 2021.
What Employers Should Do
The American Rescue Plan Act contains a number of other provisions aimed at helping employers, displaced employees and individuals struggling to meet the challenges created by the pandemic.
Employers should contact legal counsel for assistance in understanding legal requirements and strategies to meet compliance obligations.
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