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04/01/2021

The American Rescue Plan Act Expands Voluntary Paid Leave For COVID-19

President Biden recently signed into law The American Rescue Plan Act of 2021 (ARPA). The ARPA, among other things, has expanded the leave benefits available under the Families First Coronavirus Response Act (FFCRA) although employers are still free to choose whether they want to provide these benefits to employees during 2021.

You will recall that the FFCRA required employers (with less than 500 employees) to provide paid family leave (PFL) as well as paid sick leave (PSL) for COVID-19 related leave. Employers were entitled to tax credits for providing the paid leave. This mandate ended on December 31, 2020. However, under the Consolidated Appropriations Act, employers were allowed to continue claiming the tax credits if they voluntarily chose to provide PFL and PSL benefits through March 31, 2021.

Under the ARPA, the tax credits have now been extended through September 30, 2021. Covered employers are still not required to provide PFL or PSL benefits during 2021, however, if they voluntarily opt to do so, they will still be eligible to receive tax credits subject to certain limitations.

The ARPA has expanded the qualifying reasons for taking leave under the FFCRA which now include:
  • Employees getting the COVID-19 vaccine;
  • Employees recovering from complications after receiving the COVID-19 vaccine;
  • Employees awaiting the results of a COVID-19 test or diagnosis for COVID-19.

The ARPA also restarts the bank of hours available for PSL. Commencing on April 1 through September 30, 2021, participating employers will provide employees a new bank of 80 hours of PSL for which tax credits will be available. In other words, employees who previously exhausted the PSL will be permitted to take an additional 80 hours of paid leave.

In addition, the ARPA expands the PFL benefit. Earlier, this benefit was only available due to the closure of a child's school or daycare. Commencing on April 1, the ARPA expands PFL to include all of the qualifying reasons available for PSL. This is helpful for employers who wish to provide paid-leave benefits to employees because the PFL benefit is available for a much longer time period (the PFL benefit is available for up to 12 weeks). The PFL benefit now includes instances where the employee is subject to quarantine or an isolation order, the employee is instructed to self-quarantine by a healthcare provider due to COVID-19, the employee is having symptoms of COVID-19 and seeking a medical diagnosis, or the employee is caring for an individual subject to a quarantine.

The ARPA also eliminates the provision that the first 10 days of PFL is unpaid and now provides for a total of 12 weeks of paid PFL. Employees are still eligible to receive two-thirds of their regular rate, up to $200 per day (regardless of the reason for the leave). However, because the number of weeks of PFL has increased, the maximum tax credit of $10,000 per employee has been increased to $12,000.

Employers who voluntarily opt to provide these benefits and want to qualify for the tax credit are prohibited from discriminating or showing preferential treatment to highly-compensated employees, full-time employees, or on the basis of employment tenure.

If you have any questions relating to the expanded coverage for COVID-19 leave, please reach out to our Labor and Employment Group.
Labor and Employment:
 Abbey Moland amoland@mcgrathnorth.com (402) 633-9566  Aaron Clark aclark@mcgrathnorth.com (402) 633-9580 Ruth Horvatich rhorvatich@mcgrathnorth.com (402) 633-1521
 Steve Bogue sbogue@mcgrathnorth.com (402) 633-1491  Cody Brookhouser-Sisney cbrookhouser-sisney@mcgrathnorth.com (402) 633-6891  Diana Morales McFarland dmoralesmcfarland@mcgrathnorth.com (402) 633-9563
 Britni Summers bsummers@mcgrathnorth.com (402) 633-6894