The American Rescue Plan: What Employers Need to Know (Part One)

By John S. Gannon - Skoler, Abbott & Presser, P.C.

March 23, 2021

Just about a year ago, the Families First Coronavirus Response Act (“FFCRA”) went live.  At the time, the legislation seemed hasty and somewhat drastic, but necessary. Looking back, I think the law was a success. It incentivized “staying home and staying safe” with employee paid sick leave (EPSL) entitlements for COVID-related reasons. The FFCRA also expanded the FMLA to provide parents with job security and wages when they were needed at home to care for children unable to go to school or daycare. As readers likely are aware, the law had a sunset date of December 31, 2020, but covered employers could voluntarily continue to offer the benefits and claim the associated tax credits until March 31, 2021.

Earlier this month, President Biden signed the highly publicized American Rescue Plan of 2021 (“ARP”) into law. The ARP is the latest COVID-19 relief package designed to aid in the economic and health effects of the pandemic. The law includes several new and important provisions that impact employers wishing to voluntarily provide paid leave under the FFCRA. (The ARP also makes important changes to unemployment compensation and COBRA benefits – we will tackle those topics in a separate blog later this week.)

Paid Leave Tax Credits Extended to September 30, 2021

As noted above, the FFCRA’s mandatory leave requirements ended last year. In late December 2020, availability of FFCRA tax credits was extended until March 31, 2021, if employers wanted to voluntarily continue to offer paid leave under the FFCRA. The ARP similarly extends the tax credit availability through September 30, 2021, for employers who voluntarily provide FFCRA benefits.

Benefits Expanded

The ARP expands the reasons that employees can take leave under the FFCRA. In addition to the six current qualifying reasons for leave, paid sick leave is available (1) when an employee is obtaining a COVID-19 vaccination; (2) when an employee is suffering or recovering from side effects related to the COVID-19 vaccination; and (3) when an employee is seeking or waiting the results of a COVID-19 test if the employee has either been exposed to COVID-19 or the employer has requested a COVID-19 test.

In addition, the ARP expands the reasons that employees can take Expanded FMLA (EFML).   Previously, this leave was only available for school or childcare related reasons (Reason No. 5).  The ARP allows employees to take EFML for any of the original six qualifying reasons as well as the new COVID-19 vaccination and testing reasons.

Fresh Leave Banks Available April 1, 2021

You may recall that employees were eligible for 80 hours of EPSL and 12 weeks of EFML when the FFCRA launched last year. Recognizing that many employees have already exhausted some or all of these leave banks, the ARP provides employees with a new bank of 80 hours of EPSL available on April 1, 2021. Although somewhat unclear, it appears that this fresh bank of 80 hours is not in addition to an employee’s existing bank of unused EPSL. Also unclear is whether the ARP provides employees with a fresh bank of EFML to use (probably a yes). We expect to get some guidance on these issues in the coming weeks.

No EPSL or EFML Discrimination

The ARP has new nondiscrimination language that prohibits employers from favoring highly compensated employees, full-time employees or employee tenure when deciding who will be offered EPSL or EFML. Employers are of course free to decide whether they want to offer EPSL and/or EFML. But if they do, they should offer the leave in a consistent, nondiscriminatory fashion.

Bottom Line

Employers are no longer required to provide EPSL or EFML. Employers who voluntarily choose to do so will be eligible for tax credits on wages paid for such leave. Given the new reasons for leave, offering the benefit may encourage employees to get vaccinated and tested. The new bank of EPSL hours also should encourage those who have exhausted their sick leave banks to stay home if they are feeling ill—always a plus during the COVID pandemic. If you are thinking about continuing all or some FFCRA benefits, our attorneys can provide updates and guidance in this area.