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American Rescue Plan Act and FFCRA Leave

Added by John Ashby, William K. Smith in Employment Law on March 30, 2021

The American Rescue Plan Act (ARPA) was signed into law on March 11, 2021. As set out below it expands the current paid family leave and paid sick leave programs first established by the Families First Coronavirus Response Act (FFCRA) and extended under the Consolidated Appropriations Act (CAA).

FFCRA Leave

  • FFCRA mandated that all public employers and private employers with less than 500 employees provide up to 80 hours of Emergency Paid Sick Leave and up to 12 weeks of Expanded FMLA.
  • The burden of the mandatory leave under FFCRA was offset to private employers by providing a dollar-for-dollar payroll tax credit for all leave taken under FFCRA by an employee and paid by a private employer.
  • By its own terms, FFCRA expired on December 31, 2020.

CAA Leave

  • Passed on December 20, 2020, the CAA did away with required leave under FFCRA and made the paid family leave and paid sick leave established under FFCRA voluntary.
  • Employers who were covered under FFCRA were given the option to voluntarily decide to continue to provide the same paid family and paid sick leave established under FFCRA and to continue to receive a tax credit for such leave until March 31, 2021.

ARPA Leave

  • Passed on March 11, 2021, the ARPA does not require or mandate that employers provided any form of paid leave to employees, COVID-19 related or otherwise. The ARPA, like the CAA, gives employers the option to voluntarily provide the same paid family and paid sick leave established under FFCRA and extends the available tax credit from March 31, 2021 through September 30, 2021.
  • The ARPA expands the qualifying reasons for leave.
    • To receive the tax credit, Emergency Paid Sick Leave or Expanded FMLA must be for a qualified reason. Previously, Emergency Paid Sick Leave was available only when:
      • an employee was subject to a quarantine or isolation order;
      • an employee was told to self-quarantine by a healthcare provider due to COVID-19;
      • an employee was experiencing symptoms of COVID-19 and was seeking a medical diagnosis;
      • an employee was caring for an individual who was subject to a quarantine or isolation order or has been advised to self-quarantine;
      • an employee was caring for a child whose school or place of care was closed due to COVID-19; or
      • an employee was experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services.

The ARPA expands the qualifying reasons for Emergency Paid Sick Leave to include when:

      • an employee is obtaining a COVID-19 immunization;
      • an employee is recovering from side effects (i.e., injury disability, illness or condition) related to COVID-19 immunization; or
      • an employee is seeking or waiting for the results of a COVID-19 test or diagnosis because either the employee has been exposed to COVID-19 or the employer requested the test or diagnosis.

Perhaps the biggest change is an expansion of qualifying reasons for use of Expanded FMLA. Currently, employees can only use Expanded FMLA if they need time off to care for a child whose school or daycare is closed due to COVID-19 related reasons. Under the ARPA, however, Expanded FMLA can be used for any of the qualifying reasons applicable to Emergency Paid Sick Leave, including the new qualifying reasons. Thus, if an employee qualifies for Emergency Paid Sick Leave and needs leave beyond the 80 hour entitlement, the employee could take up to an additional 12 weeks of Expanded FMLA (assuming they have not previously used any EFML or time off under the FMLA).

  • The ARPA re-sets the amount of Emergency Paid Sick Leave available to any employee as of April 1, 2021. For an employee who previously took 10 days of Emergency Paid Sick Leave under FFCRA or the CAA, the ARPA allows an employer to provide an additional ten (10) days of leave between April 1, 2021, and September 31, 2021 and private employers receive the corresponding tax credits.
  • The ARPA includes a non-discrimination requirement. Employers are disqualified from receiving the tax credits if they treat highly compensated employees (within the meaning of Section 414(q) of the Internal Revenue Code), full-time employees or employees with more tenure differently under a voluntary paid sick leave plan.
  • The ARPA’s leave provisions are effective as of April 1, 2021.

Based on the above changes introduced by the ARPA, it appears that employers have the following options:

Option #1: If previously voluntarily offering FFCRA leave, end all FFCRA leave, both Emergency Paid Sick Leave and Expanded FMLA, effective March 31, 2021. If an employer chooses to end all FFCRA leave, the employer should communicate this decision promptly and clearly—especially to any employees that are currently on leave. Employers choosing this option will need to notify employees how leave for Covid-19 reasons will be handled after March 31, 2021. For example, employees could be required to use PTO or regular sick leave, or the employer could provide some alternative form of paid or unpaid leave.

Option #2: Choose to continue to allow employees to use Emergency Paid Sick leave and/or Expanded FMLA through September 31, 2021, and claim the corresponding tax credits. Under this option, employers would essentially be voluntarily extending their existing FFCRA policies through September 31, 2021.

Option #3: Although not expressly addressed in the ARPA, and thus involving some uncertainty, one viable option may be to modify existing FFCRA policies to extend Emergency Paid Sick Leave through September 31, 2021, but discontinue providing Expanded FMLA as of March 31, 2020. For private employers, this option would have the benefit of providing up to 80 hours of Paid Sick Leave to employees who cannot work due to qualifying COVID-19 reasons (with the corresponding tax credits), while eliminating the more administratively burdensome Expanded FMLA benefits.

Regardless of which option an employer chooses, the choice needs to be communicated clearly and promptly to employees and should be documented in the form of an updated policy. If you would like assistance with a policy or a consultation on these issues, please contact a member of our Employment Practice Group.