The American Rescue Plan Act’s New Paid Sick and Family Leave Provisions

As many covered employers recall, their duties under the Families First Coronavirus Response Act (FFCRA), the Emergency Paid Sick Leave Act (EPSLA), and the Emergency Family Medical Leave Expansion Act (EFMLEA) ended on December 31, 2020.  Those laws obligated them to provide emergency paid sick leave and paid EFMLEA leave to eligible employees.  In return, many of them were eligible for a payroll tax credit to offset the cost of those paid leaves.

On December 27, 2020, President Trump signed the Consolidated Appropriations Act of 2021.  That law extended the payroll tax credits through March 31, 2021 for eligible employers who continued to voluntarily offer emergency paid sick leave and paid EFMLEA leave.

Recently, President Biden signed the American Rescue Plan Act (ARPA) which extended through September 30, 2021, tax credits previously provided by the EPSLA and EFMLEA.  But, the extension of the tax credits brings some additional and very significant changes.

The ARPA provides tax credits for private-sector employers with 499 or fewer U.S. employees who voluntarily offer emergency paid sick and/or family leave.  These tax credits apply to qualifying leave taken from April 1, 2021 through September 30, 2021.

Under the original EPSLA there were six scenarios in which an employee could take emergency paid sick leave.  Those scenarios were:

1. The employee was subject to a COVID-19-related federal, state, or local quarantine or isolation order;
2. The employee’s health care provider advised the employee to self-quarantine due to COVID-19-related concerns;
3. The employee experienced COVID-19 symptoms and sought a medical diagnosis;
4. The employee was caring for an individual who was either (a) subject to an order described in #1 above or (b) advised to self-quarantine as described in #2;
5. The employee had to care for a child whose school or place of care closed, or the employee’s childcare provider was unavailable because of coronavirus precautions; or
6. The employee experienced other conditions similar to COVID-19 (as identified by the Secretary of Health and Human Services).[1]

The ARPA leaves in place the six foregoing scenarios, but as of April 1, 2021, it greatly expands scenario #3 to provide emergency paid sick leave to employees who are:

• • Seeking or awaiting the results of a test for COVID–19 and who were either exposed to the virus or who have been requested by their employer to be tested;
  • Obtaining a COVID-19 vaccination; or
  • Are recovering from an illness or condition related to being vaccinated against COVID-19.

Moreover, as of April 1, 2021, the ARPA also allows any of the foregoing expanded scenarios to qualify as reasons for an employee to take paid EFMLEA leave.  Previously, EFMLEA leave could only be taken by an employee to care for a child whose school or place of care had closed, or the employee’s childcare provider was unavailable due to coronavirus precautions.

Other Significant Changes Implemented by the ARPA

Initial Unpaid Period of Emergency Family Leave Eliminated

As of April 1, 2021, if an employee takes EFMLEA leave, the entire period of leave is paid.  An employee on EFMLEA leave receives two-thirds of his or her regular rate of pay, subject to a daily pay cap of $200, thus allowing an employee to receive a maximum amount of $12,000. An employee who takes emergency paid sick leave for reasons #1, #2, or #3 above receives his or her regular rate of pay subject to a daily pay cap of $511, and two-thirds the regular rate of pay subject to a daily pay cap of $200, for reasons #4, #5, or #6.

Additional 80 Hours of Emergency Sick Leave

From April 1, 2021 to September 30, 2021, employers who voluntarily allow employees to take emergency paid sick leave must provide up to 80 hours of leave for full-time employees and a proportionate amount for part-time employees.  This is the case even if the employee used 80 hours of emergency paid sick leave prior to March 31, 2021.

Final Thoughts

To be eligible for the tax credits, an employer cannot pick and choose which employees meeting the legal eligibility requirements will actually be granted leave.  Instead, if an employer offers these benefits, then eligible employees cannot be denied leave.[2]

Although eligible employees cannot be denied leave, it must be remembered that no employer is required by the ARPA to provide emergency paid sick leave and/or EFMLEA leave.  Indeed, employers with 500 or more employees, and public employers, probably will not voluntarily offer these benefits as they will be ineligible for tax credits.  But for private-sector employers with fewer than 500 employees, voluntarily offering one or both of these benefits may be right for them.  Aside from the tax relief, employers should contemplate the potential positive effect such an offering might have on employee morale, while also balancing possible employee-exploitation of these benefits and the impact of potentially-higher absenteeism.  In any event, it is wise for an employer to involve both its human resources and legal teams in making this decision so that all consequences are thoroughly examined

[1]  Thus far, no such condition has been identified.

[2] Note that employees who are ineligible for leave under the FMLA are ineligible for EFMLEA leave.  Additionally, any FMLA leave used by an eligible employee for reasons unrelated to COVID-19 reduces the amount of EFMLEA leave available to that employee.  Thus, an employee is not entitled to both 12 weeks’ FMLA leave plus an additional 12 weeks’ EFMLEA leave.