Apr 28
American Rescue Plan Act of 2021
Congress passed the American Rescue Plan Act of 2021 (“Rescue Plan”), COVID-19 relief package intended to provide continued economic relief to individuals, businesses, and state and local governments during the COVID-19 pandemic.
FFCRA Tax Credit Extension:
The Rescue Plan extends the Families First Act Coronavirus Response Act’s (“FFCRA”) tax credit provisions through September 30, 2021. From January 2021, covered employers, with less than 500 employees, are NOT required to provide FFCRA leave to employees. Employers may choose whether to provide FFCRA leave to employees and obtain tax credits to offset certain costs associated with providing the leave.
The Rescue Plan has made modifications to the FFCRA, all of which are effective on April 1, 2021:
1. Covered Reasons for Sick Leave: In addition to the six reasons for leave set by the FFCRA, employers will also receive tax credits for providing leave to employees who are:
1. Obtaining an immunization related to COVID-19 or recovering from any injury, disability, illness or condition related to such immunization; or
2. Seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19, when such employee has been exposed to COVID-19 or the employer has requested such test or diagnosis.
2. Reset of Paid Sick Leave Clock: With respect to employees who previously took 10 days of emergency paid sick leave under the FFCRA, the Rescue Plan permits an employer to provide such employees with an additional 10 days of leave.
3. Non-Discrimination Rules: Included are new non-discrimination rules for employers that opt to voluntarily provide FFCRA leave and obtain the tax credits, as it disallows the tax credits for any employer who discriminates with respect to leave:
1. In favor of highly compensated employees (defined in Section 414(q) of the Internal Revenue Code);
2. In favor of full time employees; or
3. On the basis of employment tenure.
The law directs the Department of Labor to issue regulations or other guidance regarding these changes. We will provide updates as additional information becomes available.
FFCRA Tax Credit Extension:
The Rescue Plan extends the Families First Act Coronavirus Response Act’s (“FFCRA”) tax credit provisions through September 30, 2021. From January 2021, covered employers, with less than 500 employees, are NOT required to provide FFCRA leave to employees. Employers may choose whether to provide FFCRA leave to employees and obtain tax credits to offset certain costs associated with providing the leave.
The Rescue Plan has made modifications to the FFCRA, all of which are effective on April 1, 2021:
1. Covered Reasons for Sick Leave: In addition to the six reasons for leave set by the FFCRA, employers will also receive tax credits for providing leave to employees who are:
1. Obtaining an immunization related to COVID-19 or recovering from any injury, disability, illness or condition related to such immunization; or
2. Seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19, when such employee has been exposed to COVID-19 or the employer has requested such test or diagnosis.
2. Reset of Paid Sick Leave Clock: With respect to employees who previously took 10 days of emergency paid sick leave under the FFCRA, the Rescue Plan permits an employer to provide such employees with an additional 10 days of leave.
3. Non-Discrimination Rules: Included are new non-discrimination rules for employers that opt to voluntarily provide FFCRA leave and obtain the tax credits, as it disallows the tax credits for any employer who discriminates with respect to leave:
1. In favor of highly compensated employees (defined in Section 414(q) of the Internal Revenue Code);
2. In favor of full time employees; or
3. On the basis of employment tenure.
The law directs the Department of Labor to issue regulations or other guidance regarding these changes. We will provide updates as additional information becomes available.
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