One year ago, Congress enacted the Families First Coronavirus Response Act (FFCRA). Among other things, the FFCRA created paid leave programs under the Emergency Paid Sick Leave Act (EPSLA) and the Emergency Family and Medical Leave Expansion Act (EFMLEA). In brief, EPSLA and EFMLEA required employers with fewer than 500 employees to provide varying amounts of paid leave to employees impacted by the COVID-19 pandemic. Employers who provided paid leave in accordance with these laws were entitled to refundable tax credits to offset the cost.
Although the mandate that employers provide leave in accordance with EPSLA and EFMLEA expired at the end of 2020, Congress passed a law in December of that year providing that employers who voluntarily continued to grant their employees paid leave in accordance with EPSLA and EFMLEA could continue to claim refundable tax credits through March 31, 2021. Now, the American Rescue Plan Act of 2021 (ARPA), which was passed on March 11, 2021, has extended through September 30, 2021 an employer’s ability to claim refundable payroll tax credits for voluntarily providing leave under EPSLA and EFMLEA. The ARPA is also more robust in that it provides additional reasons for which leave can be granted and extends the duration of leave in certain instances.
Leave Under EPSLA and EFMLEA: A Refresher
Under EFMLEA, covered employers were required to grant up to twelve weeks of job-protected leave to an employee: (1) who had been on payroll for at least thirty calendar days; (2) was unable to work (or work remotely); (3) due to the need to care for a child under age 18 if school was closed or a childcare provider was unavailable; (4) as a result of an emergency declared by a federal, state or local government that is related to COVID-19.
The first ten days of leave were to be unpaid, although an employee could choose to use accrued paid time off or sick leave under EPSLA during that time. An employee entitled to EFMLEA leave would be paid two-thirds of his or her regular rate of pay for the number of hours the employee would usually be scheduled to work, up to $200 per day and $10,000 for the entire period of EFMLEA leave.
Under EPSLA, covered employers were required to provide paid sick leave to any employee who was unable to work (or work remotely) when the employee: (1) was subject to a federal, state or local quarantine or isolation order related to COVID-19; (2) had been advised by a health care provider to self-quarantine due to concerns relating to COVID-19; (3) had symptoms of COVID-19 and was seeking a diagnosis; (4) was caring for a person who was subject to a federal, state or local quarantine or isolation order related to COVID-19, or had been advised by a health care provider to self-quarantine due to concerns relating to COVID-19; (5) was caring for a son or daughter if the child’s school or place of care had been closed, or his or her child care provider was unavailable, due to COVID-19 precautions; or (6) was experiencing any other substantially similar health condition as specified by the Secretary of Health and Human Services.
EPSLA leave was available to all employees regardless of the duration of their employment. Full-time employees were entitled to up to 80 hours of paid sick leave and part-time employees were entitled to an amount of paid sick leave equal to the average number of hours that the employee works in a two-week period.
The amount to be paid under EPSLA depended on the reason for the employee’s leave. In the case of reasons (1), (2) and (3) above, the employee was to be paid at the regular rate of pay, except that paid sick time could not exceed $511 per day, and $5,110 in total. In the case of reasons (4), (5) and (6) above, the employee was paid at two-thirds of the regular rate of pay, except that paid sick time could not exceed $200 per day, and $2,000 in total.
Leave Under ARPA
Under ARPA, from April 1, 2021 through September 30, 2021, employers will be entitled to refundable tax credits for voluntarily providing leave for any of the reasons set out in EPSLA and EFMLEA, as expanded by the ARPA.
Specifically, ARPA expands the reasons for which an employee may take EPSLA leave. An employee can now take sick leave if: (1) he or she is getting tested or seeking a diagnosis for COVID-19, provided that he or she was exposed to COVID-19 or the employer requested that he or she be tested/seek a diagnosis; (2) he or she is getting vaccinated against COVID-19; or (3) he or she is recovering from an illness or condition associated with getting immunized.
ARPA also requires employers that voluntarily provide sick leave to provide eligible employees with a new bank of EPSLA leave hours. For full-time employees, this means up to eighty additional hours of paid sick leave.
Further, ARPA expands the reasons that an employee may take EFMLEA leave to include more than just the need to care for a child whose school is closed or childcare provider is unavailable. An employee may now take EFMLEA leave for any of the expanded reasons for which EPSLA leave is available.
The ARPA also eliminates the requirement that the first ten days of EFMLEA leave be unpaid. Nonetheless, regardless of the reason for which leave is taken, leave continues to be paid at a rate of two-third’s of the employee’s regular pay rate, capped at $200 per day.
Disqualification from Receiving Payroll Tax Credits
The ARPA makes it clear that employers can forfeit their right to receive tax credits if they violate the provisions of the FFCRA that bar employers from retaliating against employees who request or take leave. Tax credits may also be forfeited if an employer administers its paid leave program in a way that discriminates in favor of highly compensated employees, more senior employees or full-time employees.
Intersection with New York Law
Although leave under ARPA is not mandatory, New York employers must bear in mind that they continue to have obligations under the State’s Quarantine Leave Law (QLL). That law requires employers to provide leave to employees who are subject to a government order of quarantine or isolation. In certain circumstances, which we previously blogged about, an employee may be entitled to QLL leave for up to three periods of quarantine or isolation.
Even where an employer chooses to provide leave under ARPA, it must provide employees with the benefits of the QLL where they are more generous than ARPA leave. In those cases, employers cannot claim a payroll tax credit for benefits that are required by the QLL but not required by ARPA. For example, in certain circumstances the QLL requires an employer to pay an employee at his regular rate of pay for the duration of leave. Leave under ARPA may also be available but is capped at $511 per day under EPSLA and $200 per day under EFMLEA. In that situation, the employer may not claim a tax credit for any amount paid in excess the ARPA amounts.
We expect that the United States Department of Labor will eventually issue regulations or guidance documents concerning leave under the ARPA, and will blog about any updates when they happen. Meantime, if you have any questions about leave, please contact Jessica Baquet at (516) 393-8292 or firstname.lastname@example.org.