Employers May Offer FFCRA Leave in Exchange for Tax Credits Until September 30, 2021

Posted: March 29, 2021 | News

President Biden recently signed the American Rescue Plan Act (ARPA) into law, which includes provisions that employers should consider as they continue to handle the impacts of COVID-19 in the workplace. There are many components to the ARPA and this blog addresses only its paid leave benefit provisions.
Employer Tax Credits for Voluntarily Providing FFCRA Leave Has Expanded

The ARPA provides tax credits for employer-provided emergency paid sick and family leave established under the Families First Coronavirus Response Act (FFCRA) from April 1, 2021 through September 30, 2021. 
As you may recall in our prior blog, under the initial version of the FFCRA, which expired at the end of last year, employers with fewer than 500 employees were required to provide emergency paid sick and family leave to employees for certain COVID-19 qualifying reasons. While employers are no longer required to provide FFCRA leave, the ARPA permits them to voluntarily provide FFCRA emergency paid sick and family leave benefits to their employees in exchange for refundable tax credits. 

An important portion of the ARPA is that it expands the reasons that employees may qualify for these benefits if an employer elects to provide them. The covered reasons under the ARPA include the qualifying reasons under the FFCRA’s Emergency Paid Sick Leave Act (EPSLA) and Emergency Family and Medical Leave Expansion Act (EFMLA), in addition to the following reasons:

  • if an employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 and the employee has been exposed to COVID-19 or the employee's employer has requested a COVID-19 test or diagnosis, or
  • the employee is obtaining immunization related to COVID-19, or
  • the employee is recovering from any injury, disability, illness, or condition related to a COVID-19 immunization

If an employer provides the ARPA benefits, employees are also entitled to use emergency family leave for the reasons previously provided under the emergency paid sick leave provisions of the FFCRA. Previously, EFMLA leave was limited to employees who were unable to work because they were caring for their children whose school or place of care was closed, or whose care provider was unavailable for reasons related to COVID-19.

Notably, under the ARPA employees are entitled to 10 days of emergency paid sick leave beginning April 1, 2021. Emergency paid sick leave previously provided under the FFCRA does not count towards the ARPA provided 10 days. In other words, an employee who previously exhausted their EPSLA, would still be eligible under the ARPA. 

As for emergency paid family and medical leave, under the ARPA, employees are entitled up to 12 weeks of paid leave, in an aggregate amount of not more than $12,000, which is a modification of the FFCRA provisions. Under the FFCRA, leave payments were capped at $10,000 in the aggregate and the first 10 days of the 12 weeks were unpaid, subject to certain exceptions.

If employers elect to receive tax credits by extending benefits under the ARPA, they should also be aware of the ARPA’s non-discrimination requirement, which provides that no credit will be allowed if an employer discriminates in favor of highly compensated employees, full-time employees, or employees on the basis of employment tenure with such employer.

Employers should review their existing policies and update them as necessary to either remove now expired FFCRA policies or to extend any FFCRA benefit provisions under the ARPA.


This blog is not meant to provide specific legal advice. For advice specific to your business, please contact any of the employment attorneys in our Employment Practices Group who are ready to assist you.

Alison C. Gibbs

Alison C. Gibbs, Esq. is a Senior Associate of the firm's Employment Practice Group.  Alison represents employers in a wide-range of employment-related litigation, including wage and hour defense, and defense of discrimination, harassment and retaliation claims.  Alison also regularly advises employers before litigation ever occurs, handling employment disputes and managing day-to-day employee issues, including reviewing employee handbooks policies, wage and hour compliance, leave issues, internal investigations, lay-offs, disciplinary action, terminations, severance negotiations, and other employment practices