FFCRA Employer Tax Credits Expanded

On March 11, 2021, the American Rescue Plan, an omnibus bill containing COVID-19 relief provisions was signed into law by President Biden.  This Client Alert discusses changes made by the American Rescue Plan to tax credits available to employers for Emergency Paid Sick Leave (“EPSL”) and Expanded FMLA (“EFMLA”).

Originally created under the Families First Coronavirus Response Act, the employee entitlement to EPSL and EFMLA, and the employer mandate to provide EPSL and EFMLA expired on December 31, 2020.  However, a prior relief bill allowed employers to continue to provide EPSL and EFMLA on a voluntary basis, claiming a corresponding tax credit, through March 31, 2021.  The American Rescue Plan extends the time employers may provide leave on a voluntary basis and claim tax credits through September 30, 2021, and makes the following changes to the FFCRA credits for wages paid after April 1, 2021:

  • Increases the credit limit from $10,000 to $12,000 per employee. 
  • Expands the eligible reasons for both EPSL and EFMLA to include obtaining or recovering from a COVID-19 immunization.
  • From April 1, 2021 through September 30, 2021, an employer may provide EPSL to an employee even if the employee previously used of the employee’s EPSL entitlement in 2020.  From April 1 on, the Act resets the clock for purposes of determining EPSL leave time under Section 5102 of the FFCRA.  Thus, even if an employee received 80 hours of EPSL in 2020, an Employer could now provide additional EPSL to that employee.

Please contact a MacDonald Illig attorney if you have any questions regarding the American Rescue Plan and how it impacts your business.