BY KATIE HALL, REYNOLDS + ROWELLA
President Biden has signed the American Rescue Plan Act (ARPA) into law on March 11, 2021, which includes an extension of tax credits for employer-provided paid sick leave originally provided under the Families First Coronavirus Response Act (FFCRA).
Previously, the FFCRA provided Emergency Paid Sick Leave (EPSL) to employers with fewer than 500 employees. Employers had to pay sick leave of up to 80 hours to an employee who was:
- subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- caring for a child of such employee if the school or place of care of the child has been closed (including the closure of a summer camp, summer enrichment program, or other summer program), or the childcare provider of such child is unavailable due to COVID-19 precautions.
For reasons 1, 2, & 3 the employer pays qualified sick leave wages for up to two weeks (up to 80 hours) at 100% of the employee’s regular rate of pay to a max of $511 per day and $5,110 in the aggregate.
For reasons 4 & 5, the employer pays qualified sick leave wages for up to two weeks (up to 80 hours) at a rate of 2/3 of the employee’s regular rate of pay. The maximum amount of qualified sick leave wages paid due to these reasons $200 per day and $2,000 in the aggregate.
For all reasons listed above, employers could receive a dollar-for-dollar tax credit up to the maximums listed.
Beginning April 1, 2021, the ARPA extends employer’s ability to receive tax credits for voluntarily providing EPSL through September 30th and expands the reasons for eligible leave. Now, in addition to the reasons listed above, employees are eligible to take leave for the following reasons at 100% of the employee’s regular rate of pay to a max of $511 per day and $5,110 in the aggregate:
- The worker is getting a COVID-19 vaccine;
- The employee is recovering from complications due to receiving the vaccine;
- The worker is awaiting the results of a COVID-19 test or diagnosis for coronavirus.
The ARPA also resets the 10-day limit for the tax credit for paid sick leave under FFCRA as of April 1st. Accordingly, if employees had previously exhausted their entitlement to paid sick leave under the FFCRA, they now have another 10-day/80-hours for use.
Since it is optional for employers to provide this leave, employers have a few decisions to make:
- Option 1: Continue offering FFCRA paid sick leave for the reasons above and reset balances with a new bank of time. This will allow employers to claim the tax credit for eligible leave taken.
- Option 2: Continue offering FFCRA paid sick leave but retain your employees’ current balances and not reset leave balances on April 1. Employers will NOT be eligible for the tax credit with this option.
- Option 3: Discontinue offering FFCRA paid sick leave beginning April 1 and reset balances to zero.
While providing employees with a reset leave balance as of April 1st is at no cost to the employer, employers still need to weigh the benefits of doing so. Employers should consider the severity of the outbreak in their area, what their demand for labor will be like through September 30th, and how increased vaccination rates will affect their workforce.
Katie Hall, PHR, Director, HR
With over a decade of diversified knowledge in HR, Katie has extensive hands-on experience leading HR initiatives including policy design, compensation, performance management, recruiting, compliance reporting, HR workflow development, training and development, and benefits administration. She assists R+R clients with recruiting and retaining quality staff and working closely with businesses in regards to their benefits, training and compensation programs. Email Katie
About Reynolds + Rowella
Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.
Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.