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The American Rescue Plan Act of 2021 has extended the tax credits available to employers with fewer than 500 employees under the Families First Coronavirus Response Act (FFCRA) through September 30, 2021. As has been the case since January 1, 2021, leave is no longer mandatory under the law, but employers may offer leave for qualifying reasons and take the tax credits on the same bases as identified in the original FFCRA, with a few modifications, as follows:

  • Perhaps most notably, the tax credit is now available for leave taken to obtain the COVID-19 vaccine or for “recovering from any injury, disability, illness, or condition related to such immunization.”
  • Employers may also now recover the tax credit for paid leave offered when “the employee’s employer has requested [a COVID-19] test or diagnosis.” Previously, leave under the FFCRA was not available if the employee was not exhibiting symptoms and had not been ordered to quarantine by the government or a doctor but was being tested at the employer’s request.
  • The new law provides a refreshed bank of 10 additional days of paid sick leave as of April 1, 2021, for which the tax credit may be recovered. So employees who already exhausted all leave available under the original FFCRA can use additional leave between April 1, 2021, and September 30, 2021.
  • The aggregate cap for paid leave (and thus tax credits) under the Emergency Family and Medical Leave Expansion Act (EFMLEA) was extended from $10,000 to $12,000, because the two weeks of leave available under the Emergency Paid Sick Leave Act (EPSLA) now count as EFMLEA leave for all purposes (not only when the leave is to care for a child when the child’s school or place of care is closed).
  • The law now imposes nondiscrimination rules, so employers may not discriminate in offering leave in favor of highly compensated or full-time employees or based on tenure.

These modifications to the FFCRA will allow employers to recover tax credits for paid leave they offer for some of the more common circumstances that were previously not available under the FFCRA.

Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.

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