The employer leave obligations that were contained in the original Families First Coronavirus Response Act (FFCRA) ended on 12/31/20. The Consolidated Appropriations Act of 2021 (signed into law on 12/27/20) did NOT extend FFCRA obligations, but gave employers covered under the FFCRA the option to voluntarily provide “qualified” paid sick leave or paid family leave wages to their employees and continue to receive a federal tax credit for such wages until 3/31/21.
In addition to extending FFCRA Paid Sick and Family Leave tax credits for wages paid voluntarily by covered employers during the period 4/01/21 through 9/30/21, the ARPA has made the following changes:
- The 10-day maximum amount of emergency paid sick leave permitted from 4/01/20 through 3/31/21 resets on 4/01/21—allowing a new 10-day maximum of paid sick leave (even for employees who have taken a similar leave prior to 4/01//21); and
- The maximum amount of wages (per employee) that may be considered for paid family leave increases from $10,000 to $12,000. (This FFCRA provision is based on the date(s) that an employee uses any emergency paid family leave.)
- Obtaining a COVID-19 immunization;
- Recovering from an injury, disability, illness or condition related to COVID-19 immunization; or
- Seeking or awaiting the results of a COVID-19 test or diagnosis because either the employee has been exposed to COVID or the employer requested the test or diagnosis.
Employers can also receive a tax credit for up to twelve (12) weeks of paid family leave. The total cap for such leave has been increased from $10,000 to $12,000; however, the credit is still limited to 2/3 of the employee’s regular rate of pay up to a maximum of $200/day for all paid family leave reasons, including the new leave reasons related to immunization or testing (listed above) and reasons that qualify for a $511/day cap when the wages are paid under the paid sick leave provisions. Note: the first two weeks of paid family leave no longer need to be unpaid.
It’s important to note that, under the FFCRA limits, leave must be taken and paid on or before 3/31/21 to be reported on the 1st quarter 2021 Form 941. If the leave is taken on or before 3/31/21 and not paid until after 3/31/21, it will be reported on the 2nd quarter 2021 Form 941 and the new ARPA rules and limits will apply.
Dealers should determine whether it’s advantageous to run a supplemental payroll on or before 3/31/21 to capture all of the federal tax credits that apply on or before 3/31/21. Your payroll provider’s system will reset on 4/01/21 to accommodate the ARPA provisions.
As a reminder, the provisions of the FFCRA and now the ARPA only apply to employers with less than 500 employees.