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The American Rescue Plan Act Expands Tax Credits for Paid Leave.

The American Rescue Plan Act Expands Tax Credits for Paid Leave

March 23, 2021

One of the provisions of the American Rescue Plan Act that is not getting many headlines is the expansion of tax credits for the employers who voluntarily offer the paid sick leave and/or expanded paid family medical leave previously required under FFCRA.  Although the mandate to provide FFCRA leave expired at the end of December, Congress extended the payroll tax credits for those employers voluntarily offering FFCRA eligible leave during part of this year.

The American Rescue Plan Act, which President Biden signed yesterday, further extends the availability of payroll tax credits to September 30, 2021, and expands the types of paid absences that qualify for tax credits.  Covered absences under the program now include time off to obtain a COVID-19 vaccination and to recover from side effects from the vaccination.  This expansion is in addition to the types of absences already covered by the FFCRA, such as the need to quarantine while awaiting results of COVID-19 testing.

In addition to extending the deadline to utilize the tax credits, the Act also allows employers to provide a new bank of paid time off for those employees who already used some or all of the COVID-19 related time off available under the FFCRA.  Starting April 1, 2021, employers can voluntarily offer employees up to 80 hours of time off for qualifying reasons, whether or not employees took time off under the FFCRA.

As noted in our prior E-Alerts on this issue, all employers should be mindful of state mandated paid leave laws and be on the alert for new laws such as New York’s recent paid time off for COVID-19 vaccination law.  Please contact Peter Bennett (pbennett@thebennettlawfirm.com) or Rick Finberg (rfinberg@thebennettlawfirm.com) with any questions regarding paid leave and available tax credits.

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