Emergency Paid Sick Leave: What employers need to know.
As the COVID-19 pandemic continues, new federal law targets help to American businesses.
President Joe Biden signed the American Rescue Plan Act into law on March 11, 2021. In continued support to families and businesses, the law provides for an extension and updates to the Emergency Paid Sick Leave and Extended FMLA rule changes of early summer that specifically aimed to help businesses during the COVID-19 pandemic.
- Extension: Emergency Paid Sick Leave was extended through September 30, 2021. It had been set to expire on March 31, 2021. As of January 2021, covered employers were not required to provide leave under the Families First Coronavirus Response Act. However, if employers chose to extend the leave, they would obtain tax credits to offset the cost.
- Additional qualifying reasons: The Rescue Plan added two qualifying reasons for leave. An employee:
- Is obtaining an immunization related to COVID-19 or recovering from any injury, disability, illness, or condition related to such immunization.
- Is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19, when such employee has been exposed to COVID-19 or the employer has requested such test or diagnosis.
- Additional hours: As of April 1, 2021, employers are permitted to provide an additional 10 days of leave, even if an employee previously took 10 days of emergency paid sick leave.
- Expanded FMLA coverage: Previously, tax credits taken by an employer to cover the cost of providing emergency / expanded Family & Medical Leave Act (FMLA) leave was only available if the employee was unable to work (or telework) to care for their child whose school or place of care was closed due to the public health emergency.
- Now, employers may claim tax credits for emergency FMLA leave arising from any of the reasons set forth in the Families First Act, including the additional reasons mentioned above.
- The Rescue Plan now removes the two-week waiting period on emergency FMLA leave.
- It also raises the cap on EFMLA leave from $10,000 to $12,000 per employee.
- Nondiscrimination rules: The Rescue Plan includes new nondiscrimination rules for employers that provide voluntary leave and obtain the tax credits. The law disallows tax credits for any employers that discriminate with respect to leave:
- In favor of highly compensated employees.
- In favor of full-time employees.
- Based on employment tenure.
What should you do to prepare?
- Decide: Employers should decide now if they will start or continue to provide voluntary paid sick leave and paid family leave to employees due to the pandemic through September 30, 2021.
- Communicate: Employers should communicate their plans to their payroll and human resources teams and ensure all forms, policies and records applicable to COVID-related paid leave are updated. Communication of the plan should be sent out to employees prior to March 31, 2021.
- Monitor: We anticipate the U.S. Department of Labor will be providing additional guidance in the coming days. JCCS will continue to monitor and share any updates.
* This article is not a complete listing of all the details related to this tax topic and you should contact your CPA for a more detailed discussion regarding these items and how they may apply to your specific situation.
Photo: National Cancer Institute, unsplash.com