The FFCRA paid sick leave provisions ended December 31, 2020, as a requirement for employers, but was extended through March 31, 2021, for employers who wished to continue the program for their employees and for employer’s payroll tax credits. However, the American Rescue Plan Act (ARPA) that was passed March 11, 2021, once again makes it a requirement for employers to offer the paid sick leave related to COVID-19 beginning April 1 through September 30, 2021.
As of April 1, 2021, a new 10-day leave period is available to employees, even those that used the full two weeks allotment under the FFCRA. In other words, the clock resets as of April 1, 2021. THE ARPA also extends the reasons for paid sick leave to include time off to receive the COVID-19 vaccine(s) or time to recover from a vaccine-related illness or injury.
The ARPA adds a tax credit for the Medicare portion of the FICA tax paid on qualified sick leave pay.
Under the FFCRA, there were some exemptions for employers with less than 50 employees or greater than 500 employees. The ARPA does away with those exemptions.
As a reminder, some of the provisions of the FFCRA were:
- Provide employees with up two weeks (limited to 80 hours) of paid sick leave at the employee’s regular rate of pay when the employee is unable to work because they are quarantined, experiencing COVID-19 symptoms and seeking a medical diagnosis related to the disease. (Not to exceed $511 per day/$5,110 in the aggregate for any employee.)
- Provide employees with up to two weeks (limited to 80 hours) of paid sick leave at two-thirds of the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine, or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19. (Not to exceed $200 per day/$2,000 in the aggregate for any employee.)
- Part-time employee’s paid sick leave was limited to the calculated hours they worked in their average two-week period.
- Employers receive 100% reimbursement through a Form 941 tax credit for all qualifying wages paid as well as a tax credit for amounts paid or incurred to maintain health insurance coverage for the affected employees during their leave (up to $12,000 in the aggregate for all calendar quarters).
- Employers also received a credit for the employer’s Social Security portion of the FICA tax on the qualified sick leave pay.
- Employers should retain some sort of documentation to support the qualification of the paid sick leave in case your Forms 941 are ever audited. (However, use care in what documentation you’re requesting from employees to avoid potential HIPPA or discrimination issues.)
For our payroll clients, please be sure to specify the type of paid sick leave to your processor so that we can be sure the leave and credits are handled properly.
We note that the ARPA also provides that the federal government will pay (through September 30, 2021) 100% of COBRA insurance premiums for employees who lose their job because of the pandemic. We continue to watch for more guidance on this new legislation that was passed last week. If you have questions on any of this, please call your CASI contact.