What Employers Need to Know About the American Rescue Plan Act

The American Rescue Plan Act (ARPA), also referred to as the COVID-19 Stimulus Package, is commonly known for providing a third round of stimulus payments to eligible adults. However, the American Rescue Plan Act also has implications for employers and their employees regarding workforce management and the implementation of COVID-19 workplace policies and procedures.

As your HR experts, we’ve reviewed the law and what it means for you, your business, and your employees. Here’s our breakdown of the key provisions in the American Rescue Plan Act.

Extension and Expansion of Payroll Tax Credits for Leave Provided Under the FFCRA

The Families First Coronavirus Response Act (FFCRA) required employers to offer employees up to 80 hours of paid sick leave to quarantine, seek a COVID diagnosis, receive preventative services, or care for a sick relative. To help offset the cost to employers, a tax credit was provided. When the mandate to provide paid sick leave expired on December 31, 2020, so did the employer tax credit.

However, prior to the expiration of required emergency paid sick leave and tax credits, the Consolidated Appropriation Act (CAA) was signed into law. While the CAA did not extend the FFCRA’s mandated sick leave, it did extend payroll tax credits to employers who voluntarily provided sick leave.

Now, under the Rescue Plan Act, the availability of payroll tax credits has been extended to September 30, 2021 for employers who choose to voluntarily continue FFCRA emergency paid sick leave. The APRA has also added additional qualifying reasons for employees to take leave, including:

  • When the employee is seeking and/or awaiting the results of a diagnostic test for COVID-19 after exposure or at the employer’s request
  • When the employee is obtaining a COVID-19 vaccine
  • When the employee is recovering from injury or illness due to the COVID-19 vaccine

As of April 1, 2021, emergency paid sick leave has reset, giving employees a new 80-hour bank of sick time to use for qualifying reasons, assuming their employer has opted to voluntarily extend these benefits.

Updates to the Emergency Family and Medical Leave Expansion Act

The Rescue Act also continues the expansion of Emergency Family and Medical Leave Act (EFMLA) leave by expanding qualifying reasons for an employee to take leave to match the reasons allowed for emergency paid sick leave (see above). Additionally, the APRA increases the aggregate cap for tax credits to $12,000 per employee and eliminates the requirement that the first ten days of expanded family and medical leave be unpaid.

Finally, the American Rescue Plan added a non-discrimination provision impacting the granting of tax credits related to emergency paid sick leave and EFMLA leave. The new non-discrimination provision prohibits employers from obtaining tax credits in cases where the employer is found to have favored highly paid employees, full-time employees, and those with longer tenure.

If you have questions or are unsure what the provisions in the American Rescue Plan mean for your business, get in touch with us today.

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