Families First Coronavirus Response Act Tax Credits Extended Through September 2021

Among many other provisions of the American Rescue Plan Act of 2021, the $1.9 trillion economic stimulus package signed into law by President Biden on March 11, most employers with 500 or fewer employees can continue to take advantage of tax credits available under the Families First Coronavirus Response Act (FFCRA) through September 30 of this year. This is the second time that FFCRA employer tax credits have been extended beyond their original expiration date of December 31, 2020. The tax credits were previously extended through March 31, 2021, after President Trump signed the Consolidated Appropriations Act into law on December 27, 2020.

While the FFCRA’s COVID-19 leave requirements have not been mandatory since December 31, 2020, this latest extension of the FFCRA tax credits is intended to incentivize eligible employers to voluntarily provide paid leave for qualifying, COVID-19 related reasons. In addition to the reasons outlined in the original FFCRA, the tax credits are also now available to cover Emergency Paid Sick Leave (EPSL) taken under the following new qualifying circumstances:

  • To obtain a COVID-19 immunization, including time spent away from work in order to recover “from any injury, disability, illness, or condition related to such immunization.”
  • While seeking or awaiting results of a COVID-19 test or medical diagnosis when the employee has been exposed to COVID-19 or the employer has requested an employee obtain such testing or diagnosis.

EPSL taken for the above two new qualifying reasons (along with the original six reasons) comes with a new “leave bank” of ten days per employee, beginning on April 1 and continuing until September 30, when the tax credits are set to expire again, regardless of whether the employee had taken similar leave before April 1.

The aggregate cap for paid leave and tax credits under the Emergency Family and Medical Leave (E-FMLA) Expansion Act has also increased from $10,000 to $12,000 per employee because the two weeks of EPSL available under the Emergency Paid Sick Leave Act now qualifies as E-FMLA leave under all circumstances (and not just when leave is taken to care for a child when the child’s school or place of care is closed for COVID-19 related reasons).

The extension of the FFCRA tax credits also comes with some new strings attached: employers cannot utilize the tax credits if they administer paid leave in a way that discriminates against highly compensated or full-time employees, or discriminates based on an employee’s length of tenure with the employer.