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President Joe Biden signed the American Rescue Plan Act of 2021 into law on Thursday, the latest and perhaps final measure of the United States’ federal response to the COVID-19 pandemic.
The law provides various forms of financial relief to families and businesses, as well as funding to improve vaccination efforts and safely reopening schools. It also extends the tax credit for eligible employers that voluntarily provide paid leave under the Families First Coronavirus Response Act (FFCRA). The credit covers 100% of qualifying wages for FFCRA leave provided between April 1 and Sept. 30 and the qualifying reasons for taking leave are expanded to include leave taken to receive a COVID-19 vaccination or to recover from an injury, disability, illness or condition related to receiving a vaccination.
“This extension is good news, as it provides much-needed relief and support for thousands of workers and their families who were significantly impacted by the pandemic,” said Scott Cawood, CEO of WorldatWork. “No one should underestimate the challenging road ahead for a full economic recovery, but these programs will go a long way in supporting it.”
The maximum tax credit is increasing to $200 per day per employee or $12,000 per employee in aggregate and the employee does not need to take 10 days of unpaid leave to qualify. However, as has been the case since January 2021, covered employers (those with fewer than 500 employees) are not required to provide FFCRA leave to employees — rather, employers can choose whether to provide FFCRA leave to employees and obtain tax credits to offset certain costs associated with providing the leave.
The FFCRA was signed into law on March 18, 2020 and has provided funding for free coronavirus testing as well as provisions that required employers (with fewer than 500 employees) to offer at least two weeks of paid leave to employees affected by the virus. The law’s protections have also been shown to help curtail the spread of the coronavirus. A recent study, for instance, finds that states where employees gained access to paid sick leave through FFCRA saw roughly 400 fewer confirmed cases per state, per day.
The FFCRA expired at the end of 2020, which eliminated employers’ mandatory obligation to provide emergency paid sick and family leave. In response, the Trump administration signed the 2021 Consolidated Appropriations Act (CAA), permitting employers to decide whether their companies would provide paid leave and, therefore, be eligible for the payroll tax credit. This option was available until March 31, before this new legislation, which was a priority for the Democratic-controlled Congress to extend in the early stages of the Biden presidency.
About the Author
Brett Christie is the managing editor of Workspan Daily.