Emergency Paid Sick Leave and Family Leave Tax Credits Under the American Rescue Plan Act

The American Rescue Plan Act allows employers to voluntarily extend emergency paid sick leave (EPSL) and emergency Family and Medical Leave Expansion Act (EFMLEA) provisions of the Families First Coronavirus Response Act (FFCRA) to employees and receive tax credits through Sept. 30. While employers are not required to provide this type of leave, this tax credit will provide a benefit to employers who do so.

EPSLA Guidelines

Under the EPSLA, Eligible Employers can provide employees with paid sick leave if the employee is unable to work (including telework) due to any of the following:

1. the employee is under a Federal, State, or local quarantine or isolation order related to COVID-19;
2. the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
3. the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
4. the employee is caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
5. the employee is caring for the child of such employee if the school or place of care of the child has been closed, or the child care provider of such child is unavailable, due to COVID–19 precautions;
6. the employee is experiencing any other substantially similar condition specified by the U.S. Department of Health and Human Services.

The rate of pay an employee is entitled to receive varies depending on the reason that an employee takes the leave:

• If an employee takes leave due to reasons (1), (2), or (3) in the list above, the employee is entitled to their regular rate of pay (up to $511 per day) for up to ten days and is further eligible to receive two-thirds of their regular rate of pay (up to $200 per day) for an additional ten weeks afterward (up to a total cap of $12,000.)
• For the other reasons listed above, the credit covers two-thirds of the employee’s regular rate of pay (up to $200 per day) for twelve weeks total (up to a total cap of $12,000.)

Tax Credit Provides Incentive to Employers

This tax credit serves as motivation for employers to provide this extended leave to their employees. Although the tax benefit is scheduled to end on September 30, 2021, the rise of the Delta variant may encourage an extension of this benefit as employees recover from illness or help their family members during a crisis. One can hope that employers will see that providing extended leave will benefit their companies in the long run, as supporting employees fosters loyalty and productivity. Until such practices are common, however, employees can write to their congressional representatives to request an extension of the tax credit and other additional benefits to protect employees during these times of crisis and uncertainty in the face of the pandemic.

If you or a loved one fears or has experienced harassment or retaliation due to the use of medical leave, please do not hesitate to contact Schaefer Halleen.