Coronavirus: Tax Credits for Employers Who Voluntarily Offer FFCRA Leave in 2021

The Families First Coronavirus Response Act provided emergency paid leave to employees who needed time off due to COVID-19. Although the law has now expired, employers who voluntarily continue to offer leave under the law are eligible for tax credits.

In March 2020, in response to the coronavirus (COVID-19) global pandemic, then-President Donald Trump signed into law an emergency relief bill that provided paid sick leave and expanded family leave for employees of businesses with fewer than 500 workers, among other provisions.

The law, known as the Families First Coronavirus Response Act, took effect April 2, 2020, and its provisions expired at the end of 2020. However, the American Rescue Plan, which President Biden signed into law in March 2021, provides that employers that continue to voluntarily provide paid leave under the FFCRA are eligible for a 100 percent refundable tax credit through September 30, 2021.

Here's a look at some of the features of COVID-related family and medical leave, as first laid out in the FFCRA.

Paid Leave Provisions

The law required (now allows) covered businesses to give up to 80 hours of paid sick time to any full-time employee who:

  • had contracted the virus or was quarantined
  • had symptoms of the disease and was seeking medical treatment
  • needed to care for a family member who had the virus or was quarantined, or
  • needed to care for a child under 18 whose school had closed because of coronavirus.

The American Rescue Plan added further qualifying reasons to the above list. Under ARP, employees can now take leave (if their employers voluntarily offers it) to:

  • seek or await the results of a diagnostic test for, or a medical diagnosis of, COVID-19, provided that the employee has been exposed to COVID-19 or the employer has requested that the employee obtain such test or diagnosis.
  • receive a COVID-19 vaccination, or
  • recover from any injury, illness, or condition related to the COVID-19 vaccination.

Payments are capped at $511 per day ($5,110 total per employee) for workers who have the virus, are under quarantine, or have to take time off for diagnostic testing, or vaccination-related reasons. Payments can't exceed $200 per day ($2,000 total per employee) for workers caring for family members who were quarantined or children. Note that the law prohibited employers from requiring their workers to find a replacement or cover in order to use paid leave.

Employers are eligible for reimbursement of all their costs via tax credits. As noted above, although the FFCRA expired at the end of 2020, employers that choose to continue voluntarily offering leave under the FFCRA can claim tax credits through September 30, 2021.

Part-Time Workers

Employers can also receive tax credits for offering paid FFCRA leave to part-time workers. Part-timers can receive an amount of leave equal to the average number of hours they work every two weeks. So if they work 15 hours a week, they can receive up to 30 hours of paid sick time for the year. Earned leave does not carry over into the following year.

Expanded Family and Medical Leave Act (FMLA) Leave

Also under the FFCRA, government employers and private employers with fewer than 500 workers had to give paid FMLA leave to employees who were caring for a child whose school or daycare had closed. Payments were limited to $200 per day, or $10,000 total per employee. The ARP increased the maximum per-employee amount to $12,000. Again, employers who continue to offer these payments voluntarily are entitled to full reimbursement through tax credits.

In addition, the FFCRA lowered the amount of time that an employee must have worked for an employer to become eligible for emergency FMLA leave: from one year to 30 days. That provision still applies under ARP.

Initial Ten-Day Period Now Paid

The FFCRA originally provided that the first ten days of emergency FMLA leave would be unpaid. But ARP eliminated that provision: all twelve weeks of emergency FMLA leave, including the first ten days, can now be paid.

Additional Rights Available

Although the FFCRA has now expired, some employers are still offering FFCRA leave voluntarily. In addition, you might have other paid leave benefits available under state law, local law, or your employer's own policies.

Check with an employment lawyer in your area or your company's human resources department to learn the full range of options available.

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