Throughout the global pandemic, various federal acts have required employers to offer emergency paid sick leave in exchange for federal tax credits. Though those obligations expired December 31, 2020, the American Rescue Act (the “Act”), signed by President Biden on March 11, 2021, extended payroll tax credits to employers with fewer than 500 employees which volunteer to offer paid leave, up to 80 hours, related to COVID-19 through September 30, 2021.
Under the Act, employers can offer both Emergency Paid Sick Leave (EPSL) and Emergency Family Medical Leave for three additional reasons:
- Employees obtain a COVID-19 vaccine
- Employees are recovering from illness, injury or conditions related to said vaccine
- Employees seeking or awaiting the result of a COVID-19 test or diagnosis when the employee has either been exposed to COVID-19 or the employer has requested the test or diagnosis
The Act reset the 80-hour Emergency Paid Sick Leave or Emergency Paid Family Leave (EPFL) allotment effective April 1, 2021. The Act also removes the requirement of the first 10 days being unpaid.
Emergency Family Medical Leave Expansion
Under the American Rescue Act, employers must now pay employees for the first 10 days of leave. The EPFL maximum has also been raised from $10,000 per employee to $12,000 per employee. Offering Emergency Sick Leave and/or Emergency Family Medical Leave after April 1, 2021 remains voluntary.
Non-Discrimination and Anti-Retaliation Provisions
The Act requires employers to comply with anti-discrimination provisions. Employers are prohibited from administering paid leave benefits in a discriminatory fashion—favoring highly compensated employees or full-time employees or providing benefits to employees on the basis of employment tenure.
Anti-Retaliation provisions ensure employers do not illegally retaliate against employees for COVID-related causes.
As with previous COVID-19 relief acts, employers should thoroughly review the provisions within the American Rescue Act to ensure compliance. if employers fail to comply with provisions, including anti-retaliation or discrimination, they will forfeit their tax credits.
While the Department of Labor and Internal Revenue Service continue to issue guidance on the American Rescue Act, Hylant will continue to monitor developments and share updates as they become available.
Reach out to your Hylant representative for further information. Don’t have one? Contact us here.
The above information does not constitute advice. Always contact your employee benefits broker or trusted adviser for insurance-related questions.