---
url: 'https://www.fmjlaw.com/american-rescue-plan-2021/'
title: The Newly Implemented American Rescue Plan and Its Impact on Employers and the FFCRA
author:
  name: Georgie Stocks
  url: 'https://www.fmjlaw.com/author/gstocks/'
date: '2021-03-18T19:21:39+00:00'
modified: '2021-08-10T16:16:43+00:00'
type: post
categories:
  - Article
  - COVID-19 Resource
  - COVID-19 Resource
  - Legal Alert
  - Legal Alert
  - Newsroom
  - Thought Leadership
image: 'https://www.fmjlaw.com/wp-content/uploads/2020/12/ffcra-article.jpg'
published: true
---

# The Newly Implemented American Rescue Plan and Its Impact on Employers and the FFCRA

There has been no shortage of news articles over the past couple of months regarding various initiatives that were originally proposed by President Biden as part of the third wave of economic stimulus in response to the COVID-19 pandemic. The President’s initial aspirations for that legislation were unveiled in January 2021 and included, in part, his vision for renewing and expanding the mandate for employers to provide emergency paid leave under the Families First Coronavirus Response Act (“FFCRA”). As we previously [**reported**](https://www.fmjlaw.com/mandatory-ffcra-paid-leave-sunset/%22%20%5Ct%20%22_blank), the last stimulus package that was passed in December 2020 did not extend the mandatory nature of the FFCRA beyond its planned sunset date of December 31, 2020. Instead, employers that voluntarily elected to continue providing FFCRA paid leave beyond that date could continue claiming a tax credit for such payments through March 31, 2021.

The new stimulus package, dubbed the American Rescue Plan Act of 2021 (or “ARPA”), has now been approved by Congress and was signed into law by the President last week on March 11, 2021. Notably, after numerous amendments, the final enacted legislation does ***not*** reinstate FFCRA paid leave as a mandatory benefit. However, ARPA does change the FFCRA in several important ways including, among other things, those summarized below. 

As stated above, providing emergency paid sick leave (“EPSL”) and emergency paid family leave (“EPFL”) after December 31, 2020, under the FFCRA remains **voluntary**. ARPA did not renew any mandate for employers to provide these benefits. However, the tax credits available to employers for providing such benefits will now extend through September 30, 2021.   

Additionally, ARPA expands the reasons for which EPSL and EPFL benefits paid to an employee will qualify for a tax credit. Previously, FFCRA paid leave benefits would only qualify for the tax credit if they were paid to an employee for one of five covered reasons (as well as a named sixth reason that, to date, has not been fully clarified under the regulations). The primary five covered reasons implemented under the original FFCRA are as follows:

- The employee is subject to state, federal, or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a health care professional to self-quarantine due to concerns related to COVID-19;
- The employee has symptoms related to COVID-19 and is seeking a medical diagnosis;
- The employee is caring for an individual who is subject to quarantine or has been advised to quarantine related to COVID-19; or
- The employee is unable to work because of a need to care for the employee’s child whose school or daycare is closed, or whose daycare provider is unavailable, due to COVID-19.

Under ARPA, this list is now expanded to include an employee’s need for time off during certain additional circumstances, such as obtaining the COVID-19 vaccination, recovering from an illness or other condition relating to such vaccination, or awaiting a COVID-19 test result or diagnosis (provided that the test or diagnosis was requested by the employer and the employee is either experiencing COVID-19 symptoms or has had a confirmed exposure to COVID-19).  

Importantly, employers should bear in mind that there are two different daily maximum amounts that apply to EPSL benefits. These remain in effect from the previously implemented FFCRA. Specifically, employers could pay EPSL benefits to an employee for up to 2 weeks, paid at the employee’s regular pay rate and subject to a cap of $511 per day ($5110 in the aggregate) if the employee’s need for time off was due to their own COVID-related illness or quarantine (reasons 1-3 above). If the employee needed time off in connection with their household member’s illness or quarantine (reasons 4-5 above), the cap for EPSL benefits was limited to two-thirds of the employee’s regular pay rate, subject to a maximum of $200 per day ($2,000 in the aggregate).

ARPA maintains these same caps for EPSL in the new stimulus package. However, employers will need to update their policies and practices carefully in order to incorporate the new reasons for potential paid leave and make sure that the correct cap applies to the additional qualifying reasons discussed above. Again, this is no longer mandatory but if an employer wants to receive tax credits, it must uniformly provide the available leave as allowed under both the FFCRA and ARPA.

With respect to the EPFL benefits, the reasons for which employers can provide such benefits to employees and receive a tax credit are now expanded to include the entire list of FFCRA qualifying reasons, including ARPA’s newly added reasons. Previously, EPFL benefits were only eligible for a tax credit if they were paid to employees who needed time off due to circumstances stated in reason 5 above. 

In addition, ARPA increases the maximum per-employee amount of EPFL wages that are eligible for the tax credit. Under the previously implemented FFCRA, employers could receive a tax credit for up to $10,000 of EPFL benefits paid to each qualifying employee. This maximum reflected the FFCRA’s original rule that employers could pay benefits to an employee for up to 10 weeks during an EPFL-qualifying leave of absence, paid at a rate of two-thirds of the employee’s regular pay rate and subject to a cap of $200 per day (or $10,000 in the aggregate). Under ARPA, employers are now able to provide EPFL benefits to eligible employees for up to 12 weeks and claim a tax credit, and the per-employee aggregate cap is increased to $12,000. The daily cap of $200 remains the same.

There are several complex nuances in the ARPA language surrounding FFCRA paid leave and we will continue to monitor this area closely for new interpretations and administrative guidance issued by the relevant employment agencies. However, with the April 1, 2021, effective date for the tax credit extension and expansion provisions quickly approaching, employers that intend to voluntarily continue providing FFCRA paid leave should review their related policies, request procedures, and recordkeeping practices to ensure that they align with the new FFCRA provisions and satisfy the IRS and U.S. Treasury Department’s requirements for receiving the tax credit. 

***The attorneys in FMJ’s **[**HR & Employment**](https://www.fmjlaw.com/practice-area/hr-employment/%22%20%5Ct%20%22_blank)** group are here to assist employers with this undertaking. Please contact **[**Shannon McDonough**](https://www.fmjlaw.com/professional/shannon-m-mcdonough/%22%20%5Ct%20%22_blank) **at **[**shannon.mcdonough@fmjlaw.com**](mailto:shannon.mcdonough@fmjlaw.com%22%20%5Ct%20%22_blank)**, **[**Heidi Carpenter**](https://www.fmjlaw.com/professional/heidi-a-carpenter/%22%20%5Ct%20%22_blank)** at **[**heidi.carpenter@fmjlaw.com**](mailto:heidi.carpenter@fmjlaw.com%22%20%5Ct%20%22_blank)**, or **[**Natolie Hochhausen**](https://www.fmjlaw.com/professional/natolie-s-hochhausen/%22%20%5Ct%20%22_blank) **at** [**natolie.hochhausen@fmjlaw.com**](mailto:natolie.hochhausen@fmjlaw.com%22%20%5Ct%20%22_blank)** to discuss how we may be able to assist your business.** *

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