Voluntary FFCRA Paid Leave & Tax Credits Extended Through September 30, 2021

Starting April 1, 2021, the new “American Rescue Plan Act”(ARPA) extends the paid leave provisions of the “Families First Coronavirus Response Act” (FFCRA) through September30, 2021. The basic FFRCA legislation, for last year and 202, law provides employers with payments for lost employee time work due to Covid-19 issues

Details

With the new law  there are four basic changes to eligibility rules. Two of these are expansions of eligibility (#2 & 3 below)and a fourth is a “contraction” but for good reason. (see #4 below). The four changes are as follows:

  1. The extension of this paid leave program (FFCRA) is now voluntary on the part of the employer.
  2. The paid leave now covers a maximum of 12 weeks instead of 10.
  3. The eligibility rules have been expanded to cover 3 additional reasons for the leave, but still related to Covid-19.
  4. FFCRA tax credits are not available to companies who discriminate in favor of more highly paid employees, full-time employees, or employees with tenure.

The expanded eligibility rule changes may seem minor, but they add up very quickly. There are three of these: 1.obtaining a Covid -19 vaccination, 2. recovering from an illness or condition related to the vaccination, and 3. while awaiting the results of Covid-19 diagnosis or test.

Just waiting for the results of a Covid test can be a few days and recovering from a Covid diagnosis can be several weeks. But even going for a vaccination,an employee can lose a half day of work.  If you have fifty employees or a thousand(or more), that can total several weeks of lost time that you can now get reimbursed for.

Voluntary but Great

Although the program this year is voluntary for the employer, it is an excellent program which pays you for lost time that you might be paying for anyway, i.e., going for a vaccination or waiting a couple of days for the results of a covid test. That test may even have been requested by you (or, at least desired by you).

But even for more lengthy “leaves”like those that would be provided to a parent whose child attends a school that has closed for several weeks due to Covid. It is a great benefit that you can give to your employee while your company is fully reimbursed for the cost.

Let’s look at the reimbursement and how readily those tax credits get paid.

One of the best things about this program how the tax credits get to the employer. These credits are available to cover the costs to the employer of the “leaves” on the same “immediate” basis as the initial 2020 version.

By “immediate”, I mean the employer can take the tax credit by a simple deduction from their quarterly payroll tax payments. The costs of the leave can also include employer paid health insurance premiums.

If it happens that the cost of the benefits provided to your employees during any tax quarter that exceeds your tax liability, the “cash”difference will be returned to you on an expedited basis.

Staffing Software Help

The one item that is “difficult”,in both last year’s FFRCA program and the current one,is gathering the data to determine if an employee qualifies (via work hours during a certain period) and how much he or she may be qualified for.

This can be more complicated for staffing companies with very many part-time or “Temp” employees whose hours over any given period can vary widely.

You can get the help you may need in pulling this data more easily from your staffing software supplier. Our company provides this help to our clients via a“tool” we created using one of our software’s basic features called “Jobstreams”. I am sure other software developers do (or will do) the same.

The original FFCRA plan

In this article I have simply addressed the changes to FFCRA in the latest federal legislation, The American Rescue Act of 2021. The original law, part of the Cares Act of last Spring, describes the main part of the legislation with the basic formulas of eligibility for full time, part-time,“Temp” employees with benefits for each category, etc.

Since I had written a blog article last April with all the basics of FFCRA, I will not repeat them here but simply provide a link to that article here.

Stay Safe. It has been more than a year but every month from now on will keep getting better.

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