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Houston Harbaugh Blog

American Rescue Act Extends Key FFCRA and CARES Act Provisions through September 30, 2021

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (“Rescue Act”). While most news reports regarding the Rescue Act focus on the stimulus checks many Americans have received or are expected to receive, there are also employment-related aspects of the Families First Coronavirus Response Act (“FFCRA”) that were modified by the Rescue Act. Primary provisions pertain to the extension of federal unemployment benefits and paid sick leave for covered reasons as explained below. Perhaps most importantly, employers are not required to extend paid sick leave under the FFCRA, but if they do, an employee’s sick time is reset to zero as of April 1, 2021 under the Rescue Act. In other words, if an employee took paid sick leave (or exhausted paid sick leave) under the FFCRA prior to April 1, that time does not count against his or her right to a new bank of paid sick leave in an amount to be determined by the employer (up to 80 hours) through September 30, 2021, as discussed in more detail below.

When the FFCRA was passed on March 18, 2020, employers with less than 500 employees were required to provide paid sick leave under the Emergency Paid Sick Leave Act (“EPSLA”) and/or family medical leave under the Family and Emergency Medical Leave Expansion Act (“EFMLA”) for qualifying reasons. Our article explaining the original FFCRA, EPSLA and EFMLA provisions can be found here. As of January 1, 2021, it became optional for employers to provide paid leave to employees through March 31, 2021 pursuant to the Consolidated Appropriations Act of 2021. For an explanation of the FFCRA extensions that took effect at the beginning of this year, please see our article here.

The new Rescue Act extends and expands the FFCRA in numerous ways. First, it provides employers the option of extending paid leave to covered employees for qualifying reasons through September 30, 2021. This is not mandatory, but any employer that chooses to do so can continue to take advantage of the dollar-for-dollar tax credits through the new deadline. However, employers should be aware that the Rescue Act expands covered reasons employees can take paid leave, which are meant to encourage COVID-19 testing and vaccinations. As of April 1, 2021, if an employer chooses to continue providing paid leave to employees under the EPSLA, leave is available to an employee who is unable to work because (new qualifying reasons are in bold):

  1. The employee is subject to 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 because of COVID-19;
  3. The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
  4. The employee is caring for an individual subject to a quarantine or isolation order, or advised to quarantine or isolation;
  5. The employee is caring for a son or daughter whose school or place of care is closed, or childcare provider is unavailable, due to COVID-19 precautions;
  6. The employee is experiencing any other substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor (catch-all provision);
  7. The employee is obtaining a COVID-19 vaccine, or he or she is recovering from any illness, injury or condition related to such vaccine (side effects); or
  8. The employee is seeking or waiting for the results of a COVID-19 diagnostic test or awaiting a COVID-19 medical diagnosis because either the employee has been exposed to COVID-19 or the employer requested the test or diagnosis.  

These new provisions are important because employers can now receive tax credits for allowing employees to take time off to be vaccinated and for situations when an employer requests an employee to be tested or seek a diagnosis for COVID-19. These options were not previously available under the original language of the EPSLA.

For employees seeking to take paid sick leave under the EPSLA for the qualifying reasons explained above, employers will follow the same requirements provided by the original statute. For reasons #1, 2, 3, 7, and 8 above, leave is paid at the employee’s regular rate of pay capped at $511 per day and $5,110 in the aggregate. For reasons #4, 5, and 6 above, leave is paid at 2/3 of the employee’s regular rate of pay capped at $200 per day and $2,000 in the aggregate.

The Rescue Act also extends FFCRA coverage in another important way. Employers are not required to extend paid sick leave under the FFCRA, but if they do, an employee’s sick time is reset to zero as of April 1, 2021 under the Rescue Act. If an employee took paid sick leave (or exhausted paid sick leave) under the FFCRA prior to April 1, that time does not count against his or her right to a new bank of paid sick leave. If an employer continues to offer paid sick leave, it can do so in any amount for any period of time through September 30, 2021, but the employer will only receive tax credit for the amount of paid sick leave offered to employees. For example, an employer can choose to offer 1 day of paid sick leave per month to each employee through the deadline, for a total of 6 days (April-September), and the corresponding tax credit will be limited to the actual amount of time taken per employee up to 6 days each. Employers cannot require employees to use paid sick leave under an existing policy before using paid leave under the EPSLA. This paid sick leave is supplemental.

The Rescue Act also extends expanded family medical leave under the EFMLA through September 30, 2021. Notably, the Rescue Act expands the qualifying reasons an employee can take expanded family medical leave under the EFMLA to now include reasons previously only allowed under the EPSLA. Before the Rescue Act, expanded medical leave under the EFMLA was only applicable when an employee was unable to work (or telework) due to a need to care for a son or daughter under 18 years of age if the child’s school or place of care has been closed, or the child care provider/program is unavailable, due to an emergency regarding COVID-19 declared by a Federal, State, or local government authority.[1] Now, expanded FMLA can be taken for all of the qualifying reasons under the EPSLA. Eligible employees can take up to 12 weeks of leave paid at 2/3 the regular rate of pay, with a maximum of $200 a day and $12,000 in the aggregate per employee. This is an important change from the original provisions of the FFCRA, which provided that the first 80 hours (2 weeks) of expanded family medical leave was unpaid. Now, up to 12 weeks of expanded family medical leave is paid at 2/3 the regular rate of pay up to $200 per day per employee. Another change increases the amount of expanded family medical leave from 10 weeks to 12 weeks, which has also increased the aggregate cap for expanded family medical (and tax credits) from $10,000 to $12,000. Finally, the Rescue Act removes the two-week waiting period for employees requesting this leave.

Depending on the circumstances, an employee can be eligible to take up to 14 weeks of paid leave (instead of the 12 weeks previously permitted) for qualifying reasons from April 1 through September 30, 2021. Importantly, employers are not required to continue providing both paid sick leave and expanded family medical leave going forward. An employer can choose to provide coverage under the EPSLA, EFMLA, or both.

The Rescue Act prohibits employers from discriminating against employees based on an employee’s status, wages, or length of service. Employers must offer leave to all employees, regardless of their position, how long they have worked for the company, or their employee status as full-time, part-time, salaried, or hourly. For example, only permitting highly compensated employees or employees making minimum wage to take paid leave under the FFCRA is not allowed. Tax credits are not available to employers that discriminate on the basis of an employee’s status, wages, or length of service.

Employers that do not choose to continue providing paid leave benefits under the FFCRA must revert to the company’s current leave policies in determining whether time off will be provided on a paid or unpaid basis. In so doing, employers must ensure compliance with all local and state laws regarding paid leave, such as the recent Pittsburgh Paid Sick Leave Act and Allegheny County Paid Sick Leave Act for employers operating in the City of Pittsburgh and/or Allegheny County. For explanations of the Pittsburgh Act and Allegheny County Act, please see our prior articles here [Pgh Paid Sick Leave Act article and Allegheny County Paid Sick Leave Act article].

The Rescue Act also extends federal unemployment benefits that were available under the CARES Act and the December 2020 Consolidated Appropriations Act, which were scheduled to expire after March 14, 2021. These statutes expanded existing unemployment benefits and created new benefits under the following programs: the Federal Pandemic Unemployment Compensation) Program (“FPUC”), the Pandemic Emergency Unemployment Compensation Program (“PEUC”) and the Pandemic Unemployment Assistance (“PUA”). Under the Rescue Act, these programs are now extended through Labor Day, September 6, 2021, and include the following changes:

  • FPUC: This program initially provided $600 per week as a supplement to state benefits, with an expiration date of July 31, 2020. This was later extended by the Consolidated Appropriations Act through March 14, 2021 but reduced benefits to $300 per week. The Rescue Act extends the $300 in supplemental benefits through September 6, 2021.
  • PEUC: This program provides supplemental assistance to individuals who exhausted unemployment benefits under state law. The CARES Act provided eligible individuals up to 13 weeks of additional benefits with an expiration date of December 31, 2020. This was later extended by the Consolidated Appropriations Act through March 14, 2021, and the Rescue Act extends benefits up to 53 weeks through September 6, 2021.
  • PUA: This program provides benefits to unemployed persons who are not eligible for regular or unemployment insurance, such as business owners, self-employed workers, and independent contractors. These individuals were originally provided up to 39 weeks of unemployment benefits with an expiration date of December 31, 2020. The Consolidated Appropriations Act provided up to 50 weeks of benefits through March 14, 2021. The Rescue Act now provides up to 79 weeks of benefits through September 6, 2021.

The Rescue Act also provides a waiver of federal taxes on the first $10,200 in unemployment benefits received in 2020 for individuals who earned less than $150,000.

The Rescue Act’s broad expansion of employee paid leave rights under the FFCRA makes it difficult for employers to decide whether or not to continue offering these benefits to employees. On the one hand, employers may want to opt-in to ensure employees are taking full advantage of opportunities to get tested and vaccinated for COVID-19 in order to protect the health of employees and ensure a safe work environment, with the U.S. Government reimbursing employers for the covered paid time off. On the other hand, employers may choose not to extend sick leave benefits for fear of employees abusing paid time off to take extended leave, which is counter-productive to an employer’s business operations. Ultimately, each employer will have to make its own decision based on the particular circumstances in its workplace. Employers should address such factors as staffing concerns, remote work capabilities, level of employee risk to COVID-19 exposure, and the feasibility of administration. Additional guidance from the U.S. Department of Labor and the IRS to help employers implement these changes, if desired, are expected in the near future. The author of this article, Catherine Loeffler, and Craig Brooks, Houston Harbaugh employment attorneys, are available to help employers make these difficult decisions.

[1] The expanded family medical leave under the EFMLA overlaps qualifying reason #5 above under the EPSLA (up to 80 hours of sick pay for employees who take off due to a child’s school or day care closure). The difference is this expanded FMLA paid sick leave applies when the school is closed or child care provider/program is unavailable due to governmental order regarding COVID-19, while sick time under the EPSLA is paid when the school is closed or child care provider/program is unavailable “due to COVID-19 precautions”, i.e., when any school or child care closes due to COVID-19 concerns, not just those resulting from a governmental order.

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