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COVID-Related Paid Leave Has Been Extended. What About Those Tax Credits?

By Jennifer Price, HR Consultant, East Coast Risk Management

On March 11, 2021 the third federal stimulus package became law. This stimulus package, also known as the American Rescue Plan Act of 2021 (ARPA), included several changes to the Families First Coronavirus Response Act (FFCRA).  These changes could impact your business. Let’s take a closer look at some of the provisions and the tax credits available should you decide to extend FFCRA paid leave time for your employees.

The new law extended the FFCRA payroll tax credit through September 30, 2021 for businesses that  voluntarily offer pandemic-related paid sick leave. As a reminder, private employers with under 500 employees can obtain this tax credit to offset leave costs.

Here is what employers need to know:

  • The ARPA is not a mandate. Employers may continue to choose to offer the paid leaves created under the FFCRA .
  • The employer tax credit switches from the employer portion of Social Security tax to the employer share of Medicare tax.
  • The Emergency Family Medical Leave (EFML) maximum tax credit has increased from $10,000 to $12,000.
  • The two-week waiting period for EFML has been removed.
  • On April 1, 2021, the banks of creditable days reset for each eligible employee. If you choose, as of April 1, 2021, you may offer 10 days for Emergency Paid Sick Leave (EPSL) and 12 days of EFML to each eligible employee, even if they had exhausted the initial bank of time made available by the FFCRA as of April 2020. This new bank of time is good through September 30, 2021. Please note that employees may not carry over EPSL or EFML time they did not use before April 1, 2021.
  • On April 1, 2021 EFML can be taken for any qualifying EPSL reason. Previously EFML leave was only available if an employee was unable to work or telework due to a child’s school, place of care, or caregiver being closed or unavailable due to COVID-19. Remember, reasons for taking EPSL include (1) a federal, state or local quarantine, (2) self-isolation advice from a healthcare provider, or (3) the employee is experiencing COVID-19 symptoms and is seeking diagnosis.
  • Employers are also now able to receive the FFCRA tax credits for providing paid leave to employees receiving a COVID-19 vaccine or recovering from illness related to a COVID-19 vaccination.
  • Employers are also able to pay FFCRA time for employees awaiting the results of a medical diagnosis of COVID-19 when the employee has been exposed to COVID-19, or when the employer has requested a COVID-19 test.

Be careful:

The ARPA also added new non-discrimination rules for employers who voluntarily provide FFCRA leave to their employees. These rules ultimately prohibit employers from choosing to extend FFCRA benefits only to certain employees based on compensation level, full-time status, or seniority. In other words, if you are extending the leave for some employees, best to extend it for all employees or you risk losing the tax credit.

The ARPA directed the Department of Labor to issue updated regulations and guidance on the above noted FFCRA changes. We are watching for that guidance. As more information becomes available, East Coast Risk Management will keep you updated. In the meantime, if you have questions about this voluntary FFCRA extension, contact us by calling 724-864-8745 or send an email to We will be happy to help.

Disclaimer: The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this Web site do not create an attorney-client relationship between East Coast Risk Management or our employment law attorney and the user or browser.