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COVID-19 Leave and Tax Credit Extension

By Amy L. DeLuca, Esq.

As you are likely aware, the required leave initially provided for under the Families First Coronavirus Response Act (“FFCRA”), including the Emergency Paid Sick Leave Act (“EPSLA”) and the Emergency Family and Medical Leave Act (“EFLMA”), became voluntary for employers as of January 1, 2021.  Those employers who continued to provide such leave remained eligible for tax credits, which were set to expire on March 31, 2021.  With the recent passage of the American Rescue Plan Act of 2021 (“ARPA”), the voluntary leave provisions of the FFCRA have been expanded and the associated tax credits have been extended.

COVID-19 related absences are still something employers are dealing with on a daily basis.  In addition, as vaccines are becoming more readily available, employers are also facing issues relating to employee time off needed to obtain the vaccine and/or as a result of side effects from the vaccine.  To help address these issues, provisions of the ARPA provide that effective April 1, 2021, eligible employers providing leave under the terms of the EPSLA and/or the EFLMA may continue to receive a tax credit for qualifying wages paid by the employer, up to the set limit, through September 30, 2021.  In addition, the ARPA expands and enhances the qualifying leave provisions as follows:

  • Effective April 1, 2021, employers may apply for a tax credit for up to ten (10) days of leave taken by an employee even if the employee already used his/her provided leave under the EPSLA.
  • A tax credit is available for additional/new reasons for leave under the EPSLA and EFMLA which include: (i) the employee is obtaining and waiting for the results of a COVID-19 test being taken as a result of exposure to COVID-19 or the employer’s request for such a test; (ii) time off taken to obtain the COVID-19 vaccine; (iii) time off taken to recover from injury, disability, illness, or other condition related to getting the COVID-19 vaccine, or (iv) twelve (12) weeks of paid leave under EFMLA to include all of the paid sick leave reasons under the FFCRA (previously the ten (10) weeks of paid leave under EFLMA only applied to child care needs due to school or daycare closures).
  • If an employer offers such leave, it must be offered to all employees, including new hires and part-time employees.

Navigating these leave allowances and the available tax credits is not an easy undertaking.  It is crucial that employers strictly comply with the leave requirements and document what is necessary in order to qualify for the tax credits.  Wickens Herzer Panza’s employment law attorneys are available to assist you with navigating these leave requirements and tax credit eligibility issues.  To discuss these matters, contact either:

Amy DeLuca

Jon Hyman

This article provides an overview and summary of the matters described therein. It is not intended to be and should not be construed as legal advice on the particular subject.

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