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Mar 2021
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March 12, 2021

President Joe Biden Signs American Rescue Plan, Extending Unemployment Benefits and FFCRA Tax Credits

On March 11, 2021, President Joe Biden signed the American Rescue Plan Act of 2021 (ARPA), a $1.9 trillion dollar package that continues the federal government’s efforts to address the economic impact of COVID-19. Among other things, the ARPA provides for an extension of enhanced unemployment benefits and the Families First Coronavirus Response Act (FFCRA) tax credits for paid leave. The enhanced unemployment benefits were established by prior COVID-19 relief packages and were set to expire on March 14, 2021, and extended tax credits for FFCRA leave were set to expire on March 31, 2021.
 
Unemployment Benefits
 
The ARPA extends Pandemic Unemployment Assistance, Federal Pandemic Unemployment Compensation, and Pandemic Emergency Unemployment Compensation, which were originally established by the Coronavirus Aid, Relief, and Economic Security Act. Such unemployment benefits will be extended through September 6, 2021. The ARPA similarly extends federal programs aimed at encouraging the use of “short-time compensation” or “work share” programs until that date.
 
Under this extension, the ARPA will continue to provide unemployed workers receiving unemployment benefits an additional $300 per week. The ARPA also makes the first $10,200 of 2020 unemployment benefits nontaxable for households with incomes below $150,000.
 
FFCRA
 
The ARPA neither reenacts the FFCRA nor requires that employers provide paid leave benefits. However, it does continue the FFCRA as a tax credit program for employers with fewer than 500 employees who voluntarily provide paid leave. If an employer elects to continue paid sick leave and paid expanded family and medical leave for employees under qualifying circumstances, the employer can obtain a payroll tax credit for any such paid leave provided through September 30, 2021.
 
The ARPA resets the 10-day limit for the tax credit for paid sick leave beginning April 1, 2021, and increases the cap of eligible expanded family and medical leave wages per employee from $10,000 to $12,000. It also expands the definition of qualifying paid leave to include leave taken to obtain a COVID-19 vaccination, recover from any injury, disability, illness or condition related to the COVID-19 vaccine, or seek or await the results of a COVID-19 test due to exposure or employer request. Notably, it also expands the definition of qualifying expanded family and medical leave to include all of the qualifying reasons for paid sick leave. Finally, the ARPA’s revisions to the FFCRA include a nondiscrimination rule requiring that employers cannot claim the tax credits if the paid leave provided to employees discriminates in favor of highly compensated or full-time employees or based on length of employment.
 
If you have any questions about the changes to unemployment benefits, the extension of the FFCRA tax credit or the American Rescue Plan in general, please contact any member of Warner’s Labor and Employment Practice Group.

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