Voluntary FFCRA Leave Benefits Under the American Rescue Plan Act

On March 11, 2021, President Biden signed comprehensive legislation into law designed to address the continued impact of the COVID-19 pandemic. The American Rescue Plan Act (the “Plan”) contains important provisions impacting employers navigating the COVID-19 pandemic.

Notably, the Plan addresses a topic familiar to all employers throughout the COVID-19 pandemic: paid leave benefits under the Families First Coronavirus Response Act (FFCRA). FFCRA originally required employers to provide two forms of paid leave benefits to eligible employees needing leave for qualifying reasons: (1) Emergency Paid Sick Leave; and (2) Emergency Family and Medical Leave.

These two leave benefits under FFCRA expired on December 31, 2020; however, Congress previously passed legislation allowing employers to voluntarily provide FFCRA leave benefits through March 31, 2021. The Illinois Teachers Retirement System (“TRS”) sanctioned the extension of these paid leave benefits under specified conditions, but only through March 31, 2021.

The Plan further extends the payroll tax credit for employers to voluntarily provide FFCRA leave benefits from April 1, 2021, through September 30, 2021, provided that employers do not discriminate in the application of the paid leave benefits in favor of highly compensated employees, full-time employees or employees on the basis of tenure.[1] Public employers may extend the benefits regardless of whether they qualify for a payroll tax credit. For employers electing to provide FFCRA leave benefits, the Plan resets the 10-day limit for sick leave beginning April 1, 2021, and adds three qualifying reasons for the Emergency Paid Sick Leave benefit:

1. The employee is seeking or awaiting the results of a COVID-19 test or diagnosis because either the employee has been exposed to COVID-19 or the employer has requested the test or diagnosis;
2. The employee is obtaining a COVID-19 immunization; or
3. The employee is recovering from an injury, disability, illness, or condition related to the COVID-19 immunization

The Emergency Paid Sick Leave benefits are subject to the same cap originally provided under FFCRA, which is based on an employee’s regular rate of pay.

In addition, the Plan expands the qualifying reasons for Emergency Family and Medical Leave to include all of the qualifying reasons for Emergency Paid Sick Leave under FFCRA. The cap for Emergency Family and Medical Leave has increased from $10,000 to $12,000, and the first two weeks of the leave no longer need to be unpaid.

For Illinois schools, TRS has not yet issued guidance on whether this new voluntary extension of FFCRA leave would be considered excess sick leave that creates the potential for TRS penalties.   Therefore, prior to voluntarily offering FFCRA leave benefits pursuant to the Plan, school districts must consider bargaining issues and whether the voluntary benefits will trigger excess sick leave penalties under TRS regulations. Other employers with unionized employees must also consider bargaining issues relative to offering this voluntary benefit. Robbins Schwartz will monitor TRS and IRS guidance relating to this issue.

Please contact a Robbins Schwartz attorney with any questions pertaining to the Plan.

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[1] Note that it is permissible for an employer to elect to provide only Emergency Paid Sick Leave, but not Emergency Family and Medical Leave from April 1, 2021 through September 30, 2021.