What the New American Rescue Plan Act Means for City and County Employers
The American Rescue Plan Act (ARPA) was signed into law on March 11, 2021. The ARPA amends the Internal Revenue Code (IRC). Sections 9641, 9642 and 9643 of the ARPA amend the IRC by adding three new sections to Chapter 21 of the IRC: “Credit for paid sick leave,” “Payroll credit for paid family leave,” and “Special rule related to tax on employers” and is effective between April 1, 2021 and September 30, 2021. The new Rescue Plan makes tax credits available to employers who voluntarily provide paid time to employees for qualified absences related to the pandemic.
This has the practical effect of amending the terms of the original EPSLA and EFMLA without actually amending them. This is also what makes it voluntary for private and public employers to continue offering Emergency Paid Sick Leave Act (EPSL) and Extended Family Medical Leave Act (EFMLA) leave. If an employer wants the tax credits, it must offer EPSL and EFMLA leave under the terms set forth in the ARPA. If it doesn’t comply with those terms, the employer won’t be eligible for the tax credits. Or if it chooses, it may decide to offer no additional COVID-19 related leave benefits at all.
What’s new for city and county employers?
For the first time, the city and county employers appear to be eligible for the social security and Medicare tax credits if these public employers continue to offer EPSL and EFMLA leave to its employees as set out in the ARPA. Throughout 2020, public employers were required to comply with the requirements of EPSL and EFMLA but did not receive the tax credits private employers received through the original EPSL and EFMLA. But starting April 1, 2021, it appears city and county employers will receive this much needed same relief as private employers.
How are the eligibility reasons under the voluntary EPSL different under the ARPA?
Congress has expanded reason 3. Now, reason 3 not only covers the time during which an employee is waiting for their doctor to diagnose them with COVID-19 but also during the time an employee is waiting for the results of a COVID test because the employee was exposed to COVID-19 or because the employer has asked the employee to get tested, the time spent getting vaccinated against COVID-19, and any time when the employee cannot work due to side effects from a COVID-19 vaccination.
This new expanded definition allows for paid time for vaccination and serves as an incentive for all employees to get vaccinated.