With all the recently enacted federal and state laws that provide employees with COVID-19 sick and vaccine-related leaves of absences, employers may be uncertain of their obligations. Some provisions are voluntary, but others are mandatory. The federal government extended the ability for employers to receive tax credits if they provide certain COVID-related voluntary leave, but doing so could require the company to then provide extensive leaves of absence. Employers should strategically consider how to approach these voluntary leave provisions and how to remain compliant with the mandatory components of applicable local laws.
Federal Law Expands Tax Credits for COVID-related Leaves of Absence Provided by Employers Voluntarily
The federal American Rescue Plan Act (“ARPA”), otherwise called the COVID Relief Bill, extends employers’ ability to obtain tax credits if they voluntarily provide employees with certain emergency paid sick leave and emergency family and medical leave, which were originally mandated by the 2020 Families First Coronavirus Response Act (“FFCRA”). When the FFCRA expired on December 31, 2020, the requirement to provide paid leave was not extended, but employers’ abilities to obtain tax credits for leave voluntarily provided was extended through March 30, 2021. The ARPA now further lengthens that extension. It does not reinstate a requirement to provide this leave but does continue the ability for employers to obtain tax credits for such leave voluntarily provided between April 1, 2021 and September 30, 2021.
Most significantly, the law expands the list of eligible sick leaves to include vaccine-related absences and illnesses and COVID-19 exposure-related absences, plus the original list: having COVID-19, obtaining a medical diagnosis, and caring for someone with COVID-19 or a child who is without school/childcare for COVID-19-related reasons. Even if employees previously used emergency paid sick leave under the FFCRA, their full emergency paid sick leave bank of up to 80 hours (two weeks) of leave resets as of April 1. The ARPA also expands employees’ abilities to use emergency family and medical leave for all these reasons—not just the original FFCRA reason of having school/childcare unavailable for COVID-19 reason. And, perhaps of most significance to employers, employees can now potentially take leave for up to 14 weeks.
Employers may opt to provide this federal leave voluntarily because of the dollar-for-dollar tax credit available for compensation provided to employees taking these paid leaves. However, due to the potential length of the leave entitlements during which employees could be out of work and potential complications arising from certain non-discrimination provisions added to the new law, employers should consult counsel to understand the risks and benefits of opting into the program. Tax professionals can provide guidance regarding the tax-benefit mechanics.
State and Local Leave Requirements
Although the federal leave options are voluntary, some states and localities have enacted mandatory leave laws for employees affected by COVID-19, or who seek time off to be vaccinated. As we wrote in a previous update, New York now mandates paid time off for employees to be vaccinated. Side effects from the vaccine are not covered by this law, and neither is actual COVID-19 illness. However, New York’s new paid sick leave law would cover the first situation, and its COVID-19 emergency paid sick leave law would cover the second.
In recent weeks, California went a step further and enacted a broad temporary COVID-19 paid supplemental sick leave mandate for employers with over 25 employees. The reasons for leave mainly parallel the ARPA reasons and include time off to attend a vaccine appointment or recover from vaccine-related symptoms. Unlike the ARPA which contains the extended weeks of emergency FMLA leave, the CA mandatory leave is capped at 80 hours. Employee compensation is also capped at $511.00 per day or $5110.00 in total, and there are very stringent tracking and documentation requirements employers must follow. Because multiple local cities and counties also enacted their own COVID-19 related sick leaves, companies should consult counsel to understand their obligations and how these laws overlap.
As vaccines become more widespread, it seems other states and/or localities may follow suit.
The landscape for vaccine and COVID-related issues has continued to shift in recent months. Employers should continue to monitor their state and local laws to identify obligations as it relates to their employees, and consult with counsel about strategies and best practices.