COVID-19 Resource Center

September 27, 2021

COVID-19: Expiration of the ARPA Tax Credits

This Thursday, September 30, 2021, the tax credits for employer-provided COVID-19-related paid sick leave are set to expire.  As such, employers that have voluntarily been providing paid sick leave to their employees will no longer be entitled to any federal tax credit reimbursement as extended under the American Rescue Plan Act (ARPA).

If you recall, the Families First Coronavirus Response Act (FFCRA) was signed into law on March 18, 2020 in response to the outbreak of COVID-19.  It provided funding for a number of measures to combat both the pandemic and its effects upon the country.  These included funding for COVID-19 testing, expanded unemployment compensation benefits, and increased food assistance for vulnerable families.  Perhaps most notably, however, the law also mandated that most employers provide paid sick leave to their employees for a number of COVID-19 related reasons.  Specifically, the FFCRA introduced Emergency Paid Sick Leave (EPSL) and Emergency Paid Family and Medical Leave (EFMLEA) to the employment environment in response to time loss related to the pandemic.  To offset the associated costs, the law provided employers with federal tax credits to cover the amount paid through EPSL and EFMLEA leave.

On December 31, 2020 the FFCRA, and its requirement to provide paid sick leave, expired.  Employers were no longer required to provide paid EPSL or EFMLEA leave.  A second law, however, The Consolidated Appropriations Act of 2021 (also called the Tax Relief Act)        extended the federal tax credits (only) through March 31, 2021 for employers that voluntarily chose to continue providing paid leave consistent with ESPL and EFMLEA.  These tax credits were later extended for a second time by ARPA, through September 30, 2021.  ARPA also expanded the opportunity for employees to utilize EPSL and EFMLEA leave and correspondingly, the basis for employers to seek reimbursement through tax credits.  

We now approach September 30th and ARPA has not been extended and, consequently, is set to expire.  As such, employers will no longer be entitled to the federal tax credit for providing paid leave to their employees related to COVID-19.  Employers that have thus far been providing this voluntary paid leave may now wish to review their paid leave policies and update their COVID-19 plans.  Specifically, internal protocol should be revised to address employees that miss time from work due to potential COVID-19 exposure now that the employer will not be reimbursed for providing paid leave.                        

It is anticipated that OSHA will issue new guidance for private employers in the next 2-6 weeks, in conjunction with the Biden Administration’s vaccination and masking mandate plan (now titled “The Path Out of the Pandemic: COVID-19 Action Plan”).  Once this guidance is issued, it will need to be carefully reviewed to determine any possible additional obligations expected to be placed on employers.  We will, of course, keep you apprised of all developments. 

If you have any questions regarding ARPA or the expiration of the tax credits, please contact our Employment Law Group at 1-888-488-2638 or email at EmploymentLaw@c-wlaw.com.