Last week, President Biden signed the American Rescue Plan Act of 2021 into law — a significant piece of legislation for staffing and recruiting companies across the United States. It extends coronavirus-related tax credits through September 30, 2021, meaning smaller companies won't have to provide Families First Coronavirus Response Act (FFCRA) paid leave to employees for another six months. However, companies can choose to provide FFCRA leave and receive tax credits to offset any costs associated with this leave.
What does this mean in real terms? And how will it affect your employees? AdminAssist investigates.
What You Need to Know
- The Rescue Plan extends FFCRA tax credits from April 1, 2021, through September 30, 2021.
- Staffing and recruiting companies with fewer than 500 employees won't have to provide FFCRA leave to employees until this date.
- These companies can choose to provide FFCRA leave to employees and receive tax credits.
- Companies can receive tax credits to offset the costs associated with FFCRA leave.
Why Should You Care?
Paid sick leave is an enormous expense for small staffing and recruiting companies that have already dealt with a complex range of issues over the previous 12 months. Research shows that 78 percent of civilian workers had access to paid sick leave benefits before the pandemic, and the average cost to employers totaled $0.45 per employee hour worked. (Information correct as of March 2020. Source: U.S. Bureau of Labor Statistics.)
The FFCRA, introduced in March 2020, provided staffing and recruiting companies with some protections. Small companies (those with fewer than 500 employees) didn't have to issue paid sick leave to employees if they didn't want to. But those that did could claim tax credits to offset the costs. Now Congress has agreed to extend these provisions with some changes to the stipulations outlined in the FFCRA. (See next section.)
While this new legislation might benefit your company, administering sick paid leave and other benefits can be a headache AdminAssist provides a back-office solution that expedites payroll, benefits, and other administrative functions. The result? You can spend time on other business tasks. Click here to calculate the savings you could make when you switch to AdminAssist.
What Else You Need to Know
The Rescue Plan makes some changes to the FFCRA. AdminAssist covers the most important points below:
Additional Reasons for Leave
The Rescue Plan sets out additional reasons for leave besides those in the FFCRA. From April 1, 2020, staffing and recruiting companies can receive tax credits after providing leave to employees who take time off work because these employees are:
- Waiting for the results of a COVID-19 test or medical diagnosis after being exposed to COVID-19 or because their employer has requested a test/diagnosis.
- Getting a COVID-19 vaccination or recovering from a disability, illness, injury, or condition related to a COVID-19 vaccination.
Increase on FMLA Cap
The Rescue Plan increases the cap on emergency FMLA from $10,000 to $12,000.
Shorter Wait Period for FMLA
Under FFCRA, employees had to wait two weeks for Family and Medical Leave (FMLA). Under the Rescue Plan, employees don't have to wait for FMLA at all.
10 More Days of Leave
The FFCRA said companies can provide employees with ten days of emergency paid sick leave. The Rescue Plan says that companies can provide employees with an additional ten days of emergency paid sick leave.
Paid Sick Leave for Any COVID-19 Emergency
Under FFCRA, staffing and recruiting companies could only receive tax credits if employees couldn't work because they had to care for a child whose school/place of care had closed because of COVID-19. Under the Rescue Plan, companies can receive tax credits for any COVID-19-related emergency as described in FFCRA.
New Rules for FFCRA Provision
The Rescue Plan identifies new rules for firms that voluntarily provide FFCRA leave and receive tax credits. Under the new legislation, companies cannot favor the following employees when providing FFCRA leave:
- Highly compensated employees
- Full-time employees
- Employees with a long employment tenure
The Rescue Plan extends on the FFCRA and adds new stipulations for staffing and recruiting companies like yours. These changes come into effect on April 1 and could change the way you administer sick leave to employees.
Are you looking for a powerful back-office solution for payroll and benefits administration? AdminAssist automates many of the processes involved when administering paid sick leave and receiving tax credits. Call 1-866-787-6570 or click here to learn more.