September 30, 2021, marks the last day of Emergency Paid Sick Leave (EPSL) and Expanded Family and Medical Leave (EFML) provided under the American Rescue Plan Act. The EPSL allowed employees to take up to 2 weeks of time off for qualifying COVID-19-related reasons with full pay. EFML allowed employees up to 12 weeks of paid time off for qualifying COVID-19-related reasons, providing two-thirds pay. Employers with 500 or fewer employees could apply for tax credits for the wages paid under either leave.
While these tax credits are coming to an end for employers, that doesn’t mean policies that have been implemented to provide paid time off for COVID-related reasons must end. Employers may choose to continue providing paid or unpaid leaves of absence for qualifying reasons with well-communicated policies.
It is recommended that employers choosing to discontinue providing paid leave time under ARPA also communicate this to employees so there is no confusion as to the final day of paid time, how any extensions of leave may be handled, or how requests for time off for related reasons will be handled in the future.
In addition to paid leave time, the COBRA premium assistance offered will also expire on September 30. Employers with COBRA eligible individuals between April 1, 2021, and September 30, 2021, were able to apply for a full premium reimbursement if the job loss was related to involuntary termination of employment. While individuals may continue to be eligible for COBRA benefits past September 30, 2021, the full premium reimbursement is no longer available. Individuals effected by the change should have been sent a notification postmarked on or before September 15, 2021.
Some benefits that were extended as part of ARPA will remain in place. They include:
- The employee retention tax credit. This refundable credit covers employers with 500 or fewer employees and provides a refundable payroll tax credit of 70 percent of qualified wages, up to $10,000 per employee per quarter.
- The Work Opportunity Tax Credit (WOTC). This federal tax credit is available to employers who hire individuals from certain targeted groups who have consistently faced significant barriers to employment, such as ex-felons, veterans, food-stamp recipients, the long-term unemployed, and individuals with disabilities. The expiration date was extended to December 31, 2025.
- Employer-provided student loan repayment for employees. Employers are able to contribute up to $5,250 toward student loans for employees. All payments are excluded from employee wages through December 31, 2025.
- Flexible Spending Accounts. These benefits were extended to allow unused amounts to be carried over to 12 months following the end of the affected plan year. The annual contribution amounts for medical spending accounts remained the same, but employers were able to allow unused funds to carry over into the next year, as long as the plans are amended before the last day of the year following a plan year (i.e., an amendment for the 2020 plan year must be made by December 31, 2021). The same rules apply for dependent care accounts, but the maximum amounts were increased to $10,500 for single filing and married filing jointly or $5,250 for those who are married but file separate returns.