What Employers Should Know About the Emergency Paid Sick Leave Act?

Emergency Paid Sick Leave Act

Every employee needs time off. Workers also need extensive sick days and paid leaves for themselves and their dependents.

This is common across the industrial spectrum. Employers know that paid leave is necessary to protect the health of their employees, the employee’s family, and the community.

The federal and state governments frequently announce new and improved plans to provide paid sick leaves to employees nationwide.

Overview of the Emergency Paid Sick Leave Act

In March 2020, amid the pandemic, Congress passed the Families First Coronavirus Response Act (FFCRA). Under FFCRA, eligible employers with fewer than 500 employees could receive up to 80 hours of paid sick leave and, for those caring for children whose schools or places of care were closed, an additional 10 weeks of expanded family and medical leave.

This was considered necessary to ensure low-wage earners had ample access to paid sick leaves during the pandemic.

The federal government provides businesses with refundable tax credits to cover the cost of paid sick leave provided under the FFCRA.

This initiative was meant for employers who provide paid sick leaves under the act to their employees.

On 11th March 2021, the President signed the American Rescue Plan (ARP).

Tax Credit Benefits for Employers under the Emergency Paid Sick Leave Act

Let’s first look at the credits an employer can earn when they provide paid sick leave to their employees. Under the act, employers are eligible for tax credits that can cover costs for:

Tax Credit Benefits for Employers under Emergency Paid Sick Leave Act

Tax Credit Benefits for Employers under the Emergency Paid Sick Leave Act

  • Prorated paid emergency sick leave for part-time employees, according to the number of hours as per their average hours accumulated in two weeks.
  • Full wage replacement for employee self-care, with the maximum benefit of US$ 511 per day (up to US$ 2,000).
  • Two-thirds wage replacement when employees are looking after their dependent or family member whose school has been closed or whose childcare provider is unavailable, with maximum compensation of $200 per day (up to a total of $12,000).

Under the Emergency Paid Family and Medical Leave, an employer can claim tax credit to cover expenses incurred for:

  • Maximum 12 weeks of paid emergency leave between 1st April 2021 and September 2021 end.

Credit Allowances under the Emergency Paid Sick Leave Act

Here is a breakdown of the criteria under which employers receive benefits from their employee’s paid sick leaves:

  • Employers with employees embarked on emergency paid sick leave and emergency paid medical and family leave can avail of the tax credits for both paid sick leaves. However, the employee should not have taken the two types of leaves simultaneously. Hence, tax credits can cover a maximum of 14 weeks of paid leave per employee, with employers eligible to claim tax credits worth US$ 12,000 in wages for each employee on leave.
  • Employers who provide health insurance coverage can also claim the tax credit and constantly provide healthcare coverage to employees during their leave.
  • Employers shall be compensated with a refundable tax credit, which counts against their payroll, and these credits can also be advanced.

Eligibility Criteria and Availability of Tax Credits under the Emergency Paid Sick Leave Act

Private-sector employers with less than 50 employees, state and local government employees, and self-employed workers are eligible for tax credits under the Emergency Paid Sick Leave Act.

The FFCRA provided up to 80 hours of paid sick leave and up to an additional 10 weeks of paid family leave for eligible employees


Paid leaves are extremely essential in such trying financial times. Paid sick leaves are becoming increasingly essential for low-wage frontline workers engaged in essential jobs. This act ensures that the country provides all workers with permanent and comprehensive paid leaves.

Current Version
November 15, 2023
Updated By
Andrea Morales G.

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