Setting up and using ARPA paid sick leave

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This article explains how to set up and use the three types of paid sick leave payroll items to track employees' ARPA-related paid leave as specified buy the American Rescue Plan Act (ARPA) of 2021.

Important information

  • To be compliant with the American Rescue Plan Act, payroll checks that include ARPA paid leave must have a period beginning or period ending date that falls between April 1, 2021 and September 30, 2021.
  • The ARPA paid leave special types differ in tax treatment with the COVID-19 paid leave special types. COVID-19 paid leave wages were exempt from ERFICA-SS and subject to ERFICA-MED whereas ARPA paid leave wages are subject to both ERFICA-SS and ERFICA-MED.
  • Accounting CS will calculate 0% of the employee's pay for a leave type once the hour limit for that type has been met for that employee.

Paid sick leave types and limits

There are 3 types of paid leave covered by the American Rescue Plan Act. The following table describes the fraction of pay rates, hour limits, and capped amounts for each type of ARPA paid leave.

Leave type Fraction of pay rate Hour limit Max. amount
Self care Full pay 80 hours (shared with Other care hour limit*) $63.875 per hour
Other care 2/3 pay 80 hours (shared with Self care hour limit*) $25.00 per hour
Extended care 2/3 pay 480 hours $25.00 per hour

* If the combined number of self care and other care hours exceeds the 80 hour limit, Accounting CS automatically reduces the first of those two ARPA pay items listed in the Pay item grid for that employee to meet the limit (see example #4 in the ARPA paid sick leave - Calculation examples article.). To change the pay item that is reduced, you can change the sort order in the Payroll Item Sort Order dialog.

Scenarios for taking ARPA paid leave

The American Rescue Plan Act of 2021 specifies that sick paid leave or family paid leave can be taken for any of the following scenarios:

  1. The employee was subject to a COVID-19-related federal, state, or local quarantine or isolation order.
  2. The employee's health care provider advised the employee to self-quarantine due to COVID-19-related concerns.
  3. The employee experienced COVID-19 symptoms and sought a medical diagnosis.
  4. The employee was caring for an individual who was either (a) subject to an order as described in #1 above or (b) advised to self-quarantine as described in #2.
  5. The employee had to care for a child whose school or place of care closed, or the employee's childcare provider was unavailable because of coronavirus precautions.
  6. The employee experienced other conditions similar to COVID-19 (as identified by the Secretary of Health and Human Services).
  7. The employee was seeking or awaiting the results of a test for COVID-19 and who were either exposed to the virus or who have been requested by their employer to be treated.
  8. The employee was obtaining a COVID-19 vaccination.
  9. The employee was recovering from an illness or condition related to being vaccinated against COVID-19.

Setting up a pay item for ARPA-related paid leave

Follow these instructions as you create pay items for all three types of paid sick leave.

  1. Select Setup > Payroll Items.
  2. In the Main tab, select the Add button and then enter a description for the pay item.
  3. In the Type field, select Pay.
  4. In the Calculation type field, choose either Hourly rate or Salary - Hours sensitive. The calculation will not work properly if any other calculation type is chosen.
  5. In the Special type field, choose an ARPA special type (details about each type can be found in the table in the previous section).
    • ARPA self care
    • ARPA other care
    • ARPA extended care
  6. If you are tracking general ledger values, choose a GL account from the Expense drop-down list in the General Ledger Accounts section.
  7. When all payroll item information is set up, select Enter to save the pay item.

Note: The application uses the GL Expense account number associated with the FIT tax item on the Payroll Taxes tab of the Setup > Clients screen when creating the credit liabilities.

For more information, see Creating and adding payroll items for your client.

Activating the new pay item(s) for an employee

  1. Select Setup > Employees.
  2. Choose the employee and select the Edit button.
  3. Go to the Payroll Items tab.
  4. In the Pay grid, mark the checkbox next to the new ARPA-related pay item.
  5. Enter a pay rate for the pay item or link the pay item to the employee's usual pay item as appropriate, based on the following criteria:
    • If the calculation type for the employee's usual pay rate is NOT Hourly or Salaried - Hours sensitive: Enter an hourly rate for the employee or enter their annual salary amount in the Rate field.
    • If the calculation type for the employee's usual pay rate IS Hourly or Salaried - Hours sensitive: Link the new payroll item to the employee's usual hourly rate.
    • For tipped employees: Enter the hourly rate that is the greater of the following three amounts:
      • The employee's regular hourly rate
      • The federal minimum wage amount
      • The state or local minimum wage amount
  6. Select Enter to save the employee information.

Note: If an employee typically earns more than the hourly limit allows for the ARPA sick leave pay item and the client wants to pay that employee their usual pay rate, you can override the Amount field for the ARPA special type pay item during payroll check entry.

Use caution of you use this method. The negative adjustment made by Accounting CS for the federal tax agent will MATCH that override amount, even if it exceeds the maximum allowed amount. This could cause issues when filing the employer's Form 941.

Entering payroll checks that include ARPA sick leave hours

Important! Any payroll checks entered in the application prior to installing the 2021.1.1 update that need to reflect ARPA-related paid leave wages will need to be reversed/voided/deleted and re-entered using the appropriate special type pay items.

Enter payroll checks as usual, entering hours for the appropriate ARPA paid sick leave pay items.

Accounting CS alerts you if the number of ARPA paid sick leave hours for an employee has exceeded the number of hours they have available.

When you select OK, the ARPA paid sick leave hours default to the maximum number that are available for the employee. If the employee has no available leave hours, you cannot enter any hours for that pay item for that employee.

Tracking used and available leave hours with accruable benefit items

This procedure is optional, but extremely useful. Use this method to track an employee's used and available ARPA hours and easily print the accruable benefit details on reports and pay stubs.

You will need to set up two new benefit items; one to track the 80 hours of self/other care hours used (those two pay items share a limit of 80 hours total) and one to track the 480 hours of extended care.

Setting up the accruable benefits

  1. Select Setup > Accruable Benefits.
  2. In the Main tab, select the Add button to create an accruable benefit item to match the desired paid leave items.
  3. In the Accrual Information section, choose Per calendar year in the Method field and select January 1 as the Date of accrual.
  4. For the Hourly allowance, select the Fixed option and make sure the amount is 0.00. This ensures that the hours will not accrue the following year.
  5. In the Balance Reset section, select Never in the Method field.
  6. Select Enter to save the accruable benefit information. Show me.

Activating the accruable benefits for the employee

  1. In the Setup > Employees screen, choose the employee and select the Edit button.
  2. Select the Accruable Benefits tab.
  3. Mark the checkboxes for one (or both) of the new ARPA accruable benefits.
  4. In the Activation Date field, select April 1, 2021.
  5. Enter the beginning balance for the ARPA accruable benefit:
    • For Self/Other care, the beginning balance is 80 hours.
    • For Extended care, the beginning balance is 480 hours.

      Show me.

  6. Select Enter to save the changes for the employee.

Entering the accruable benefits during payroll check entry

When entering the payroll checks, find the cell in the grid that corresponds to the appropriate ARPA accruable benefit item. Enter the number of hours used in the cell where the ARPA pay item row and ARPA accruable benefit column intersect. The accruable benefit hours will display on the check stub in the pay section and will be deducted from the available hours balance. Show me.

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