Benefits and Compensation, Coronavirus (COVID-19), HR Management & Compliance

Vaccine PTO Credit

As the vaccine rollout continues across the United States, employers are figuring out their employees’ needs. Some employers have opted to offer incentives for employees to get vaccinated, noting that having a vaccinated workforce can help reduce risks of COVID spread and absences as a result. Others have taken a hands-off approach and are allowing employees to make their own choices. For more information on the pros and cons of offering vaccine incentives to employees, check out this article.

Source: Dmitry Demidovich / shutterstock

The current White House administration has set vaccination goals and included incentives to help reach them. One such incentive in the American Rescue Plan (ARP) is a tax credit for small businesses and nonprofits that offer paid leave for employees to get vaccinated. The basics of the credit are quite straightforward. Here’s information directly from the White House site dedicated to the incentive’s announcement:

“[A] paid leave tax credit will offset the cost for businesses and nonprofits with fewer than 500 employees for up to 80 hours (i.e. 10 work days) up to $511 per day of paid sick leave offered between April 1 and September 30, 2021. This tax credit will allow these employers to provide paid leave for employees to get a COVID-19 vaccination and for any time their employees may need to recover from that vaccination at no cost to the employer.”[i]

The Internal Revenue Service (IRS) has already issued guidance that confirms that employers can receive tax credits for the full amount of paid leave provided for individuals and two-thirds of the pay for leave for family. Here’s information from the IRS site dedicated to the credit:

“The tax credit for paid sick leave wages is equal to the sick leave wages paid for COVID-19 related reasons for up to two weeks (80 hours), limited to $511 per day and $5,110 in the aggregate, at 100 percent of the employee’s regular rate of pay. The tax credit for paid family leave wages is equal to the family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at 2/3rds of the employee’s regular rate of pay. The amount of these tax credits is increased by allocable health plan expenses and contributions for certain collectively bargained benefits, as well as the employer’s share of social security and Medicare taxes paid on the wages (up to the respective daily and total caps).”[ii]

Caveat for Employers: Be Aware of Nondiscrimination Requirements

Something to bear in mind is that the Equal Employment Opportunity Commission (EEOC) is likely to issue updated guidance for employers on how to ensure that any vaccine incentives are rolled out in a way that is not inadvertently discriminatory. It had already issued guidance in December 2020, but the situation has evolved significantly since that time.[iii]

Employers need to be aware that their obligations under the EEOC, the Genetic Information Nondiscrimination Act (GINA), and all other antidiscrimination statutes and privacy of health information still exist, and they still have an obligation to ensure they’re compliant. It’s risky to offer a benefit knowing that those with disabilities may not be able to partake in that benefit, as it could appear to be discriminatory. One way to mitigate this risk is to offer an equivalent incentive that can be achieved by those who are ineligible for the vaccine.

Employers offering or considering offering any benefit related to COVID-19 illness or inoculation should continue to watch for new information from the EEOC.


[i] https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/21/fact-sheet-president-biden-to-call-on-all-employers-to-provide-paid-time-off-for-employees-to-get-vaccinated-after-meeting-goal-of-200-million-shots-in-the-first-100-days/

[ii] https://www.irs.gov/newsroom/employer-tax-credits-for-employee-paid-leave-due-to-covid-19

[iii] https://www.eeoc.gov/wysk/what-you-should-know-about-covid-19-and-ada-rehabilitation-act-and-other-eeo-laws and https://www.eeoc.gov/coronavirus