On March 11 President Biden signed Congress’ latest pandemic-fueled economic stimulus package, the “American Rescue Plan Act of 2021.” The new act extended now-familiar federal unemployment programs and added new relief for laid-off workers and employers in the form of tax waivers and credits and new subsidies.
The act extended the alphabet soup of unemployment programs created by the CARES Act through September 6, 2021. Benefits for those workers who have exhausted state unemployment benefits were extended from the 24 additional weeks authorized in the December 2020 stimulus bill to 53 additional weeks. The self-employed and others who are ineligible for state unemployment benefits can now receive up to 79 weeks of benefits. The new act also waived federal income tax for the first $10,200 in unemployment compensation received in 2020 for households earning less than $150,000 per year. Recognizing the massive fraud problem in pandemic-related unemployment programs, Congress set aside $2 billion to combat fraud and to ensure equitable access and timely payments.
Laid-off workers also received a break on COBRA premiums. The federal government is subsidizing the premiums at 100% through September 2021. Employers should keep this in mind if they are contemplating or executing any employee terminations or layoffs.
Congress also extended and expanded employers’ opportunity to claim tax credits for providing paid sick and/or family and medical leave under the federal Families First Coronavirus Response Act (FFCRA). Tax credits are now available through September 2021 for paid leave taken for any reasons identified in the FFCRA. Those reasons were expanded to include time spent receiving or recovering from an immunization or seeking a diagnostic test for COVID-19 after exposure or, notably, employer request. When Congress passed the last stimulus bill in December 2020, it elected not to extend the requirement that employers actually provide leave under the FFCRA and stuck with that position this time around, so the tax credits are available for leave that employers provide voluntarily or in accordance with state law. The Department of Labor is expected to issue new rules related to these, and other, FFCRA changes in the stimulus bill.
