After several revisions, President Biden signed the American Rescue Plan (ARP) into law on March 11, 2021. We highlight below important provisions affecting employers and employees that made it into the final version.
The ARP allocates funding for the Department of Labor, including the Occupational Safety and Health Administration (OSHA), to carry out COVID-19 related worker protection activities. That funding will go toward both training and enforcement activities related to COVID-19 at high risk workplaces. As a result, employers should expect heightened enforcement by these agencies, particularly in light of the National Emphasis Program announced by OSHA on March 12, 2021.
Expanded National Vaccine Program
The ARP also addresses the current shortcomings in the nationwide vaccination program. It seeks to expand and improve the nationwide delivery and administration of vaccines. This includes efforts to boost access to COVID-19 testing, contact tracing and vaccinations. It also funds additional research development, vaccine manufacturing, and other mitigation activities.
Credits for Paid Sick and Family Leave
Our team has provided extensive coverage of the federal Families First Coronavirus Response Act (FFCRA) here and here. The FFCRA leave mandate expired on December 31, 2020, including the mandate to covered employers to provide emergency paid sick leave and emergency family and medical leave. The Consolidated Appropriations Act (CAA), enacted in December 2020, did not extend employees’ entitlement to FFCRA leave, but extended the tax credit for employers that voluntarily continued to provide such paid leave through March 31, 2021.
The ARP, like the CAA, does not extend an employer’s obligation to provide FFCRA leave, but once again extends the tax credit for an employer that chooses voluntarily to provide such leave through September 30, 2021 for eligible employers and self-employed individuals. The ARP amends the Internal Revenue Code to provide for employer credits for leave against applicable employment taxes equal to 100 percent of the qualified leave wages. For paid sick leave, the term “qualified sick leave wages” means wages paid by an employer which would be required to be paid by reason of the Emergency Paid Sick Leave Act. Similarly, for paid family leave, the term “qualified family leave wages” means wages paid by an employer which would be required to be paid by reason of the Emergency Family and Medical Leave Expansion Act.
Reacting to the nationwide vaccination efforts, the ARP adds three additional qualifying reasons for leave, including:
- The employee is obtaining immunization related to COVID-19;
- The employee is recovering from any injury, disability, illness or condition related to such immunization; or
- The employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 or their employer has requested such a test or diagnosis.
The ARP also resets the 10-day limit for the tax credit for paid sick leave. Employers that provide paid sick leave for qualifying reasons on or after April 1, 2021 will be eligible to claim the tax credit as they would under the FFCRA. The aggregate limit on the credit for paid family leave is increased to $12,000. It also increases the amount of paid leave credits by the amount of the employer’s qualified health plan expenses (those amounts paid by the employer to provide a group health plan) as are properly allocable to the qualified leave wages.
The federal government, its agencies or instrumentalities cannot claim the tax credits. In addition, employers that discriminate with respect to leave in favor of certain categories of employees (such as highly compensated or full-time employees) cannot claim the tax credits.
Extension of FFCRA Unemployment Provisions
The FFCRA provided states with interest-free loans to assist with the payment of unemployment compensation benefits through December 31, 2020. The CAA extended this provision through March 14, 2021. The ARP provides a further extension through September 6, 2021. The ARP also extends through September 6, 2021 the provision in the FFCRA that provides temporary full federal financing of extended benefits for high unemployment states. States are normally required to pay 50% of the cost of extended benefits.
Extension of Pandemic Unemployment Assistance
The ARP extends the Pandemic Unemployment Assistance (PUA) program available to covered individuals for weeks of unemployment, partial unemployment or inability to work caused by COVID-19 until September 6, 2021, and increases the total number of weeks the benefit is available to individuals from 50 weeks to 79 weeks. The extension builds on the framework created by the CARES Act, as we reported here.
Extension of Emergency Unemployment Relief for Governmental Entities and Nonprofit Organizations
The ARP increases the reimbursement rate under 42 U.S. Code § 1103, which provides payments to states to reimburse nonprofits and government agencies for 75% of the costs they incur from March 13, 2020 through September 6, 2021 to pay unemployment benefits.
Extension of Federal Pandemic Unemployment Compensation
The ARP extends the Federal Pandemic Unemployment Compensation payments through September 6, 2021 and maintains the $300 weekly enhancement.
Extension of Full Federal Funding of the First Week of Compensable Regular Unemployment for States with No Waiting Week
The ARP provides full funding to pay the cost of the first week of unemployment benefits through September 6, 2021 for states that choose to pay recipients as soon as they become unemployed instead of waiting one week before the individual is eligible to receive unemployment benefits.
Extension of Emergency State Staffing Flexibility
States that modify their unemployment compensation law are provided with limited flexibility to engage temporary staff, rehire former staff or take other steps to quickly process unemployment claims through September 6, 2021.
Extension of Pandemic Emergency Unemployment Compensation
The ARP increases the number of weeks of benefits an individual worker may receive in the Pandemic Emergency Unemployment Compensation (PEUC) program from 24 weeks to 53 weeks, to help those who remain unemployed after exhausting all rights to regular compensation under state or federal law. It also extends the payments to weeks of unemployment ending on or before September 6, 2021.
Extension of Temporary Financing of Short-Time Compensation
As we reported previously, many states already have so-called “work share” programs that provide for partial unemployment benefits when employers impose hours reductions, or partial furloughs, in lieu of layoffs. The ARPprovides full federal financing through September 6, 2021 to support these existing state “short-time compensation” programs. Further, the ARP supports states that begin a “short-time compensation” program by providing 50% of the costs a state incurs in providing such compensation through September 6, 2021.
The ARP also provides for COBRA subsidies, increased tax advantaged contributions to dependent care flexible spending accounts, revised health care subsidies under the Affordable Care Act, revised limits on executive compensation, and revised pension funding provisions. More details can be found in our alert on the benefit and executive compensation provisions.
In its original form, the ARP also included language eliminating the tip credit, extending and expanding paid leave, and raising the minimum wage to $15 an hour. Although those provisions did not survive after multiple revisions, Democrats have announced their intent to tackle these campaign promises in future legislation. Employers should stay tuned, in addition to paying attention to any state or local COVID-19 laws and regulations.