On March 11, 2021, President Joe Biden signed H.R. 1319 into law. The American Rescue Plan Act (ARPA) has quickly become referred to as another stimulus package. While there are stimulus provisions in the bill that impact individuals, there are several provisions that directly impact employment law. As a business owner or human resources professional, it is important to understand these provisions. Failure to understand these provisions is not a defense to any compliance violations that may occur, even if unintentional.
Emergency Paid Sick Leave and Emergency Family Medical Leave
You may be aware of these paid leave provisions introduced by the Families First Coronavirus Response Act (FFCRA). These leaves expired on December 31, 2020; however, the Tax Relief Act of 2020 extended the tax credits available for these leaves through March 31, 2021. Beginning January 1, 2021, the leaves were no longer required; however, covered employers had the option of continuing to offer these leaves and receive the tax credit to fund the cost of these leaves.
ARPA extends the tax credits even further, making them available through September 30, 2021. Employers still have the option of whether to provide these leaves to their employees. The new bill added three new qualifying reasons for leave, which include if the employee is:
1. getting a COVID-19 vaccine.
2. recovering from complications due to receiving the vaccine.
3. awaiting the results of a COVID-19 test or diagnosis for coronavirus.
In addition, ARPA resets the 10-day limit on April 1, 2021 meaning employees who previously used all available time under Emergency Paid Sick Leave may take additional time for a qualifying reason.
The FFCRA also introduced paid Emergency Family Medical Leave to employees who have been employed for at least 30 days if the employee is unable to work (or telework) due to a need for leave to care for their child if their school or daycare has been closed due to COVID-19. See “What employers need to know about the Families First Coronavirus Response Act” for additional details on this paid leave including who is eligible, the amount of FMLA required and pay during the leave.
ARPA extends this Emergency Family Medical Leave to include any of the initial qualifying, or new qualifying, reasons for Emergency Paid Sick Leave. In addition to three qualifying reasons listed above, Emergency Family Medical Leave may also include if the employee is:
1. subject to a federal, state, or local quarantine or isolation order related to COVID-19.
2. advised by a health care provider to self-quarantine because of COVID-19.
3. experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
4. caring for an individual subject or advised to quarantine or isolation.
5. caring for a son or daughter whose school or place of care is closed due to COVID-19.
6. experiencing other substantially similar conditions specified by the Secretary of HHS.
The new bill provides pay for up to 12 weeks at 2/3 the employee’s regular rate of pay up to $200 per day (or $12,000 total). Previously the pay was available for one qualifying reason and the first two weeks were unpaid (unless the employee chose to use their 10 days of Emergency Paid Sick Leave for the initial two weeks thereby exhausting their available Emergency Paid Sick Leave).
The Emergency Family Medical Leave is also reimbursable to employers via tax credits through September 30, 2021.
Dependent Care Assistant Programs
For employers that offer flexible spending accounts for dependent related expenses, the ARPA offers the option of increasing the amount employees may contribute to the account from $5,000 per year to $10,500 per year. Employers may voluntarily amend their plan to allow the increase if the amendment is adopted by the last day of the plan year.
This change along with rollover provisions introduced by the Consolidated Appropriations Act at the end of 2020 invite the opportunity for employers to offer financial assistance to their employees during a time they were unable to use dependent care funds that would have otherwise been lost. Employers should speak to their benefit brokers about these provisions to determine if they want to implement an amendment to their plan offering these benefits to their employees.
COBRA Subsidy
Beginning April 1st, ARPA offers a 100% subsidy for COBRA coverage to employees that were involuntarily terminated from employment or incurred a reduction in hours which makes them ineligible for group health plan coverage. The only exception includes terminations for gross misconduct. Keep in mind that gross misconduct is different than the mere violation of a policy and employers should seek additional guidance if they plan to use this exception. Employees who voluntarily leave employment do not qualify.
By May 31st, employers will be required to send a notice of special enrollment to anyone currently eligible for COBRA that has not yet elected coverage or previously elected COBRA and subsequently dropped coverage. This will include individuals who lost coverage at the beginning of the pandemic. Although, they will now have the options to enroll in coverage, the length of coverage will continue to be measured from the date of the initial qualifying event. For example, if they lost coverage on April 1, 2020 and were initially eligible for 18 months of coverage, they may now enroll at no cost to them through September 30, 2021 or until they become eligible for other coverage, whichever comes first.
The Department of Labor will release a model notice for this notification and more guidance soon.
The subsidy is only available through September 30, 2021 and applies to coverage for the employee and any covered family members. Premiums will be reimbursed through tax credits. Self-insured employers must pay the cost of the COBRA premium and receive the tax credit against payroll taxes owed. If the employer is fully insured, the insurance company will make the payment of premiums and claim the tax credit through their taxes.
Unemployment Provisions
Pandemic related unemployment programs have been extended to September 30, 2021 at their current additional weekly rates. Additionally, the first $10,200 of unemployment compensation in 2020 is now tax free for households with income less than $150,000. Although this doesn’t directly impact employers, it is important for employers to understand as unemployment continues to be a point of contention among employers who are having difficulty bringing employees back to work or finding enough employees to run the business successfully.
Other Provisions
While this advisory focuses on the employment law aspects of the bill, there are other provisions that may be impactful to certain employers, including:
1. Extension of the Employee Retention Tax Credit introduced by the CARES act
2. Additional Paycheck Protection Program funding
3. The Shuttered Venue Operators Grant Program
4. Additional Economic Injury Disaster Loans funding
5. Pension plan relief for underfunded plans
Please do not hesitate to reach out with any questions or concerns you may have on how this new bill will impact you and your business.
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