David I. Rosen, Jill Turner Lever
Employment and Labor
March 15, 2021
The newly enacted $1.9 trillion American
Rescue Plan Act of 2021 (the “Act”) includes broad financial relief in a
variety of categories but actually has less impact on employers than previously
The Act is notable for what is
included in the final law signed by President Biden on March 11, 2021. Specifically, two employment issues that had
generated much publicity and debate in earlier iterations of the legislation
were not included in the enacted law: the federal $15 per hour minimum wage,
and mandatory extension of the federal Families First Coronavirus Response Act
The Act does, however, include a number of key provisions impacting employers,
including the following:
Unemployment Insurance. The Act extends the federal pandemic payment
of $300 in extra weekly unemployment insurance benefits through September 6,
2021. It also extends benefit coverage
for gig workers and the self-employed. In
addition, the Act provides that the first $10,200 of unemployment insurance
received in 2020 will be federal tax-free in 2021 for workers with household
incomes of less than $150,000 per year.
FFCRA Modifications. While the Act did
not extend mandatory leave, which had
expired on December 31, 2020, it contains a number of significant FFCRA amendments.
continues to allow employers with fewer than 500 employees to voluntarily provide leave for certain COVID-related reasons.
- extends the tax credits available for employers who voluntarily provide FFCRA leave from March 31, 2021 to September 30, 2021.
- provides that in addition to the existing reasons for leave set forth in the FFCRA, employers also will receive tax credits for providing paid leave to employees who are:
- obtaining an immunization related to COVID-19;
- recovering from any injury, disability, illness
or condition related to such immunization; or
- seeking or awaiting the results of a diagnostic
test or medical diagnosis for COVID-19 when the employee has been exposed to COVID-19 or
the employer has requested such a
test or diagnosis.
- resets the clock on 80 hours of emergency paid sick leave and tax
credits available to the employer, commencing April 1, 2021, which means that
employers may grant a new bank of 80 hours to employees even if they have used
this time previously.
- eliminates the prior two week waiting period for expanded family and medical leave (if the
employee is unable to work or telework due to COVID-19 related unavailability
of a child’s school or childcare) and increases the tax credits available to
employers from $10,000 to $12,000 to cover a leave of up to 12 weeks at two-thirds the
employee’s regular rate up to $200 per day.
- includes non-discrimination rules to provide
that no tax credit is available if the employer discriminates with respect to
leave (i) in favor of highly compensated employees, (ii) in favor of full-time
employees, or (iii) on the basis of tenure with the employer. Thus, employers that
elect to provide such leave to employees should do so uniformly, without
discriminating against certain categories of workers.
COBRA Subsidies. The Act includes coverage of 100% of the cost
of continuing health insurance for up to 6 months under COBRA during the period
of April 1, 2021 through September 30, 2021, where an employee has lost
coverage under their employer’s health care plan due to a layoff or involuntary
termination. As a result, this would
allow employees who were laid off in or after March 2020 to be able to take
advantage of the subsidy if they are still receiving benefits under COBRA
during this period. The Act also creates a special election period for any
individual who did not elect federal COBRA continuation coverage but who
otherwise would have been eligible for the COBRA subsidy and for any individual
who elected federal COBRA continuation coverage and discontinued such coverage
before April 1, 2021. The Act directs the U.S. Department of Labor (DOL) and
Internal Revenue Service (IRS) to issue regulations and guidance regarding the
application and administration of the COBRA subsidy provisions, and the DOL to produce
model COBRA election notices.
Paycheck Protection Program. The Act adds an additional $7.25 billion of
funding to last year’s Paycheck Protection Program, which provided for fully
forgivable loans for certain qualified employers, provided they have maintained
certain levels of payroll and headcount.
Restaurant/Shuttered Venue Relief. Industry-specific relief is also included in
the package with funds set aside for the restaurant and food service industry and
for shuttered venue operators (such as theatres, live performing arts
organizations, and museums).
Just as the onset of the pandemic created a flurry of complicated and
often conflicting rules, the loosening of restrictions will result in further complex
issues. Employers should remain
vigilant for further developments, including evolving federal, state and
local guidance on protocols for vaccinated individuals, quarantines and
workplace protocols. Please contact us
if you have any questions about these issues.
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