Yesterday, March 10th, Congress passed the new COVID-19 Relief Stimulus Bill, known as the American Rescue Plan Act of 2021 (ARPA), which is expected to be signed into law by President Biden no later than Friday. This alert focuses on the bill as it relates to the employment sector.
It is important to note that much is still unknown regarding this stimulus package, as the Department of Labor has yet to release additional guidance, and because of that, this alert focuses on what we currently do know.
Families First Coronavirus Response Act (FFCRA)
Currently, the Families First Coronavirus Response Act (FFCRA) is optional through March 31st, which means employers are not required to provide Emergency Paid Sick Leave (EPSL) and/or Emergency Family Medical Leave (EFML) to eligible employees, but may voluntarily choose to do so.
While ARPA does not make these leaves mandatory, it will continue to provide tax credits to employers who voluntarily choose to offer the benefit until September 30, 2021.
Here are some key takeaways from ARPA.
Optional Paid Emergency Sick Leave (EPSL)
- Effective April 1st until September 30, 2021
- Continues to apply to employers with 500 or fewer employees
- Resets 10 days of Paid Sick Leave for all employees meaning an employer may voluntarily choose to provide EPSL to employees and receive tax credits
- In addition to the standard reasons for EPSL, the ARPA adds new reasons for COVID-19 vaccine appointments and for complications due to receiving the vaccine
Paid Emergency Family Medical Leave (EFML)
- Effective April 1st until September 30, 2021
- Continues to apply to employers with 500 or fewer employees
- Provides a new 10 weeks of Paid EFML for all employees, which means an employer may voluntarily choose to provide EFML to employees and receive tax credits
- Raises aggregate cap of EFML to $12,000 (previously $10,000)
- No changes to cap for EPSL
- EFML now includes all of the reasons under EPSL, including the two new reasons mentioned above
Extension of Employee Retention Credit
The ARPA also extends the Employee Retention Tax Credit, previously set to expire in June 2021, until December 31, 2021. This tax credit applies to eligible employers who experience a full or partial shutdown due to COVID-19 or a qualifying decline in their receipts in 2021.
Unemployment Insurance Expansion
The ARPA also extends the federal unemployment insurance payments of $300 per week, which is in addition to that individual’s unemployment insurance payments administered by the state. The federal unemployment benefits now expire on September 6, 2021 instead of the previous date of March 14, 2021.
In addition, the bill continues to provide the expanded insurance coverage to gig workers and self-employed individuals. Moreover, this stimulus package allows for the first $10,200 of unemployment insurance payments received in 2020 to be free from federal taxes in 2021 – this tax break is for individual’s earning less than $150,000 per year.
COBRA Subsidies
The ARPA includes an opportunity for 100% coverage of COBRA premium costs from April 1st through September 30, 2021 for employees (and their family members) who experience a loss of group health coverage due to reduced hours of employment or involuntary termination of employment (aside from gross misconduct).
Plan administrators are required to begin notifying eligible individuals of the COBRA subsidy within 60 days of April 1, 2021 and the DOL is required to issue new model COBRA notices pertaining to this subsidy.
PPP Loans
This bill also adds an additional $7.25 billion to last year's Paycheck Protection Program, which provided for fully forgivable loans for certain employers, provided they maintained payroll and headcount. In addition, the bill also provides $50 billion to small businesses, including $28.6 billion for a new grant program that would provide funds to bars, restaurants and other venues that had to close during the pandemic.
To learn more about this Recovery Plan, please register to attend our live webinar on March 19th in which we will discuss the ARPA and what it means for employers.
Cascade is actively monitoring this legislation and will continue to provide additional alerts when information becomes available. Please do not hesitate to reach out if you have any questions.