On March 10, 2021, Congress passed the American Rescue Plan Act of 2021 (“ARP”), which has been signed into law by President Biden. The ARP contains several provisions which are important for employers to understand.
Voluntary FFCRA Leave and Tax Credits for COVID-19 Related Reasons.
The Families First Act Coronavirus Response Act (“FFCRA”), which created two separate leave provisions for COVID-19 related reasons, Emergency Paid Sick Leave (“EPSL”) and Emergency Family Medical Leave (“EFMLA”) and applied to employers with less than 500 employees, expired on December 31, 2020. The Consolidated Appropriations Act of 2021 allowed for employers to voluntarily provide this leave through March 31, 2021, and now, the ARP provides that covered employers (i.e. employers with under 500 employees) have the option to offer their employees this leave through September 20, 2021 and take a payroll tax credit for qualifying sick or medical leave wages. Again, offering these types of leave is optional. An employer could offer just EPSL leave or EFMLA leave or both.
The ARP broadens the scope of available leave tremendously. It expands EFMLA leave to include any of the qualifying reasons under the EPSL and adds two new qualifying reasons for ESPL (which are bolded below).
EPSL Qualifying Reasons and Pay
80 hours for full time employees; up to $511 per day and $5,110 aggregate for reasons 1, 2 or 3; up to $200 per day and $2,000 aggregate for reasons 4, 5 and 6; amount of hours re-sets as of April 1, 2021:
- The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19 (which may mean a general stay-at-home or “shelter-in-place” order);
- The employee has been advised by a health care professional to self-quarantine (whether or not the employee has tested positive);
- The employee is experiencing COVID-19 symptoms and seeking a medical diagnosis, or the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and such employee has been exposed to COVID–19 or the employee’s employer has requested such test or diagnosis, or the employee is obtaining immunization (vaccine) related to COVID–19 or recovering from any injury, disability, illness, or condition related to such immunization;
- The employee is caring for an individual who has been quarantined or is subject to a quarantine or isolation order (2/3 pay);
- The employee is caring for a child due to school or daycare closures (2/3 pay); or
- The employee is experiencing “substantially similar conditions” to those of COVID-19 (which has not been defined).
EFMLA Qualifying Reasons and Pay
Up to 10 weeks, up to $200 per day and $12,000 in the aggregate (an increase over the original bill). There is no two week unpaid waiting period. Leave and pay can begin immediately.
- To care for a child under the age of 18 if their school has been closed;
- To care for a child under the age of 18 if their place of care has been closed;
- To care for a child whose child care provider is unavailable due to a public health emergency; and
- Any of the qualifying reasons under EPSL as outlined above.
Most employment lawyers will advise employers to apply policies and practices uniformly to all employees to avoid the potential for discrimination. Voluntary application of the EPSL or EFMLA is no different. The ARP states that employers shall not be provided the payroll tax credit if they discriminate in favor of highly compensated employees, full-time employees or employees on the basis of their tenure with the company. If you choose to offer this leave, make sure you are providing it consistently to all employees.
Extensions to Unemployment Insurance
The ARP also extends the pandemic-related unemployment benefits first available under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Before the ARP was enacted, these expanded benefits were set to expire after March 14, 2021.
The expanded unemployment benefits of the CARES Act were set to expire once already, but were first extended in December 2020 under the Consolidated Appropriations Act (“CAA”). The ARP provides continued, extended unemployment benefits in four categories:
- Federal Pandemic Unemployment Compensation (“FPUC”): provides a supplemental $300 weekly benefit for each week of unemployment beginning March 14, 2021 and ending September 6, 2021;
- Pandemic Emergency Unemployment Compensation (“PEUC”): provides an additional 53 weeks of unemployment benefits eligibility for those who have exhausted available unemployment benefits;
- Pandemic Unemployment Assistance (“PUA”): provides unemployment benefits to workers typically ineligible for assistance, including self-employed workers and independent contractors, for up to 79 weeks. The additional 29 weeks provided under the ARP are available for weeks of unemployment after March 14, 2021;
- Mixed Earners Unemployment Compensation (“MEUC”): provides a supplemental $100 weekly benefit to certain previously self-employed workers collecting unemployment benefits (except PUA). This program is optional for states to administer.
All three laws – the CARES Act, the CAA, and the ARP – provided incentives for states to waive the typical waiting period for benefits and encourage the use of state short-time compensation (or “work sharing”) programs. The ARP increases these incentives by 100% federally funding benefits paid during a waived waiting period and reimbursing short-term compensation payments. States administering unemployment benefits systems are still allowed flexibility regarding waiting week, work search, good cause, and experience rating policies.
In addition, the ARP waives federal taxes on the first $10,200 of unemployment benefits collected by a worker in 2020. This waiver applies to taxpayers with a 2020 adjusted gross income of less than $150,000. The ARP also provides Affordable Care Act eligibility for one year for workers receiving unemployment benefits in 2021. The individual’s household income will be considered to be not higher than 133% of the federal poverty line for purposes of calculating the premium subsidy.
Employers may face challenges returning employees to the workforce due to available unemployment. Employers are advised to consult with legal counsel to develop strategies for addressing this concern and before responding to inquiries from the administrative agencies that manage unemployment insurance.