American Rescue Plan Act Update
Perhaps the biggest news in the United States this month was the nearly $2 trillion Covid-19 relief package signed into law by President Biden on March 11. It provided stimulus checks for the American people, greater unemployment benefits, and tax benefits for families with children.
However, did you know it also has several implications for American employers? Many of the provisions extend the relief efforts of the Families First Coronavirus Response Act (FFCRA), but there are also new measures.
Employers should pay particular attention to the paid leave portions of the act.
The ARPA extends the tax credit allowed for voluntarily extending FFCRA leave through September 30, 2021. An employer may choose to extend paid leave for the tax credit, but it is optional. Furthermore, on April 1, 2021, if employers choose to take the tax credit, they need to offer ten more days or eighty hours of paid sick leave under ARPA. The employer can still claim the tax credit, even if it claimed a tax credit for sick leave taken by an employee for a covered reason before April 1, 2021.
ARPA also creates tax credits for three additional qualifying reasons for paid leave tax credits. These reasons all relate to COVID-19:1
- An employee takes leave to get a COVID-19 vaccine
- The employee takes leave to recover from a side-effects or illness related to the vaccine
- The employee takes leave to be tested for or wait for test results for COVID-19
EFMLA Leave Tax Credits: Employers can claim a tax credit if they offer emergency FMLA leave for all of the reasons that were eligible under FFCRA, as well as the new COVID-19 and vaccine-related reasons bulleted above.
Maximum Tax Credit Limit: The first two weeks of EFMLA may now be paid at 2/3 the regular rate of pay and be eligible for the tax credit. This raises the maximum tax credit limit for EFMLA from $10,000 to $12,000 per employee.
Leave must be offered uniformly to employees (i.e., employers cannot discriminate in favor of those employees who are highly compensated, are full-time status or have more seniority).
Other ARPA measures employers should know
Small Business Grants
- Restaurants and food and beverage establishments are eligible for grants up to $10 million through the Shuttered Venue Operators Grant. Learn more on the US Small Business Administration site: https://www.sba.gov/funding-programs/loans/covid-19-relief-options.
- An additional $15 billion will be available for EIDL (Economic Injury Disaster Loans), with a maximum amount of $500,000. See here for application details: https://www.sba.gov/funding-programs/loans/covid-19-relief-options/covid-19-economic-injury-disaster-loan.
- Employees who lost health insurance due to (involuntary) termination or reduction in hours are eligible for free COBRA coverage. Self-insured employers will cover the COBRA premiums and take a dollar-for-dollar payroll tax credit.
- All eligible participants must be sent a notice within 60 days of April 1, 2021. The Department of Labor will issue model COBRA notices, which can be found here: https://www.dol.gov/agencies/ebsa/coronavirus.
- The annual limit for DCAP elections has temporarily increased from $5,000 per year to $10,500. Married filing jointly has a limit of $5,250, up from $2,500. Employers may amend their plan to allow for the DCAP election by the end of the year.
Employee Retention Credit
- This credit is extended through 2021 to encourage retention of workers in the workforce.
For more information on this topic, please feel free to contact a member of our employment law practice group.
Under FFCRA, qualifying reasons for providing paid sick time were if the employee is unable to work because her or she: (1) is subject to a federal, state or local quarantine or isolation related to COVID-19; (2) has been advised by a healthcare provider to self-quarantine; (3) is experiencing COVID-19 symptoms and seeking a diagnosis; (4) is caring for an individual who is subject to quarantine or is self-quarantining; (5) is caring for a child whose school or place of care is closed (or child care provider is unavailable) because of COVID-19 or (6) is experiencing any other substantially similar condition specified by the US Secretary of Health and Human Services. These qualifying reasons still stand under ARPA.
Simmons Perrine Moyer Bergman PLC is a full service law firm with locations in Cedar Rapids and Coralville, Iowa. For more information, visit spmblaw.com.
Disclaimer: This information is intended for general information purposes only and is not intended, nor should it be construed or relied on, as legal advice. Please consult your attorney if specific legal information is desired.