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THE AMERICAN RESCUE PLAN ACT OF 2021

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EMPLOYMENT LAW COVID-19 UPDATE
THE AMERICAN RESCUE PLAN ACT OF 2021
March 19, 2021

On March 11, 2021 President Biden signed into law the American Rescue Plan Act of 2021 (ARPA) which includes not only the stimulus checks that most Americans are eagerly awaiting, but also includes a renewal of the tax credit for paid sick and family leave, which is voluntarily provided by employers through September 30, 2021, provides new qualifying leave provisions.

Of the greatest significance is the requirement for employers to provide full subsidies for COBRA premiums.

COBRA SUBSIDY BENEFITS INCLUDED IN ARPA

In brief, employees and their dependents, who had a qualifying event during the COVID-19 pandemic, now have an opportunity to receive fully subsidized COBRA coverage for up to six months. Under ARPA, the employer, insurer or multi-employer plan sponsor must pay eligible employees’ COBRA premiums but may offset the cost by claiming a new federal tax credit.

My esteemed colleague, Marilyn Monahan of Monahan Law Office, has published a brilliant newsletter that clearly and concisely breaks down the COBRA subsidy related issues contained in ARPA. Her newsletter can be found here:

WHAT SHOULD I DO NOW?
Pending further guidance from the Department of Labor, employers should begin to review their records (or coordinate with their COBRA Administrators) to determine who is an eligible employee for the COBRA subsidy and who might need to be provided notice under the ARPA.
EXTENDED TAX CREDIT FOR PAID SICK LEAVE

As explained in prior newsletters, the FFCRA contained provisions where qualifying employees were entitled to take time off due to several COVID-19 qualifying events for Emergency Paid Sick Leave (EPSL) or paid Extended Family and Medical Care leave (EFMLA) – and would receive either their full or partial wages for up to 80 hours. And covered employers (those with fewer than 500 employees) paying for such leave was entitled to a payroll tax credit. The FFCRA expired as of December 31, 2020 and so did the paid leave mandate.

The Consolidated Appropriates Act of 2021 did not extend the Paid Sick Leave benefits as was expected, but it did provide that if an employer voluntarily provided the same or similar paid leave benefits as was required under the FFCRA, the employer would receive a tax credit for such payments through March 31, 2021.  Under ARPA, this tax credit for voluntarily provided Paid Sick Leave is now extended through September 30, 2021.

ARPA does increases the amount of wages for which an employer may claim the tax credit for paid EFMLA leave from $10,000 to $12,000 annually per employee.

There are some exclusions from the tax credit detailed in ARPA such as where employers treat highly compensated employees, full-time employees, or employees with more tenure differently under a voluntary paid sick leave plan.

NEW QUALIFYING REASONS FOR PAID LEAVE
ARPA also adds the following as qualifying reasons for employees to take the paid leaves:
  • the employee is obtaining immunization (vaccination) related to COVID-19;
  • the employee is recovering from a condition, illness or disability related to the vaccination; and,
  • the employee is seeking or awaiting the results of a COVID-19 test or diagnosis (including where the employer has requested the test or diagnosis).
Paid Sick Leave Time Re-Sets As Of April 1st
Under ARPA the maximum of 80 hours of leave entitlement re-sets as of April 1, 2021. This permits employers to voluntarily provide employees up to 80 hours of EPSL in the period from April through September 2021 even if the employee had already taken 80 hours of EPSL and the employer remains eligible for the corresponding tax credit.

As the guidance issued by the state and federal agencies is regularly changing, as is the medical information known about COVID-19, this memo is provided solely as a reference tool to be used for informational purposes and should not be construed or interpreted as providing legal advice related to any specific case or cases.

This Newsletter is intended as a brief summary of employment law. While every effort has been made to ensure the accuracy of the information contained herein, it is not intended to serve as “legal advice,” or to establish an attorney-client relationship. If additional information is needed on any of the topics contained herein, please contact our office. All rights reserved. ©2021.