Question
What should employers know about the American Rescue Plan?
Answer
Nearly a year after the Families First Coronavirus Response Act (FFCRA) was signed into law, President Biden has signed the American Rescue Plan—the third major relief bill passed by Congress since the COVID pandemic began. While this new $1.9 trillion relief package covers many areas, employers should be aware of specific provisions that are most likely to affect them.
First, the new law gives the FFCRA a new life of sorts.
Like the relief package passed in December 2020, the American Rescue Plan gives employers the option to provide FFCRA leave while continuing to receive the tax credits—now through September 30, 2021. So while employers do not have to continue providing FFCRA leave, they may be incentivized to do so by receiving the same tax relief as they did when providing emergency paid sick leave or emergency family and medical leave was mandatory (i.e., through December 31, 2020).
Regardless of whether covered employers (499 or fewer employees) have previously exercised this option of continuing to provide optional FFCRA leave, they have the option of doing so now through the end of September. As employers continue reopening physical workplaces, this option may allow employers to provide the kind of flexibility employees are seeking while also receiving a tax benefit.
If employers choose to provide this optional FFCRA leave, they should be aware of other changes the American Rescue Plan made to the FFCRA and effective April 1—including one that may provide a solution for employers looking to encourage vaccinations.
1. Eligibility for both emergency FMLA and paid sick leave has been expanded.
a. Originally, employees could only take emergency FMLA leave if they were unable to work or telework due to needing to care for a child whose school or place of care had been closed or was unavailable (due to COVID). Now, employers who desire to offer employees the option of continued emergency FMLA leave can do so for any of the eligible reasons for leave, including those added by the American Rescue Plan.
b. Employees who had previously exhausted their 10 days of emergency paid sick leave under the FFCRA can now take up to an additional 10 days of this leave. The law does not create a new “bucket” of leave for employees who may have exhausted their allotment of emergency FMLA leave.
2. Eligible reasons for leave now include leave taken to (a) receive a COVID vaccine or recover from any injury, disability, illness or condition related to a COVID immunization; or (b) get tested or await results from a COVID test when an employee has been exposed to COVID or the employer has requested the COVID test or diagnosis. Many employers have been exploring ways to incentivize vaccination by their employees, and this new reason for emergency paid sick leave may provide an incentive while also allowing the employer to claim a tax credit.
Pursuant to a direction in the American Rescue Plan, the Department of Labor will be issuing regulations or other guidance on these changes. In the meantime, if employers decide to offer this optional FFCRA leave, they should do so in a uniform and non-discriminatory manner, as the American Rescue Plan prohibits participating employers from discriminating on the following bases when determining and providing the leave: status as a highly-compensated employee, full-time status or length of employment.
Employers should also be aware of the American Rescue Plan’s extension of unemployment benefits.
Previous relief bills had created the Federal Pandemic Unemployment Compensation (FPUC), Pandemic Emergency Unemployment Compensation (PEUC), and Pandemic Unemployment Assistance (PUA) programs—all three of which are now extended through Labor Day. Likely of most interest to employers, the extra $300 weekly benefit will now continue (instead of expiring on March 14) and individuals who had exhausted unemployment benefits under state law may continue to receive federal benefits through PEUC, which now provides for up to 53 weeks of additional benefits.
Finally, the American Rescue Plan also contains provisions related to COBRA premium subsidies and related issues.
Read more in the article "Benefit Plans: American Rescue Plan of 2021 (ARPA) Update," written by our Compensation Planning & Employee Benefits Group.
With vaccinations in progress and the light at the end of the tunnel in sight, this may be the last major relief package affecting employers, though COVID will impact the workplace in other ways into the future.
Contact your Fredrikson Employment attorney or any member of our team for assistance.
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