The American Rescue Plan Act: What GC’s in the Private Sector Need to Know Understanding the Act’s effect on labor, employment & employee benefits
This article was based on the Legal Updates: Congress Passes and President Biden Signs American Rescue Plan Act Providing COVID-19 Stimulus and Extending Key Labor and Employment Benefits and $1.9 Trillion COVID-19 Stimulus Legislation Includes COBRA Premium Assistance, Retirement Plan Funding Relief, and an Expansion of Covered Employees Under Section 162(m) two of more than 70,000 resources available in Practical Law.
On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (ARPA-21), one of a series of relief packages responding to the health and economic harms caused by the COVID-19 pandemic. The Practical Law editorial teams closely monitored this development, tracking various versions as it was passed between the House and the Senate and carefully combing through the 600+ page legislation for those provisions most relevant to employers and their counsel. ARPA-21 extends (with some modification) many benefits provided under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) enacted in March 2020 and as amended by the Consolidated Appropriations Act, 2021 (CAA-21).
Of particular note is the extension and expansion of select unemployment benefits. ARPA-21 also allows covered employers to continue to take tax credits for voluntarily-provided qualifying paid sick and family leave under the Families First Coronavirus Response Act (FFCRA) through September 30, 2021, and expanded the qualifying reasons for leave to include time spent getting vaccinated and recovering from any after effects. In addition, the law earmarked funding for paid sick leave for federal public employees and funded additional benefits for those in the hospitality and transportation fields. Although additional implications will only be apparent after the DOL issues implementing regulations, Practical Law editors were quick to update their FFCRA, unemployment, and other key resources content to reflect these new developments. Access all Practical Law resources on ARPA-21, the CARES Act, and other major labor, employment, and employee benefits law immediately with a free trial.
ARPA-21 also provides for premium assistance to eligible individuals for health insurance continuation coverage (known as COBRA coverage).
Key labor and employment provisions in the ARPA-21
- Extends Pandemic Unemployment Assistance (PUA) benefits, providing direct payments of $300 per week to qualifying individuals through September 6, 2021.
- Extends Federal Pandemic Unemployment Compensation (FPUC) which provides supplemental direct payments of $300 per week for weeks of unemployment beginning after December 26, 2020 through September 6, 2021.
- Expands Pandemic Emergency Unemployment Compensation (PEUC) through September 6, 2021 for individuals who remain eligible for PEUC and have not exhausted their other benefits.
- Extends reimbursements to states for the costs of waiving the one-week waiting requirement for unemployment insurance benefits for weeks of unemployment through September 6, 2021.
- Extends funding for state work-share or short-term compensation (STC) programs to September 6, 2021 and expands funding from 50% to 100%.
- Extends full federal funding of extended unemployment compensation under the FFCRA through September 6, 2021.
Provisions for Specific Employee and Employer Groups
The ARPA-21 contains several provisions that apply only to specific groups of employees.
- The ARPA-21 continues unemployment and other assistance to rail workers, but it also amends
the Railroad Unemployment Insurance Act to provide additional unemployment benefits.
For example, the ARPA-21:
- Extends the period of eligibility for $600 weekly recovery benefits from March 14, 2021 to September 6, 2021.
- Extends the benefit period for rail employees with ten or more service years from 185 days to 330.
- Extends the benefit period for employees with fewer than ten service years from 120 to 265 days.
- Extends the waiver of the seven-day waiting period for benefits from March 14, 2021 to September 6, 2021.
- Includes funding through at least December 31, 2021 in part for grants to covered restaurant employers for specific expenses needed to sustain their businesses, including costs associated with payroll and providing family and sick leave to employees.
- Includes funding available through September 30, 2024, for covered airports, conditioned on continuing to employ through September 30, 2021 at least 90 percent of those individuals they employed as of March 27, 2020 (adjusting for retirement and those who left their jobs voluntarily).
- Includes additional funding to extend the payroll support programs for air carriers and associated contractors previously created under the CAA-21.
Provides funding to the Secretary of Transportation to set up a payroll support program for aviation manufacturing companies that are not benefiting or have not benefitted from:
- a credit under section 2301 of the CARES Act (26 U.S.C. § 3111 note)
- financial assistance under section 4113 of the CARES Act (15 U.S.C. § 9073)
- financial assistance under the paycheck protection program (PPP) (15 U.S.C. § 636(a)(36)).
Eligible aviation manufacturing employers may obtain up to six months of payroll support funding, provided they use the funds exclusively to:
- continue paying wages, salaries, and benefits to employees eligible as of April 1, 2020 for the duration of the agreement.
- facilitate retaining, rehiring, or recalling of employees (provided the funds are not used for back pay).
Air Carriers and Associated Contractors
- Includes additional funding to extend the payroll support programs for air carriers and associated contractors previously created under the CAA-21, provided, among other things, these employers do not conduct involuntary furloughs until the later of September 30, 2021 or when the financial assistance is exhausted.
- Includes funding for retraining programs and housing stipends to enable eligible veterans to obtain training or education necessary for high-demand occupations.
Extension and Expansion of Families First Coronavirus Response Act (FFCRA) Tax Credits
In 2020, the FFCRA required (and provided funds for) small businesses (i.e., businesses with fewer than 500 employees) to provide paid family and sick leave to employees affected by COVID-19. The mandatory requirement was dropped as of Jan. 1, 2021, but under ARPA-21, covered employers that wish to continue providing paid family and sick leave can still receive compensatory payroll tax credits through September 30, 2021.
For businesses that choose to continue providing paid family and sick leave under the FFCRA, the ARPA-21 expands the eligibility criteria for employees who want to take paid leave to:
- employees who are unable to work because they are getting a COVID-19 vaccine.
- employees who are recovering from any illness or other side effects of the vaccine.
- employees who are seeking or waiting for a COVID-19 diagnostic test.
- employees who are awaiting a COVID-19-related medical diagnosis.
Employers should also know that the ARPA-21:
- Increases the aggregate tax credit cap per employee for emergency family leave from $10,000 to $12,000.
- Expands the qualifying reasons for family leave to include reasons for sick leave.
- Eliminates the previous requirement that the first ten days of emergency leave are unpaid.
- Continues funding for sick and family leave tax credits to self-employed individuals beyond March 31, 2021.
- Creates a new annual allotment of up to 80 hours per employee of qualifying paid sick leave for 2021 (exclusive of the first quarter).
- Provides the Department of Labor with extensive funding to conduct investigative, enforcement, and fraud prevention activities.
Employers should also be aware that they can be disqualified from receiving ARPA-12 tax credits if they:
- Fail to comply with any of the FFCRA’s provisions including its anti-retaliation provision.
- Discriminate in favor of highly compensated employees, full-time employees, or employees on the basis of their employment tenure.
In addition to more generous family and sick leave, the ARPA-21 also expands the health safety net by providing 100% premium assistance for continuation of health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, to employees who have been involuntarily terminated or had their hours reduced (qualified employees). Qualified employees will be treated as having paid their COBRA continuation coverage premium amounts in full. Employers will be reimbursed by the federal government for the amount of COBRA premiums, through a credit or refund of an overpayment of payroll taxes.
- Employees who leave their jobs voluntarily are not eligible for COBRA relief.
- COBRA premium assistance is available to qualified employees between Apr. 1, 2021 and Sept. 30, 2021, whether or not they had a COBRA election in effect on Apr. 1, 2021.
- Qualified employees who do not have a COBRA election in effect on April 1, 2021 may elect COBRA coverage during an extended election period. The extended election period is also available to individuals who elected COBRA but discontinued it before April 1, 2021. The extended election period begins on April 1, 2021 and ends 60 days after the date on which notice is furnished to the individual.
- Employers must notify qualified beneficiaries of the availability of COBRA premium assistance and extended election periods.
- Employers must also notify beneficiaries, in writing, when extended COBRA benefits expire.
- The Department of Labor is required to issue model notices for employers to use to satisfy the law's notice requirements.
- Employers must refund COBRA premiums to any qualified beneficiary who inadvertently pays them between Apr. 1, 2021 and Sept. 30, 2021.
This full Legal Update is available for free access: Congress Passes and President Biden Signs American Rescue Plan Act Providing COVID-19 Stimulus and Extending Key Labor and Employment Benefits.
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