As we approach the one-year anniversary of the COVID-19 related quarantine, Congress passed and President Biden signed the American Rescue Plan on March 11, 2021. Like the other coronavirus stimulus packages, there are a large number of programs, including an extension of unemployment benefits and stimulus payments to qualifying individuals. The $1.9 trillion-dollar relief package also contains a number of provisions that will impact employers:
Families First Coronavirus Response Act – Expansion of Voluntary Leave and Extension of Tax Credits
The Families First Coronavirus Response Act (“FFCRA”) adopted in March 2020 mandated that all public sector employers and private-sector employers with under 500 employees provide paid sick leave and expanded paid family leave to employees affected by COVID-19. The FFCRA provided 100% tax credit to private sector employers for the qualifying wages under these laws. In December 2020, the Consolidated Appropriation Act of 2021 allowed qualifying employers to voluntarily elect to provide FFCRA leave through March 31, 2021.
The American Rescue Plan expands the reasons that employees may voluntarily grant qualified employees paid leave under the FFCRA and extends the tax credits available for such private-sector employers who voluntarily provide FFCRA leave from March 31, 2021, to September 30, 2021.
Paid Sick Leave
The American Rescue Plan provides tax credits to eligible private sector employers for granting voluntary paid sick leave and paid family leave for the original six reasons in the FFCRA:
- subject to quarantine or isolation related to COVID-19;
- subject to self-quarantine by a healthcare provider related to COVID-19;
- experiencing COVID-19 symptoms;
- caring for an individual with COVID-19, or subject to self-quarantine;
- caring for a child whose school or place of care is closed for reasons related to COVID-19; and
- experiencing a similar condition as specified by the Secretary of Health and Human Services.
The American Rescue Plan adds two qualifying reasons for paid sick leave:
- employee is obtaining immunization relating to COVID-19; and
- employee is recovering from an injury, disability, illness or condition related to the COVID-19 vaccination.
The American Rescue Plan also re-sets the 10-day limit for the tax credit for paid sick leave under the FFCRA beginning April 1, 2021. As a result, an employer that already provided an employee with ten days of paid sick leave during the past 12 months and obtained the tax credit for such paid sick leave could voluntarily provide an additional 10 days of FFCRA paid sick leave to such employee beginning April 1, 2021, and would be eligible for a tax credit for doing so, but employers are not required to do so.
Emergency FMLA Leave
The American Rescue Plan has significantly expanded the reasons that qualified employees may take up to 12 weeks of emergency family leave if their employer chooses to voluntarily grant such leave to include all eight reasons listed above.
The American Rescue Plan also removes the two week waiting period on emergency FMLA leave and raises the aggregate cap on emergency FMLA leave from $10,000 to $12,000.
The American Rescue Act also adds non-discrimination rules to provide that no tax credit is available if the employer, in determining availability of the paid leave, discriminates against highly compensated employees, full-time employees, or employees on the basis of tenure with the employer. This provision appears designed to compel employers who make the decision to voluntarily provide leave do so in a uniform manner, without discriminating against certain categories of workers.
We anticipate the Department of Labor will issue guidance on these changes soon. We will send an update when that guidance is available.
The American Rescue Plan provides for a 100% COBRA premium subsidy effective April 1 – September 30, 2021, for those employees who are involuntarily terminated and want to remain on their employer’s health insurance. The American Resuce Plan also provides a “second chance” election for those who did not elect COBRA or who let their COBRA coverage lapse. The employer or insurer will offset the cost by claiming a credit against Medicare payroll taxes.
The coverage is only available to individuals who are involuntarily terminated or had hours reduced. COBRA premiums are not available to individuals who are eligible to enroll in another group health plan, a FSA, qualified small employer health reimbursement arrangement or Medicare.
Employers and group health plans will be required to provide several new notices to those who become eligible for COBRA continuation coverage. Notices will address the availability of the new subsidies, the option to enroll in different coverage as available, the extended period to enroll in COBRA continuation coverage, and the expiration of the premium assistance. The Department of Labor will be developing model notices for these purposes, and we will send out an update when these notices are available.
Increased Funding for Worker Protection Audits/Inspections
The American Rescue Plan provides funding to a number of federal agencies (including OSHA, the Wage and Hour Division) to carry out COVID-19 related worker protection activities. The expectation is an increase in audits and inspections. We expect OSHA will also be issuing new guidance soon. OSHA’s most recent guidance on COVID is available at:
Please reach out to your Lashly & Baer attorney or one of the Cross-Disciplinary Coronavirus Practice Team Attorneys if you have any questions about the American Rescue Plan.