The American Rescue Plan Act of 2021 and the Workplace
President Biden signed the American Rescue Plan Act of 2021 into law on March 11, 2021. While you may have heard of some of the Act’s provisions, such as individual stimulus payments, other aspects have received less attention. Nevertheless, employers should take note of some of the components of the acts that may affect their businesses and employees.
Extended Credits for Emergency Paid Sick Leave and Emergency Family and Medical Leave
Employers have not been required to provide Emergency Paid Sick Leave or Emergency Family and Medical Leave since December 31, 2020. However, in January the tax credits for providing such leave were extended as a means of encouraging employers to provide such leave voluntarily. The American Rescue Plan Act further expands these credits through September 30, 2021.
The Act also provides for additional qualifying reasons under which an employee may be given leave that qualifies for the tax credit. These include:
The employee is seeking or awaiting the results of a diagnostic test for a medical diagnosis of COVID-19 after an exposure or at an employer’s request;
The employee is obtaining a COVID-19 vaccine; or
The employee is recovering from an injury, disability, illness or condition related to the receipt of a COVID-19 vaccination.
Again, it should be noted that the Act does not mandate that employers provide extended leave, but rather provides for tax credits to encourage them to do so.
Preserving Health Benefits for Workers – COBRA Expansion and Subsidy
The Act additionally seeks to expand eligibility for health-care continuation benefits under COBRA. Under the Act, employers will be required to determine which employees lost health plan coverage in the last 19 months because of an involuntary termination of employment or reduction in hours. Those employees must then be notified of their eligibility in the program. Look for the US Department of Labor to issue model notices.
Employees who qualify will receive a subsidy of up to 100% of the premium for continuation coverage in effect beginning April 1, 2021, and ending when the individual becomes eligible for another group health plan or Medicare, when the individual exhausts his or her COBRA coverage period, or September 30, 2021.
Individuals whose previous COBRA coverage was discontinued will be given a special election period, beginning on April 1, 2021 and ending 60 days after the notification is provided to the individual. Notably, electing COBRA coverage during this “special election period” does not extend the period of continuation coverage beyond that which would have been required had it been elected or not discontinued.
Extension of Employee Retention Credits
The Act additionally extends the Employee Retention Credit (ERC), which provides a 70% credit against applicable employment taxes, up to $10,000.00 for businesses whose operation was fully or partially suspended due to a government order, or for an employer who experiences a significant decline in gross receipts.
Additional Extension of Unemployment Benefits
The American Rescue Plan Act further extends unemployment benefits under the Pandemic Unemployment Assistance (PUA), Pandemic Unemployment Compensation (PUC), and Pandemic Emergency Unemployment Compensation (PEUC) programs through September 6, 2021.
The pandemic continues to affect the economy and change how business is handled in the workplace. As state and federal laws are enacted to adapt to these changes, employers and employees should consult a lawyer to make sure they stay on top of their rights and obligations. If you need assistance in one of these areas, contact us today.