The new American Rescue Plan Act of 2021 and its impact on employers
On March 11, 2021 President Biden signed the American Rescue Plan Act of 2021. Most of the news reports have focused on the $1,400 stimulus checks that many Americans will receive or the extension of the $300 federal unemployment benefit through September 6, 2021, but for employers the primary question has been: Do I still have to provide paid sick leave?
Families First Coronavirus Response Act (commonly called the “FFCRA”) put into place COVID-related paid leave requirements with which most employers are now very familiar. The FFCRA largely expired on December 31, 2020, with mandate to provide paid leave expiring, but the ability to use tax credits extending through March 31, 2021. For more information on what happened between December 31, 2020 and March 31, 2021 see our article here.
Now we have The new American Rescue Plan Act of 2021 (or the “ARPA”). What does that mean for your business?
First, understand that paid leave remains optional, so business owners need to decide whether to provide employees with the paid leave provided under the ARPA. To help with that decision, here is a summary of key changes to the FFCRA included in the ARPA:
- Tax credits. Businesses can continue to claim tax credits for providing qualified ARPA leave through September 30, 2021.
- New Paid-Sick Leave (EPSL): The FFCRA provided 10 days of paid sick leave that could be used up to December 31, 2020, or if the employer elected to extend into 2021, it could be used up to March 31, 2021. The extension allowed employees to roll any unused paid sick days over into 2021. The ARPA will create a new bank of paid sick leave that employers can claim tax credits for starting on April 1, 2021 and ending September 30, 2021.
- New Reasons for Paid Sick Leave (EPSL): Originally under FFCRA, employees could take EPSL for six reasons, the ARPA has added the following new reasons:
- the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and such employee has been exposed to COVID–19,
- the employee’s employer has requested such test or diagnosis,
- the employee is obtaining immunization (vaccination) related to COVID–19, or
- recovering from any injury, disability, illness, or condition related to such immunization.
- Expansion of Expanded FMLA (EFMLA): Previously EFMLA was only available – and tax credits could be claimed – if an employee was unable to work or telework due to the COVID-related unavailability of a child’s school or childcare. Under ARPA, the family leave payroll tax credits may now be claimed for all of the qualifying uses of EPSL listed above. Moreover, FFCRA originally provided that the first two weeks of EFMLA were unpaid, but the ARPA has deleted that unpaid two-week provision, meaning that the entire (up to) twelve weeks of EFMLA is paid (and the tax credit has been increased to $12,000).
- New Non-Discrimination Provision: Businesses that elect to provide ARPA leave must follow its nondiscrimination rules which say that tax credits are not available to employers who discriminate:
- in favor of highly compensated employees,
- in favor of full-time employees, or
- on the basis of an employee’s tenure with the company.
To summarize:
- Providing paid leave is optional.
- If you opt to provide paid leave, the available time employees can take off for COVID related reasons is now up to 14 weeks of paid leave.
- The qualifying reasons for leave now includes vaccination time and time to recover from vaccinations.
- Leave must be made available to all employees – regardless of salary level, hours worked per week or seniority.
What now?
Once you’ve made your decision whether to provide paid leave under ARPA, what are some of your first steps?
- Providing Leave?
- Update your posters to include the ARPA.
- Update your COVID leave request forms and policies to include the new leave terms.
- Communicate your new policies to your employees.
- Not Providing Leave?
- Make sure you have removed your FFCRA Posters from all notice locations before April 1st.
- Remove your FFCRA policies from your handbook, intranet, or any location where you include employee policies for employees to review.
- Communicate your decision with your employees.
That’s just a start, each business will have to determine what other steps are necessary or are best for their employees and operations. Talk with your management team and supervisors to determine what is best for your business.
What else does the ARPA do?
The American Rescue Plan Act of 2021 addresses a number of other issues, including providing funding for:
- agriculture and nutrition programs, including the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program);
- schools and institutions of higher education;
- childcare and programs for older Americans and their families;
- COVID-19 vaccinations, testing, treatment, and prevention;
- mental health and substance-use disorder services;
- emergency rental assistance, homeowner assistance, and other housing programs;
- payments to state, local, tribal, and territorial governments for economic relief;
- multiemployer pension plans;
- small business assistance, including specific programs for restaurants and live venues;
- programs for health care workers, transportation workers, federal employees, veterans, and other targeted populations;
- international and humanitarian responses;
- tribal government services;
- scientific research and development;
- state, territorial, and tribal capital projects that enable work, education, and health monitoring in response to COVID-19; and
- health care providers in rural areas.
The bill also includes provisions that:
- extend unemployment benefits and related services;
- make up to $10,200 of 2020 unemployment compensation tax-free;
- make student loan forgiveness tax-free through 2025;
- provide a maximum recovery rebate of $1,400 per eligible individual;
- expand and otherwise modify certain tax credits, including the child tax credit and the earned income tax credit;
- provide premium assistance for certain health insurance coverage; and
- require coverage, without cost-sharing, of COVID-19 vaccines and treatment under Medicaid and the Children’s Health Insurance Program (CHIP).
Should you have any questions about the American Rescue Plan Act of 2021 and paid leave policies for your business or would like to schedule an initial consultation, please contact Navigant Law Group, LLC at (847) 253-8800 or email us at info@navigantlaw.com.
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