Employers And The American Rescue Plan Act of 2021

On March 11, 2021, President Joe Biden officially signed the American Rescue Plan Act of 2021 (ARPA) into law. This helped to provide trillions in relief and it directly affects employers and their employees.

Now, the ARPA expands some leave provisions under the Families First Coronavirus Response Act (FFCRA) which was enacted last year as a response to the pandemic.

The FFCRA focused on employers who have less than 500 employees, as they were required to offer the following:

• up to two weeks paid leave under the Emergency Paid Sick Leave Act (EPSLA)
• up to 10 weeks of paid family leave under the Emergency Family and Medical Leave Act (EFMLA) to employees who were unable to work due to COVID-19 related reasons

Through March 31, 2021, employers could voluntarily provide FFCRA paid leave to their employees and receive refundable payroll tax credits.

Who Does The ARPA Apply To?

This is relevant for group health plans that are sponsored by private-sector employers or employer organizations, including unions. Additionally, it is relevant for plans that are sponsored by state or local governments which are subject to the continuation provision under the Public Health Service Act. And, ARPA is relevant for group health insurance that is required under state mini-COBRA laws.

When Is The ARPA Deadline?

If the American Rescue Plan Act applies to you, which we went into above, then you are obligated to inform assistance to eligible individuals (AEI) before May 31, 2021, and during the six-month period that they are entitled to COBRA coverage.

Additionally, you must notify individuals who opted out of COBRA or those who originally elected COBRA, but have since dropped coverage as they have the chance to opt-in again.

What’s Included In ARPA?

If you are an employer with 500 or fewer employees then the decision is on you if you want to claim tax credits for employee leave that is claimed during the next two quarters of 2021 for reasons directly related to COVID-19.

• obtain a tax credit for offering 10 additional days worth of paid sick leave to employees who are eligible from April 1, 2021 through September 31, 2021
• expands the sick leave coverage for those who qualify for the tax credit

This also extends to the following:

• Leave-Qualified Reasons for example waiting for test results of a COVID-19 test, obtaining immunization for COVID-19, and those recovering from illnesses associated with COVID-19 immunization
• Available EPSL Hours have been refreshed from April 1, 2021 to 80 hours, and it includes those who used up their EPSL leave prior to April 1
• Paid EFMLA for all 12 weeks. The ARPA ensured an increase to the maximum tax credit that is allowable per employee for EFMLA from $10,000 to $12,000 from April 1, 2021.
• Anti-retaliation Provisions mean that employers who offer benefits under the FFCRA cannot receive the accompanying payroll tax credit if the employer, according to National Law Review, “(1) fails to comply with the FFCRA or (2) discriminates in favor of highly compensated employees, full-time employees, or employees on the basis of employment tenure with respect to leave.”

The American Rescue Plan Act has also added $7.25 billion to the Paycheck Protection Program (PPP) and has expanded the eligibility to internet-only news publishers, tax-exempt groups (including labor organizations, social clubs, fraternal benefit societies, and religious groups) with less than 300 employees, and larger nonprofits organizations with no more than 500 employees.

The deadline to apply for PPP loans is May 31, 2021. 

ARPA has allowed for crucial benefits targeting small businesses, like the Restaurant Revitalization Fund, small business loans,  vaccination effort support, and more.

ARPA extends unemployment benefits in three key ways:

• ARPA adds $300/week for anyone who collects unemployment compensation benefits through September 6, 2021
• Pandemic Emergency Unemployment Compensation (PEUC) benefits are extended until September 6, 2021
• Pandemic Unemployment Assistance (PUA) benefits are extended to September 6, 2021
  • It also applies to self-employed individuals

Additionally, unemployment benefits under the ARPA allow for an individual or each spouse to exclude $10,200 in unemployment benefits from federal income tax if the household income is under $150,000. Meaning that if both spouses are receiving unemployment and have the total household income under $150,000, then up to $20,400 could be excluded from federal income tax.

What Isn’t Included In ARPA

The ARPA does not include certain requirements that would dramatically affect employers, for example:

1. Federal Minimum Wage Doesn’t Increase

ARPA didn’t demand or require that the federal minimum wage increase from $7.25 to $15 but there are already many states who have adopted an increase in the minimum wage starting from January 1, 2021, or later in the year. We outline which states fall into the increase and which don’t here.

2. Tip Credit Is Not Eliminated

There was talk of removing, or phasing out, the current federal tip credit in ARPA but that didn’t go through in the end. In fact, the Department of Labor states, “many states do not allow a tip credit toward state minimum wage obligation for tipped employees, but for those states that permit a tip credit, ARPA does not alter the status quo.”

3. No Paid Leave Entitlement

Finally, for those in the private sector, ARPA does not expand obligations that you provide employees with paid leave. Instead, it incentives that you offer additional paid leave under the FFCRA through September 2021.

Stay Informed As The American Rescue Plan Act Evolves

Laws and regulations are ever-evolving, especially during the global pandemic. Therefore, be diligent about staying up to date on laws and regulations that may affect you, your business, and your employees. Be sure to consult legal counsel for additional guidance when appropriate. Or you may also refer to updates on the Department of Labor site.