On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (the “Plan”). The historic $1.9 trillion bill contains several provisions of note for employers.

Extension of the Families First Coronavirus Response Act Tax Credit

The Plan extends the availability of tax credits under the Families First Coronavirus Response Act (“FFCRA”) through September 30, 2021. As employers may recall, the last round of stimulus legislation extended tax credits through March 30, 2021. The extension was not mandatory. Likewise, the Plan does not mandate that employers provide leave under the FFCRA. Rather, it extends the tax credits to offset the costs for employers who choose to provide FFCRA leave.

The Plan makes a few modifications to the leave benefits:

• It adds three new covered reasons for leave;
  • Obtaining a vaccination
  • Recovering from injury, disability, or illness or condition related to vaccination, and
  • Seeking or awaiting results of a test when an employee has been exposed to COVID-19 or the employer requests such a test
• The Plan resets the clock for paid sick leave. As of April 1, 2021, employers may offer a new allotment of leave, 10 days of sick leave.
• The Plan expands the Emergency Family Medical Leave Act (“EFMLA”), allowing employees to take leave for all FFCRA qualifying reasons. This includes the newly added reasons above.
• The Plan removed the two-week unpaid waiting period on EFMLA. The first two weeks now are paid at two-thirds (2/3) of the regular rate of pay and eligible for a tax credit.
• The Plan also raises the minimum tax credit available for EFMLA to $12,000 per employee.
• The Plan includes non-discrimination rules for employers providing FFCRA leave. Tax credits are disallowed for employers that discriminate with respect to: highly compensated employees, full-time employees, or on the basis of tenure.

Unemployment Benefits

The Plan extends the three unemployment programs made available under the Coronavirus, Aid, Relief, and Economic Security Act (the “CARES Act”) (see previously issued client alert) through September 6, 2021. They were set to expire after March 14, 2021. The Pandemic Emergency Unemployment Compensation Assistance and Pandemic Unemployment Assistance are continued at the current $300 per week rate.

Additionally, the Plan makes the first $10,200 in unemployment received by workers in 2020 non-taxable for households with income less than $150,000.

COBRA

The Plan provides for a hundred (100) percent COBRA subsidy for employees (and covered family members) who lost their group health insurance due to an involuntary termination or reduction in hours. This does not apply to individuals who voluntarily quit their employment.

The benefit applies to workers who lost group health insurance coverage within the last 18 months (on or after November 1, 2019). Subsidies are available to eligible employees and family members for up to six months through September 30, 2021. Employers or insurers will offset the cost by claiming a credit against payroll taxes.

Employers will have to provide notice of a special enrollment period to eligible participants who have not yet elected coverage. The Department of Labor will issue model COBRA notices addressing the subsidy and more guidance is expected.

Conclusion

We will keep a close eye on further guidance issues by the Department of Labor and IRS and provide updates as warranted. If you have questions about any aspect of this new law and its impact on you and your workplace, contact your attorney at Hinckley Allen.

For additional information related to anything contained in this Client Alert, please contact one of the authors listed above, or any member of our Labor & Employment Law Practice Group.

Follow Hinckley Allen on Twitter and LinkedIn for the latest news and updates.