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The American Rescue Plan Act of 2021: Key Takeaways for Employers

APRIL 1, 2021

As Michelman & Robinson reported last month, President Biden signed the American Rescue Plan Act of 2021 (ARPA), the $1.9 trillion COVID-19 relief bill. ARPA goes into effect today (April 1) and will expire on September 30, 2021.

In many respects, the ARPA is viewed as an extension and expansion of the Families First Coronavirus Response Act, which required certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. Of note, the FFCRA had expired on December 31, 2020 and was extended once (in part) through March 31 by way of the Consolidated Appropriations Act of 2021.

All that being said, below are some of the key takeaway points regarding the ARPA that employers should be aware of:

Ways the ARPA Expands Coverage of the FFCRA

  • Covered Employers: Like in the FFCRA, an employer is covered under the ARPA if it employs fewer than 500 employees nationwide.
  • Employers are not required to provide leave under the ARPA but may provide it voluntarily and qualify for a tax credit.
  • The ARPA expands FFCRA coverage by including more qualifying reasons for employees to receive EPSL (Emergency Paid Sick Leave) or E-FML (expanded Family and Medical Leave).
    • In addition to the qualifiers under the FFCRA, the ARPA extends qualifying reasons to include:
    1. Seeking or awaiting the results of a COVID-19 diagnosis;
    2. Obtaining a COVID-19 immunization; and
    3. Recovering from any injury, disability, illness, or condition related to a COVID-19 immunization.
  • Under the ARPA, employees may now use E-FML for the same qualifying reasons as EPSL, including the above-mentioned newly added qualifying leave expansions. These reasons are:
    1. Employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
    2. Employee has been advised by a health care provider to self-quarantine due to COVID-19 concerns;
    3. Employee is seeking a medical diagnosis if experiencing coronavirus symptoms;
    4. Employee acts as a caregiver for someone who is subject to a federal, state or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
    5. Employee acts as a caregiver for a child if a school or daycare closed or if the childcare provider is not available, due to coronavirus precautions; or
    6. Employee is experiencing other conditions similar to COVID-19, as identified by the Secretary of Health and Human Services.
  • Notably, ARPA expands the qualifying reasons for E-FML to include all the reasons listed above, not just qualifying reasons related to childcare.
  • Enhanced E-FML: E-FML was originally provided for a total of 12 weeks, with the first two weeks of leave unpaid. The ARPA, however, allows employers to voluntarily offer E-FML as a paid benefit for the full 12 weeks. The amount of paid leave wages an employer may claim a tax credit for also increased from $10,000 to $12,000.
  • Resetting Emergency Paid Sick Leave: Employees’ new allotment of 80 EPSL hours resets on April 1, 2021. Thus, where an employer had continued to provide FFCRA coverage to its employees voluntarily, and those employees had exhausted their EPSL, they become eligible again with a new 80-hour bank after April 1, 2021 (in other words, there is no off-set by prior EPSL). However, unused leave from before March 31, 2021 does not roll over into the new period.   
  • Additional Non-Discrimination Rules: Employers who choose to provide FFCRA leave are prohibited from discriminating in favor of highly compensated employees, full-time employees, or on the basis of employment tenure. As otherwise stated, the benefits should be provided to all employees.

Ways ARPA Merely Extends Current FFCRA Terms

  • Employers with fewer than 500 employees may continue receiving tax credits for voluntarily offering employees paid leave under the Families First Coronavirus Response Act (FFCRA).
    • Similar to the Consolidated Appropriations Act of 2021, ARPA allows employers to receive tax credits until September 30, 2021, if they choose to voluntarily continue providing EPSL and E-FML.
    • Employers will be reimbursed through tax credits against their quarterly payroll taxes for the costs of the subsidized coverage during the six-month subsidy period.
  • ARPA Extends Unemployment Insurance Benefits
    • ARPA also extends the Federal Pandemic Unemployment Compensation, Pandemic Emergency Unemployment Compensation, and Pandemic Unemployment Assistance benefits that were available under the CARES Act and the December 2020 Consolidated Appropriations Act, both of which were set to expire after March 14, 2021, through September 6, 2021.

Key Takeaways for Employers

  • While ARPA extends the period during which tax credits are available to eligible employers and expands qualifying reasons to receive paid COVID-19-related leave, providing FFCRA leave benefits to employees remains optional and the types of covered employers has not changed.
  • However, states and local jurisdictions may have enacted their own COVID-19 leave mandates that continue to apply (see California’s recently passed SB 95). Employers should evaluate and comply with any applicable state or local law that may require paid leave.
  • Qualifying employers who decide to voluntarily continue (or start) providing FFCRA leave to employees should ensure that leave is offered to all employees. ARPA dictates that FFCRA leave must not be restricted to highly compensated employees, full-time employees or tenured employees.
  • Employers should also update their FFCRA leave forms and policies to ensure continued compliance and satisfaction of the documentation requirements.
  • Employers should continue to look for published guidance and/or updated FAQs from the Department of Labor.

As always, the employment lawyers at M&R are available should you need any assistance in interpreting the effect of ARPA on your paid leave practices.

We are working diligently to keep our clients up to date on coronavirus-related developments. Nevertheless, these developments are changing daily and, in some cases even hourly, so it is important that you make sure you are dealing with the most current information. That being said, this alert is not offered, and should not be relied on, as legal advice. You should consult an attorney for guidance and counsel regarding any specific concern or situation.