Employment Law Trending Now – The American Rescue Plan Act Affords Key Benefits to Employees and Extends Tax Credits and Other Benefits to Employers

04.12.21

On March 11, 2021, President Joe Biden signed into law the American Rescue Plan Act (“ARPA”). The ARPA, a $1.9 trillion Coronavirus relief package, contains several provisions directly impacting employers and employees, including updates to the Families First Coronavirus Response Act (“FFCRA”), the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) and the unemployment insurance programs established by the Coronavirus Air, Relief and Economic Security Act (“CARES Act”). The law became effective on April 1, 2021 and will remain in effect through September 30, 2021. Below are some of the key employment provisions of the new law.

1. Employers May Elect to Provide Paid Leave Benefits under the FFCRA Through September 2021

As employers may recall, from April 2020 through December 2020, the FFCRA generally required private-sector employers with less than 500 employees to extend certain paid leave benefits to employees for various reasons related to the Coronavirus. Employers who provided employees with paid leave for FFCRA-qualifying reasons were eligible for tax credits during that time period as well.

The ARPA extends the benefits and credits afforded by the FFCRA by allowing (not requiring) employers to provide eligible employees with an additional 10 days of paid leave, as well as to claim accompanying tax credits pursuant to the FFCRA through September 30, 2021. Any days of paid leave taken by an employee prior to April 1 will not count toward the new 10-day limit.

The ARPA also amends the FFCRA to further expand upon the qualifying reasons for leave to include employees who need to take time off in order to:

  • Obtain the COVID-19 vaccine;
  • Recover from an injury, disability, illness or condition related to the COVID-19 vaccine; and/or
  • Seek or await the result of a COVID-19 test or diagnosis when an employee has either been exposed to COVID-19 or the employer has requested the test or diagnosis.

Employers who elect to provide FFCRA leave should be mindful of the ARPA’s non-discrimination policy, which prohibits employers from discriminating in favor of highly compensated employees, full-time employees, or in favor of employees based on their tenure. Employers who fail to comply with ARPA’s non-discrimination policy risk forfeiting the applicable tax credit.

Although employers are not required to provide paid leave under the ARPA, some states may require such leave. Employers are encouraged to reference applicable state law on this topic prior to responding to an employee’s request for leave relating to COVID-19.

2. Employees Affected by the Pandemic are Granted a Subsidy for COBRA Coverage

Under the ARPA, employees who are eligible for continued health care coverage under COBRA may remain on their employers’ health plans without cost for up to six months - from April 1 through September 30, 2021.

Subsidies are available to those employees who, from November 1, 2019 onwards, either involuntarily lost their jobs or were forced to work reduced hours and who did not otherwise qualify for Medicare or another group health plan after losing coverage from their employer. Eligible employees (and their qualified beneficiaries) who previously declined COBRA coverage may now retroactively elect to opt-in to obtain COBRA benefits.

Employees who left their employment voluntarily are not eligible for subsidized COBRA coverage. Similarly, employees who qualify for subsidized coverage, but who start a new job with group health insurance, will no longer be eligible for the subsidy.

Employers are required to take immediate action as follows:
  • Employers must pay the relevant COBRA premiums on behalf of any qualifying employee or former employee. The employer will then be reimbursed for the premium through a quarterly payroll tax credit.
  • By May 31, 2021, employers must issue notices to employees and former employees who qualify for continued health care coverage, apprising them of the new COBRA benefits.

Model notices for use by employers, as well as additional guidance from the Department of Labor regarding COBRA benefits under the ARPA, can be found HERE.

3. Unemployment Benefits Established under the CARES Act are Extended through September 6, 2021 and Expanded in Scope

The CARES Act, which was enacted in March 2020, created the following three unemployment insurance programs:
  • Federal Pandemic Unemployment Compensation (“FPUC”), which provided unemployed workers with an additional weekly unemployment supplement to benefits provided by the state (initially $600 between April 5 and July 31, 2020, and then reduced to $300 from August 1, 2020 through March 14, 2021);
  • Pandemic Emergency Unemployment Compensation (“PEUC”), which provided 24 additional weeks of unemployment benefits to unemployed workers who had exhausted their state law unemployment benefits; and
  • Pandemic Unemployment Assistance (“PUA”), which provided unemployment benefits to unemployed workers who were not otherwise eligible for unemployment insurance, such as business owners and independent contractors.

Under the ARPA, unemployed workers may elect to seek benefits under the unemployment benefits programs created by the CARES Act, which were initially set to expire in March 2021, through September 6, 2021.

In addition to extending the deadline for unemployed workers to seek unemployment benefits, the ARPA also expands the scope of unemployment benefits established by the CARES Act by granting individuals receiving any form of PEUC, PUA, or state unemployment benefits, an additional $300 per week, until September 6, 2021.

Extension of these unemployment benefits may pose a challenge to recruitment or hiring efforts, or the ability of an employer to retain employees.

If you have any questions about this Alert, or if you would like assistance in complying with the ARPA, please contact the authors listed below or the Aronberg Goldgehn attorney with whom you work:

Maryam H. Arfeen
312.755.3185
marfeen@agdglaw.com

The above material is intended for general information and promotional purposes and should not be relied on or construed as professional advice. Under the Illinois Rules of Professional Conduct, the above information may be considered advertising material. The transmission of this information is not intended to create, and receipt of it does not create, a lawyer-client relationship.



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