The American Rescue Plan bill has undergone several revisions and numerous initial proposals have fallen by the wayside; however, there is important news for employers, including extension and expansion of the voluntary FFCRA program tax credits, unemployment support and many other business impacts.
Here is a summary of the final bill to be signed by President Biden, with a detailed summary of the leave and unemployment provisions:
- Pandemic Unemployment Assistance program and Pandemic Emergency Unemployment Compensation of $300 per week are both extended through September 6th.
- The first $10,200 in unemployment received in 2020 will not be taxed for household incomes under $150,000.
FFCRA Tax Credits
This has been an area of concern for employers who are struggling with categorizing time off for COVID-19-related issues since the expiration of the mandatory FFCRA program in December of last year.
A previous law provided that the program could be continued voluntarily by employers who were originally eligible for the tax credits (generally 500 employees or fewer) until the end of March.
There are still ongoing discussions in Washington regarding expanded leave; however, for now, the new law will:
- Extend FFCRA’s EPSL (10 days) leave program tax credits to certain self-employed individuals.
- Extend FFCRA refundable tax credits until September 30th for eligible employers (generally 500 employees or fewer) who choose to provide FFCRA leave.
- Permit that tax credits are available under the EFML for any EPSL reason at 2/3 pay and that both EFML and EPSL will qualify for tax credits for the following additional reasons (100% pay for EPSL and 2/3 for EFML):
- COVID-19 vaccination or recovery from any illness, disability, condition or injury related to the vaccination.
- Awaiting results of a diagnostic test or medical diagnosis for COVID-19. This includes employer requested tests due to exposure.
- Eliminate the two weeks of unpaid EFML, making the full 12 weeks eligible for tax credits at 2/3 pay (changing the cumulative per-employee cap from $10,000 to $12,000). This means that there is the potential of 14 weeks of pay between the EFML and the EPSL programs.
- Add non-discrimination rules not allowing for tax credits when employers provide leave in a manner that discriminates in favor of highly compensated employees or full-time employees, or discriminates against employees due to their tenure. (This language indicates that employers should provide leave consistently if they choose to continue programs voluntarily, now that the DOL is no longer enforcing this as a mandatory program.)
- Allow employers to offer 10 days of EPSL (as of April 1st) whether employees have used the previous EPSL or not. Employers may choose (or not) to permit an additional 10 days for those who have already used their time previously and will receive tax credits in the case that they choose to provide it.
- Most previous requirements remain, including no “double dipping” for forgiven PPP loans or other similar programs included in this or past bills.
- The Department of Labor has been directed to issue clarifying guidance to implement these new provisions, so keep an eye out for additional updates.
Other areas the bill addresses:
Small Business Support
- $25 billion for a new Small Business Administration Program to support restaurants and similar establishments through grants for payroll and other expenses of up to $10 million.
- $7 billion for the Paycheck Protection Program, administered by the SBA, which provides small businesses with forgivable loans and expands PPP eligibility to some nonprofit organizations.
- $15 billion to the Economic Injury Disaster Loan (EIDL) Advance program (also administered by the SBA) to support businesses who have been impacted by the pandemic, with a focus on smaller employers.
- Shuttered Venue Operators Grant (SVOG) program for museum, arts and entertainment programs impacted by the pandemic.
- $24 billion for childcare facilities and assistance to childcare workers making less than $12 per hour.
Business Tax Credit and COBRA subsidy
- The employee retention credit (ERC) is extended through December 31st and has been expanded to some previously non-qualifying businesses.
- 100% COBRA premium subsidy (April 1 through September) for employees who are laid off or have reduced hours. There is also a special enrollment period for any such employee who either (1) did not elect COBRA but who otherwise would have been eligible for the subsidy or (2) elected COBRA but discontinued coverage before April 1. Coverage for these individuals will be retroactive to April 1. Good details here – employers must provide notice of this special enrollment period. (This is an employer subsidy resulting in no payment for the coverage by the employee, which will be able to claim the subsidy as a tax credit.)
- The dependent care flexible spending account (“FSA”) limit is increased from $5,000 to $10,500 for the 2021 tax year (employers may adopt if they choose, if they (1) make the change retroactive to the beginning of the plan year and (2) amend their plan by the last day of the 2021 plan year.
Butch Lewis Emergency Pension Relief Act of 2021
- This portion of the bill is complex and should be reviewed by those with multiemployer pension plans. Those plans in a “critical and declining” status will have benefits paid by U.S. Treasury through 2051. Retirees required to receive benefit cutbacks previously will be repaid and have benefits restored.
Individual Stimulus Payments
$1,400 stimulus checks (this is in addition to the $600 payments in the December bill). Individuals earning more than $80,000 and couples earning more than $160,000 will not be eligible, and they are phased out starting at $75,000/$150,000.
Individual Taxes and Medical Insurance Supports
- The fully refundable child tax credit increases to $3,000 for ages 6 – 17 and to $3,600 for those under 6. This program is for earners up to $75,000 (single) and $150,000 (joint filing). The tax credit is refundable which supports low-income parents and can be take in monthly payments.
- Earned income credit for lower-income taxpayers has also been increased significantly, with the age requirement lowered to 19.
- 100% COBRA premium subsidy (see Business Tax Credit section).
- ACA subsidies expanded to those with premiums exceeding 8.5% of income (currently this is instead an income limit of $51,000).
- See earlier information in this alert related to help to childcare workers making less than $12 per hour.
- See adjustment to the Dependent Care FSA limit in Business Tax Credit section.
Among other measures not as closely related to employment law is an additional $15 Billion for vaccine distribution and administration.
For questions about the employment law provisions, call Catapult.