What Do Employers Need to Know About the $1.9 Trillion American Rescue Plan?

The new stimulus extends paid leave tax credits, unemployment benefits, and funds business loan programs

American Rescue Plan Graphis

President Joe Biden has signed a stimulus bill that contains nearly two trillion dollars in initiatives aimed at providing additional relief to the country. Unlike the stimulus packages passed last spring and in December of 2020, the American Rescue Plan (ARP) does not have many new regulations directly targeted at employers, but it does extend certain programs and provide for additional unemployment relief and business loan programs. What follows is a summary of the parts of the ARP that are most relevant to employers.

Extension of Paid Time Off for COVID-19 Related Reasons

Up to two weeks of mandatory paid leave to employees for certain COVID-19 related conditions including quarantine and childcare under the Families First Coronavirus Response Act (FFCRA) was originally set to expire at the end of 2020. In December it was extended through March 31, 2021 on a voluntary basis. Initial word from the Biden administration was that they were seeking to both extend the program and once again make it a mandatory program. In the final version of the ARP there is an extension through October 1, 2021, but still on a voluntary basis.

Unless an employer is not subject to the FFCRA, HR One encourages clients to continue to provide the leave on the voluntary basis because it satisfies New York’s COVID-19 paid leave provisions with the added incentive of tax credits for employers.

Business Loan Programs

The ARP injects $15 billion into an Emergency Injury Disaster Loan (EIDL) program administered by the Small Business Administration for businesses. EIDL funds provide low interest long term capital for normal operating expenses, including payroll, rent, and utilities, for those organizations severely impacted by COVID-19. Some of the funds are being prioritized for businesses with fewer than 10 employees.

There is an additional $7 billion going towards the Paycheck Protection Program (PPP) for second round loans.

Finally, there is a new $25 billion grant program targeted towards restaurants and bars.

For specific questions regarding eligibility and the terms of these programs, employers need to contact lenders. For our payroll clients we can provide reports that may be required to secure a grant or loan.

Unemployment Benefits

Originally set to expire on March 14, 2021, the ARP extends the temporary relief programs for the unemployed through September 6, 2021. This includes the Pandemic Emergency Unemployment Compensation (PEUC) and the Pandemic Unemployment Assistance (PUA). PEUC provides extended eligibility for those who ran out of state eligibility. PUA allows individuals who were not traditionally eligible for unemployment benefits, such as the self-employed, gig workers, and independent contractors, to remain eligible to collect benefits. The ARP will also extend the weekly $300 payments to individuals who are collecting benefits through September 6.

The ARP also provides subsidies for COBRA insurance coverage for individuals to maintain their employer-sponsored insurance without paying any portion of the premiums through the end of September 2021. There are also subsidies available for those who seek coverage in the individual marketplace.

Two factors have led to a spike in unemployment-related fraud; State unemployment agencies were not prepared for the overflow of claims they received in the past year and individuals have added financial incentives to commit fraud due to the increased benefits. As HR One previously reported, employers should be on the look-out for potentially fraudulent claims that could have an impact on their unemployment insurance accounts.

What should employers continue to do?

If you have questions about the COVID-19 paid leave provisions, possible unemployment fraud, or payroll reports for loan applications, contact HR One. Even as restrictions ease, hospitalizations and deaths are down, COVID-19 will continue to be a major disruptive force for many in the coming weeks. HR One is here to help.