The American Rescue Plan Act

Posted on Published

The American Rescue Plan Act (ARPA), which is the latest bill to address the ongoing economic impacts of COVID-19, has been signed into law. Most aspects of the law do not directly affect the HR function, but two of those that do—optional extension of sick and family leave and establishment of COBRA subsidies—are outlined below.

OPTIONAL EXTENSION OF SICK AND FAMILY LEAVES

Part of ARPA is an extension of the current tax credit scheme for Emergency Paid Sick Leave (EPSL) and Emergency Family and Medical Leave (EFMLA) under the Families First Coronavirus Response Act (FFCRA). The FFCRA required many employers to provide EPSL and EFMLA in 2020, but became optional when it was previously extended to cover January 1 through March 31, 2021.

The new extension under ARPA takes effect April 1, 2021, and lasts through September 30, 2021. Like the current version, it remains optional. In addition, tax credits are available but only to employers with fewer than 500 employees and up to certain caps. To receive the tax credit, employers are required to follow the original provisions of the FFCRA. For example, they can’t deny EPSL or EFMLA to an employee if they’re otherwise eligible, can’t terminate them for taking EPSL or EFMLA, and have to continue their health insurance during these leaves.

Emergency Paid Sick Leave (EPSL) Changes

Here are the key changes to EPSL, in effect from April 1 through September 30, 2021:

  • Employees can take EPSL to get the COVID vaccine and to recover from any related side effects.
  • Employees can take EPSL when seeking or waiting for a COVID-19 diagnosis or test result if they’ve been exposed to COVID-19 or if the employer has asked them to get a diagnosis or test. (Previously, time spent waiting on test results was not necessarily covered, which seemed like an oversight.)
  • Employees will be eligible for a new bank of leave on April 1. Full-time employees are entitled to 80 hours while part-time employees are entitled to a prorated amount. Unused hours from before April 1 will not carry over.
  • Employers can’t provide EPSL in a manner that favors highly compensated employees or full-time employees or that discriminates based on how long employees have worked for the employer. (Be aware that any inconsistencies in the granting of leave could potentially lead to a discrimination claim.)

Emergency Family and Medical Leave (EFMLA) Changes

Here are the key changes to EFMLA, in effect from April 1 through September 30, 2021:

  • EFMLA can now be used for any EPSL reason, in addition to the original childcare reasons. This includes the two new EPSL reasons noted above.
  • The 10-day unpaid waiting period has been eliminated.
  • The cap on the reimbursable tax credit for EFMLA has been increased to $12,000 (from $10,000). This applies to all EFMLA taken by an employee, beginning April 1, 2020. This change accounts for the additional 10 days of paid time off—the daily cap of $200 remains the same.
  • The law isn’t clear as to whether employees are entitled to a new 12-week bank of EFMLA. We anticipate that the IRS, DOL, or both will provide guidance on this question soon. It is possible that an employee will be entitled to additional unpaid protected time off, even if they already received the maximum reimbursable amount during previous EFMLA leave(s). We will update our materials if and when new information is available.
  • Employers can’t provide EFMLA in a manner that favors highly compensated employees or full-time employees or that is based on how long employees have worked for the employer. (Again, be aware that any inconsistencies in the granting of leave could potentially lead to a discrimination claim.)

Reasons for Using EPSL and EFMLA

Starting on April 1, employees can take EPSL or EFMLA for the same set of reasons, which is a useful simplification. The following are acceptable reasons for taking these leaves:

  1. When quarantined or isolated subject to federal, state, or local quarantine or isolation order
  2. When advised by a health care provider to self-quarantine because of COVID-19
  3. When the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis; seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 because they have been exposed or because their employer has requested the test or diagnosis; or obtaining a COVID-19 vaccination or recovering from any injury, disability, illness, or condition related to the vaccination
  4. When caring for another person who is isolating or quarantining on government or doctor’s orders
  5. When caring for a child whose school or place of care is closed due to COVID-19

Employees and employers will—in most cases—want to exhaust EPSL first, since it has a higher tax credit, except when used to care for others.

Tax Credit Review

The tax credits available between April 1 and September 30 are the same as under the original FFCRA, except for the increased aggregate cap for EFMLA. Tax credits are available as described below, regardless of how much EPSL or EFMLA an employee used prior to April 1.

  • The credit available for EPSL when used for reasons 1, 2, or 3 (self-care) is up to 100% of an employee’s regular pay, with a limit of $511 per day.
  • The credit available for EPSL when used for reasons 4 or 5 (care for another) is up to 2/3 of an employee’s regular rate of pay, with a limit of $200 per day.
  • The credit available for EFMLA for any reason is up to 2/3 of an employee’s regular pay, with a limit of $200 per day and a cap of $12,000 per employee.

Employers can also claim a credit for their share of Medicare tax on the employee’s wages and the cost of maintaining the employee’s health insurance (qualified health plan expenses) during their absence.

COBRA SUBSIDIES

Another important aspect of the law employers should understand is the creation of COBRA subsidies.

Employees and families enrolled in the employer’s group health plans may lose coverage if the employee’s work hours are reduced or employment is terminated. They can elect to continue coverage under COBRA, but the high premium cost can make it difficult to afford this coverage.

ARPA provides a 100% COBRA subsidy if the employee’s work reduction or termination was involuntary. The subsidy applies for up to six months of coverage from April 2021 through September 2021 (unless the individual’s maximum COBRA period expires earlier).

For group plans subject to the federal COBRA rules, the employer will be required to pay the COBRA premium but then will be reimbursed through a refundable payroll tax credit.

Employers with fewer than 20 workers usually are exempt from the federal COBRA rules, but their group medical insurance plans may be subject to a state’s mini-COBRA law. In that case, it appears the subsidy will be administered by the carrier. The carrier will pay the premium and then be reimbursed by the government.

Employers will need to work with their group health plan carriers and vendors on how to administer the new subsidy provision. Although it takes effect April 1, 2021, employees who were terminated earlier but are still in their COBRA election window also are included. Federal guidance is expected to be released by April 10, including model notices that plans can tailor for their use.

Note that the COBRA subsidy doesn’t apply during FFCRA leaves because employees are entitled to maintain their health insurance during those leaves on the same terms as though they had continued to work.

Department of Labor Revises FFCRA Rules

Posted on Published

In response to a court ruling in early August that invalidated certain regulations by the U.S. Department of Labor (DOL) related to leave under the Families First Coronavirus Response Act (FFCRA), the DOL has released revised regulations, which took effect September 16. The changes, or lack of changes, are outlined below. 

Definition of Health Care Provider

The definition of health care provider, for purposes of whom an employer can deny leave to, is revised to include physicians and others who make medical diagnoses (the same as under traditional FMLA); employees who provide diagnostic services, preventive services, treatment services, or other services necessary for patient care; and employees who provide services that, if not provided, would adversely affect patient care.

This definition is narrower than in the previous rule. For example, nurse assistants and laboratory technicians who process test results are considered health care providers, but IT workers at a hospital and medical billers are not.

Documentation Prior to Leave

Employers may require that employees provide documentation to support their need for leave as soon as practicable.

The former rule said that employers could require documentation before the leave started, which isn’t always practical.

Leave During a Furlough or Business Closure

Emergency Paid Sick Leave (EPSL) and Emergency FMLA (EFMLA) are still available only if an employer has work available for them during the time that they need the leave.

This is the same rule as before; the DOL just explained its reasoning.

Approval for Intermittent Leave for Childcare

Employees still must get approval from their employer to use intermittent leave. However, the DOL has made it clear that leave is not considered intermittent if a school or daycare is closed on certain days or half days. For example, if the employee’s child’s school has a hybrid schedule with in-person classes on Tuesdays and Thursdays, but remote learning on Mondays, Wednesdays, and Fridays, then the employee would need leave on Mondays, Wednesdays, and Fridays, with each day being a separate leave event. In other words, the employee is not requesting intermittent leave in this scenario, so they do not need their employer’s consent.

This is the same rule as before; the DOL just explained its reasoning and clarified some aspects of the rule.

Article content provided by My HR Support Center

FFCRA Leave – Significant Rule Changes

Posted on Published

A federal court in New York recently struck down four federal Department of Labor rules related to the leaves provided by the Families First Coronavirus Response Act (FFCRA). As a result, certain aspects of the FFCRA are now more favorable to employees. Unfortunately, it’s not clear if the ruling applies nationwide or only in the Southern District of New York, where the court is located. Until there is further activity in the case—which may clarify whether the rules remain intact throughout the rest of the country—we recommend that employers err on the side of caution when administering FFCRA leaves and assume these particular rules no longer apply.

What is clear is that these four rules definitely do not apply to the counties of Bronx, Dutchess, New York, Orange, Putnam, Rockland, Sullivan, and Westchester (i.e., the Southern District of New York).

Here are the rules that the court invalidated:

The requirement that work be available for an employee to use leave

  1. DOL Rule: The DOL said that for an employee to use Emergency Paid Sick Leave (EPSL) or Emergency Family Medical Leave (EFMLA, aka EFMLEA), the employer had to have work available for them during the time they needed leave. For instance, if an employee was furloughed while sick with COVID-19, they would not be eligible for EPSL.
  2. The Court’s Ruling: Availability of work is irrelevant. If an employee is still employed, whether on the schedule or not, they should be allowed to use FFCRA leave for qualifying reasons.

The requirement that employers agree to intermittent leave

  1. DOL Rule: Employees must get approval from their employer to use intermittent leave to care for their children when their school or place of care is unavailable because of COVID-19.
  2. The Court’s Ruling: If an employee needs intermittent leave (partial weeks or partial days off) to care for their child whose school or place of care is unavailable because of COVID-19, the employer must allow it.

The requirement that employees provide documentation before taking leave

  1. DOL Rule: Employers could require that employees provide certain documentation before being allowed to take FFCRA leave or before designating the leave as EPSL or EFMLA.
  2. The Court’s Ruling: Employers can still require documentation (which is necessary to get their tax credit), but they can’t prevent an employee from starting leave until the documentation is received. The law clearly states that an employee must provide notice “as is practicable” when taking EFMLA and after the first workday of leave when taking EPSL.

The definition of health care provider, for the purpose of exemption from leave

  1. DOL Rule: The DOL defined health care providers very broadly, to include anyone who works for a healthcare entity and many who contract with one. (The rule was so broad that a custodian working at a drugstore or an English professor at a university with a medical school could be exempt.)
  2. The Court’s Ruling: The definition is too broad. However, the court did not provide a new definition. We recommend that employers apply the exemption only to those employees capable of directly providing healthcare services.

We will be watching closely for activity in this case and will let employers know if and when things change or become clearer. 

Article content provided by My HR Support Center

Contempo COVID-19 Employer Update

Posted on Published

The IRS and U.S. Department of Labor announced their plans for new Federally mandated paid sick leave with Families First Coronavirus Response Act (FFCRA).
Employer items to note include:

  • Employees directly affected by COVID-19 illness are entitled to up to 2 weeks of fully paid Emergency Paid Sick Leave.
  • Employees can also receive benefits under the Emergency Family Medical Leave Expansion Act. This will provide both job-protected leave and 2/3 replacement pay during a period of absence from 3 to 12 weeks for absences related to the care of a child during school shut-downs.
  • Both of these new leaves will be paid by employers and funded by the US government via the retention and use of payroll tax funds employers would otherwise pay to the IRS in the form of 941 payroll tax deposits. If those amounts are insufficient to cover the cost of the new paid leave, employers can seek an “expedited advance” from the IRS by submitting a “streamlined claim form” that will be released shortly.
  • The Department of Labor and the IRS will be providing additional details and guidance on the specifics and the implementation of the FFCRA on March 25th.
  • The Department of Labor will also release a new required workplace poster outlining these new employee rights under the FFCRA.

It may be hard for business owners affected by COVID-19 business slowdowns to imagine how they can bear additional effort and expense. We encourage anyone with these concerns to read the information in the web links below carefully:

We encourage all Contempo HCM clients to visit our online HR Support Center for additional tools and resources related to COVID-19. We are continually updating our HR Support Center as new information and guidance becomes available. You can learn more about the details of these leaves (who is covered, what it’s for, duration, etc.) on the HR Support Center by searching for “FFCRA.”