American Rescue Plan Act of 2021 Passes House Contains Several Significant Employment Law Changes
March 10, 2021 saw the passage of the American Rescue Plan Act of 2021 (ARPA) in the House of Representatives. This law is filled with new spending and initiatives surrounding COVID-19. It also addresses many important areas of employment law. It will be signed by the President soon, so it will become law in a matter of days. Key updates are as follows:
Employee Retention Credit Expanded Until the End of the Year.
During the height of the pandemic in 2020, the federal government had made several attempts to keep citizens employed amid rampant business closures. One such attempt was a program called the Employee Retention Credit.
As a reminder, the Employee Retention Credit is a program created under the IRS where an employer can recoup wages paid to employees during a business suspension as tax credits. For more information, please see the official IRS Article.
The ARPA expands this program to December 31, 2021 and includes businesses previously not eligible for this program, such as smaller businesses (less than $1 million in gross receipts established during the pandemic) and businesses that still continue to lose 90% or more of their business from the same calendar quarter in 2019.
Paycheck Protection Program (PPP) Loans Expanded and Extended.
ARPA has also made expansions and extensions to the PPP. The program will be infused with $7.25 billion in extra capital to assist businesses still struggling.
ARPA has expanded this program to include other businesses such as charitable organizations (at less than 500 employees) and certain non-profit organizations.
Other new aspects of ARPA relevant to employment law include the following:
- A “Restaurant Revitalization Fund” providing relief to restaurants (as well as other food-oriented service industries like bars) needing money for operational and staff costs. All funds used by the business given through this program are tax-deductible.
- An extension of the payroll tax credits under the Families First Coronavirus Response Act (FFCRA). Tax credits given to employers for providing sick/family leaved to employees under the FFCRA are extended to September 30, 2021. It also increases the wage cap to $12,000 and resets the 10-day limit on emergency sick leave credits.