|On March 11, 2021, Congress passed the American Rescue Plan Act of 2021 (ARPA) which grants relief to businesses and individuals to combat the impact of the COVID-19 pandemic.
One benefit that ARPA provides is premium subsidies for health insurance continuation under the Consolidated Omnibus Budget Reconciliation Act (COBRA). This benefit will permit unemployed individuals (and their spouses and dependent children), who have been subject to an involuntary termination or reduction of hours, to continue employer-sponsored health insurance coverage after losing employment without having to contribute towards any portion of their insurance premiums from April 1, 2021 to September 30, 2021. Employees who voluntarily terminated their employment or are using COBRA based upon another qualifying event are not eligible for this subsidy. Employers will receive tax credits equal to the premium amounts paid in the same manner employers recovered mandatory paid leave costs under the Families First Coronavirus Response Act. Employers must provide written notice to eligible individuals, and COBRA plans must share information regarding the subsidy. These notices will need to be distributed within 60 days after April 1, 2021. Individuals must be notified of their specific enrollment window and whether their subsidy will end before September 30, 2021. Individuals who previously experienced an involuntary termination or reduction in hours, but did not elect COBRA, or those who elected and subsequently dropped COBRA coverage and are still within their COBRA maximum coverage period, must be given the opportunity to elect COBRA to take advantage of the subsidy available under ARPA. An individual may not be eligible for more than the COBRA maximum coverage period measured from the date of the original qualifying event. The subsidy ends when an individual becomes eligible for coverage under another group health plan or Medicare. The individual must inform their former employer that they are no longer eligible for subsidized COBRA coverage under ARPA. Any individual who fails to update their former employer about a change in eligibility is subject to a $250 fine (and up to 110% of the full subsidy amount if the failure to notify is determined to be deliberate).
For 2021 only, ARPA increases the amount which may be elected tax-free through a §129 Dependent Care Assistance Program (DCAP) from $5,000 to $10,500 (or from $2,500 to $5,250 for individuals who are married but filing separately). Employers have the option, but are not required, to increase the election amount on plans they sponsor. Employers will need to amend their DCAP plan by the end of the 2021 plan year to allow for this increased amount. It is unclear whether amounts from a 2020 carryover or grace period would count toward the total 2021 amount that may be reimbursed on a tax-favored basis.
Effective March 29, 2021, California passed SB 95 which provides additional COVID-19 related employee benefits for the period from January 1, 2021 to September 30, 2021. Previously, California granted supplemental sick leave pursuant to AB 1867. SB 95 contains similar provisions to California’s 2020 Supplemental Paid Sick Leave statute, which expired on December 31, 2020. SB 95, however, applies to all employers with more than 25 employees, provides additional reasons for leave, and may require employers to compensate employees for sick leave taken between January 1, 2021 and March 29, 2021. According to the FAQs on the Labor Commissioner’s website, “covered employees who took qualifying leave can request payment for that leave if it was not paid by the employer.” If the employer paid the employee for that qualified time off after January 1, the employer may retroactively count the hours of the other paid leave toward the total number of hours required under the statute. A covered full time employee is entitled to 80 hours of COVID-19 supplemental paid sick leave and part-time employees receive leave based on their average hours worked. The total number of hours of COVID-19 supplemental paid sick leave to which a covered employee is entitled to is in addition to any paid sick leave available under existing California law. The hours provided under this statute must be above and beyond those already required by California law, meaning sick leave already required by California law does not qualify. Similarly, COVID-related sick leave provided pursuant to 2020 Supplemental Paid Sick Leave will not count toward the 80-hour requirement. Employers are not required to pay more than $511 per day and $5,110 in the aggregate to a covered employee under the new statute.
SB 95 expands the reasons for supplemental sick leave: 1) the employee is subject to a quarantine or isolation period due to COVID-19 based on an order or guidelines from federal, state, or local agencies (if subject to mandatory quarantine, the employee must be permitted to use COVID-19 paid sick leave for the minimum quarantine period mandated); 2) the employee has been advised to self-isolate by a healthcare provider due to COVID-19 concerns; 3) the employee is attending an appointment to receive a COVID-19 vaccine; 4) the employee is experiencing symptoms related to receiving a COVID-19 vaccine that prevent the employee from working or teleworking; 5) the employee is experiencing COVID-19 symptoms and seeking a medical diagnosis; 6) the employee is caring for a family member who is subject to a mandatory quarantine or isolation order or has been advised to quarantine or isolate by a healthcare provider; or 7) the employee is caring for a family member whose school or place of care is closed or otherwise unavailable because of COVID-19. An employer cannot deny supplemental sick leave solely for lack of medical certification, but can ask for documentation if the employer has other information the employee is not using the leave for a valid purpose.
Employers in California are required to provide itemized wage statements, which must include how many hours of sick leave the employee has available. The FAQs require that SB 95 sick leave be a separate line item on employees’ wage statements. Employers should update wage statements immediately to comply.
SB 95 does not provide for any subsidies or tax credits to the employer to offset the cost of the additional sick leave.
We are here to help with any questions or issues you face as an employer, either due to COVID-19 or any facet of your business. Please contact JoLynn Scharrer at firstname.lastname@example.org to discuss how our Employment Law Group can help.
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