The new federal stimulus law known as the American Rescue Plan Act of 2021 has now been passed by Congress, and President Biden is expected to sign it tomorrow, March 12. The Act contains several provisions relating to employment which are worth noting.
COBRA Until now, an employee and covered relatives who lost company-sponsored health insurance coverage could elect to continue that coverage under COBRA. The employee, however, was required to pay the full amount of the premium, including the company’s share. The Act now provides for the federal government to pay 100% of the premium through September, 2021.
UNEMPLOYMENT SUPPLEMENT Earlier stimulus legislation provided for the federal government to pay a $600 weekly supplement for workers receiving unemployment benefits for Covid-related reasons. That amount was later reduced to $300. The new Act provides for an extension of the $300 supplement through September 6. The Act also contains the following provision about the taxation of unemployment benefits: “In the case of any taxable year beginning in 2020, if the adjusted gross income of the taxpayer for such taxable year is less than $150,000, the gross income of such taxpayer shall not include so much of the unemployment compensation received by such taxpayer (or, in the case of a joint return, received by each spouse) as does not exceed $10,200.”
FFCRA PAID LEAVE The new law does not extend the mandatory paid leave requirements of the Families First Coronavirus Response Act (FFCRA), but extends the payroll tax credits tied to the FFCRA leave through September 30, 2021. As of January 1, 2021, the FFCRA paid leave is no longer required, but employers may voluntarily provide such leave and take the tax credit if employees have not already used their entitlement of the FFCRA paid leave.
MINIMUM WAGE The $15 per hour federal minimum wage provision did not survive the Senate, so it is not part of this new legislation. Keep in mind, however, that last year’s Virginia General Assembly enacted legislation raising the minimum wage in Virginia gradually over several years to $15 per hour. The first step increase will be to $9.50 per hour as of May 1, 2021, with the second step to $11.00 per hour effective January 1, 2022. The $15 per hour rate goes into effect on January 1, 2026.
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