How does the American Rescue Plan Act affect Small Business?
On March 11, 2021, President Joe Biden signed into law the American Rescue Plan Act (ARPA) of 2021 to provide economic relief during the coronavirus pandemic. The $1.9 trillion measure has several provisions of note that directly affect employers.
While the ARPA does not require employers to provide paid leave for employee absences related to COVID-19, it does extend the tax credit allowed for voluntarily extending FFCRA-like leave from March 31, 2021, to September 30, 2021.
The tax credits are also available for these additional qualifying reasons for paid leave:
The employee is obtaining a COVID-19 vaccination.
The employee is recovering from any illness related to receiving the vaccine.
The employee is seeking or waiting for test results or a medical diagnosis for COVID-19, or the employer has requested the employee to obtain the same.
As of April 1, 2021, employers may voluntarily offer another 10 days of paid sick leave to employees and receive a tax credit for doing so.
Employers may now also offer emergency FMLA leave (EFMLA) for all FFCRA-qualifying reasons for leave (i.e., those previously only offered for emergency paid sick leave), including the newly added reasons above, and receive a tax credit. Previously under the FFCRA, EFMLA was only available for leave needed to care for a child whose school was closed or whose caregiver was unavailable due to COVID-19.
The first two weeks of EFMLA may now be paid at 2/3 the regular rate of pay (previously unpaid) and eligible for the tax credit. This raises the maximum tax credit limit for EFMLA from $10,000 to $12,000 per employee.
The tax credit will also now only be eligible to those employers who offer this paid leave in a manner that does not discriminate against those employees who are highly compensated, are full-time status or by an employee's years of service. Leave must be offered uniformly to employees.
The act extends three unemployment programs through September 6, 2021 – Pandemic Emergency Unemployment Compensation (PEUC), the Pandemic Unemployment Assistance (PUA) and the Federal Pandemic Unemployment Compensation (FPUC)/Mixed Earners Unemployment Compensation (MEUC).
PUA and PEUC are continued at the current $300-per-week boost to unemployment benefits, and the MEUC is continued at the current $100-per-week boost.
For those workers who received unemployment compensation in 2020, the first $10,200 is now tax-free for households with less than $150,000 in income.
The Employee Retention Credit
This credit, enacted under the CARES Act, is extended to Dec. 31, 2021. It allows qualifying employers to claim a credit for wages paid to workers they retained on their payroll during the pandemic.
New grants for up to $10 million are available to restaurants and other food and beverage establishments through the Small Business Administration (SBA).
The Paycheck Protection Program is additionally funded with $7 billion.
The Shuttered Venue Operators Grant program.
An additional $15 billion will be available for Economic Injury Disaster Loans through the SBA, with priority funding for employers with less than 10 employees.