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Employers must prepare for significant changes under President Joe Biden’s American Rescue Plan

Posted by Shivali Anand

June 8, 2021    |     6-minute read (1159 words)

President Joe Biden’s decision to massively ramp up government spending through the $1.9 trillion American Rescue Plan aims to expedite the country’s recovery from the health and economic fallout of the COVID-19 pandemic. 

Among the plan’s provisions are initiatives to contain the pandemic, help families and communities facing economic damage and lay the groundwork for a broad revival. Observers describe it as much bolder than the response to the Great Recession from 2007 to 2009, which they say shows that leaders have learned significant lessons from the failures of past years. 

An overview of the American Rescue Plan as it pertains to employers and employees is below.

  • Helping employers to hire new workers easily by:

Supporting hard-hit restaurants and bars. Restaurants and bars offered employment to nearly 12% of all workers before the COVID-19 pandemic. Through the American Rescue Plan, the Biden-Harris administration launched the Restaurant Revitalization Fund to help restaurants, food trucks, bars and other food and drinks businesses by giving them the flexibility to recruit back employees at a good salary. 

During the initial two days of the program, around 186,200 restaurants, bars and other eligible businesses across all states applied for relief.

The fund allocates $28.6 billion in pandemic assistance grants, offering up to $10 million per business with a limit of $5 million per physical location; funds can be used to cover rent, payroll, utilities and other expenses.

In addition, forgivable loans to help cover payroll and other operating costs were also offered through the Paycheck Protection Program.

Retaining, rehiring workers through the extended and expanded Employee Retention Credit. To help employers hit by COVID-19 rehire and retain workers, President Biden has extended and expanded the Employee Retention Credit or ERC, offering eligible employers with 500 or fewer employees a 70% credit for the first $10,000 in wages per employee per quarter. The refundable, advanceable credit that will cover around $7,000 in wages per quarter or $28,000 per year for each employee.

 Helping employers ramp back up: As businesses scale back up after widespread closures and takeout-only restrictions, many would like to consider bringing workers back on a part-time basis as the economy recovers. As part of the American Rescue Plan, expanded unemployment insurance can offer an alternative for such employers and their returning workers, allowing employees to work part-time while still receiving part of their unemployment benefits. 

Partial unemployment also allows employees to go back to work with a new employer at reduced hours will still receiving some unemployment benefits. This is meant to be an option for people who may not otherwise qualify for short-term compensation because they aren’t returning to their previous jobs.

Clarifying the unemployment insurance program: President Biden affirmed the basic rules of the unemployment insurance benefit to reiterate that any person receiving UI who is offered a suitable job must take it or lose their benefits. Its core purpose is to help workers get back to work. By reaffirming these rules, the administration ensures that the program supports workers while also facilitating employment.

Under all UI programs, including the Pandemic Unemployment Assistance program, workers may not reject a job due to a general, nonspecific concern about COVID-19. According to the PUA program, a worker may receive benefits if the employer certifies weekly that one of the few specific COVID-related reasons specified by Congress is the cause of their unemployment. 

President Biden has also ordered the secretary of labor to work with states to reinstate work search requirements for UI recipients, if health and safety conditions allow, putting in place appropriate work search requirements as the economy continues to rebound, vaccinations increase and the pandemic has been controlled.

  • Helps families with children by expanding the Child Tax Credit

The American Rescue Plan aims to slash child poverty in half by providing families $3,600 per every child under age six years and $3,000 per child age 6-17 years. The lowest-income parents receive the benefits even if they don't owe taxes, and it will be delivered monthly beginning July 2021. The benefit amount is slowly reduced for couples earning over $150,000 and for individuals earning over $75,000 annually. 

  • Increases access to health insurance

Increased Affordable Care Act and COBRA subsidies:  The American Rescue Plan offers 100% COBRA premium coverage for qualified individuals from April 1, 2021, through September 30, 2021. 

Businesses can be compensated for the premium subsidy via a payroll tax credit, for which there is no income cap. Also, the ARP extends the COBRA election period and offers a second chance to elect COBRA continuation coverage for those qualified individuals who otherwise would be covered but either never elected COBRA coverage or discontinued their COBRA coverage earlier. 

  • Implements emergency paid sick leave

The American Rescue Plan expands the qualifying reasons for emergency paid sick leave and resets the balance of EPSL that employers can voluntarily offer to eligible employees to two weeks as of April 1, 2021. In other words, if an employee has exhausted the original two weeks before April 1, 2021, employers have the option to provide that employee an additional two weeks of EPSL for use between April 1 and September 30, 2021. 

Employees who have not exhausted the original two weeks of EPSL by April 1, 2021, will not carry over such leave. The EPSL is available for up to two weeks when an employee is unable to work or telework due to the following reasons:

  • Subject to state, federal or local quarantine or isolation order related to COVID-19.
  • Advised by a health care professional to self-quarantine due to concerns related to COVID-19.
  • Experiencing COVID-19 symptoms and is seeking a medical diagnosis.
  • Caring for a person who is subject to a quarantine or isolation order or advised to quarantine due to COVID-19 by a health care provider.
  • Caring for a child (under the age of 18) because schools or places of childcare have closed.
  • Experiencing other conditions substantially similar to COVID-19 as specified by the U.S. Department of Health and Human Services.
  • Seeking or awaiting the results of a test for COVID-19 (and the employee has been exposed to COVID-19) or the employee's employer has requested such test or diagnosis.
  • Obtaining the COVID-19 vaccination.
  • Recovering from the COVID-19 vaccination.
  • Expands the Emergency Family and Medical Leave Expansion Act

The ARP has increased the qualifying reasons for emergency family and medical leave to include the original EFMLA qualifying reasons and all of the EPSL qualifying reasons. It also removes the provision that the first two weeks of EFMLA are unpaid. So, employers may now voluntarily provide up to 12 weeks of paid EFMLA leave in exchange for a tax credit. It means that employees who may have previously exhausted their 10-week EFMLA entitlement may be provided an additional two weeks of leave at their employer's discretion. 

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