Employment Law Updates: April 2021

Three Federal, along with D.C., and ten State Law Updates have been issued this month. Our HR Advisors are versed and ready to answer your toughest HR questions to help your company through working remotely, coming back to work and all year long.

Federal Labor Law Updates for April 2021

Employer Tax Credits, American Rescue Plan, and Paid Leave for Employees to Get Vaccinated

On April 21, 2021, the Internal Revenue Service (IRS) released a fact sheet about the American Rescue Plan Act of 2021 (ARP), employers that are eligible for tax credits for the paid leave granted to employees for COVID-19 vaccinations, and how to claim them. The ARP allows small and midsize employers to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations.

The ARP tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through September 30, 2021.

Tax Credits and Paid Sick and Family Leave

Eligible employers are entitled to tax credits for wages paid for leave taken by employees who are not able to work or telework due to reasons related to COVID-19, including leave taken to receive COVID–19 vaccinations or to recover from any injury, disability, illness or condition related to the vaccinations. These tax credits are available for wages paid for leave from April 1, 2021, through September 30, 2021.

Tax Credit Amount and Calculation

The paid leave credits under the ARP are tax credits against the employer’s share of the Medicare tax. The tax credits are refundable, which means that the employer is entitled to payment of the full amount of the credits if it exceeds the employer’s share of the Medicare tax.

The tax credit for paid sick leave wages is equal to the sick leave wages paid for COVID-19 related reasons for up to two weeks (80 hours), limited to $511 per day and $5,110 in the aggregate, at 100 percent of the employee’s regular rate of pay. The tax credit for paid family leave wages is equal to the family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at 2/3rds of the employee’s regular rate of pay.

The amount of these tax credits is increased by allocable health plan expenses and contributions for certain collectively bargained benefits, as well as the employer’s share of social security and Medicare taxes paid on the wages (up to the respective daily and total caps).

Claiming the Credit

Eligible employers may claim tax credits for sick and family leave paid to employees, including leave taken to receive or recover from COVID-19 vaccinations, for leave from April 1, 2021, through September 30, 2021.

Eligible employers report their total paid sick and family leave wages (plus the eligible health plan expenses and collectively bargained contributions and the eligible employer’s share of social security and Medicare taxes on the paid leave wages) for each quarter on their federal employment tax return, usually Form 941, Employer’s Quarterly Federal Tax Return Form 941 is used by most employers to report income tax and social security and Medicare taxes withheld from employee wages, as well as the employer’s own share of social security and Medicare taxes.

In anticipation of claiming the credits on the Form 941, eligible employers can keep the federal employment taxes that they otherwise would have deposited, including federal income tax withheld from employees, the employees’ share of social security and Medicare taxes and the eligible employer’s share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible. The Form 941 instructions explain how to reflect the reduced liabilities for the quarter related to the deposit schedule.

If an eligible employer does not have enough federal employment taxes set aside for deposit to cover amounts provided as paid sick and family leave wages (plus the eligible health plan expenses and collectively bargained contributions and the eligible employer’s share of social security and Medicare taxes on the paid leave wages), the eligible employer may request an advance of the credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19. The eligible employer will account for the amounts received as an advance when it files its Form 941, Employer’s Quarterly Federal Tax Return, for the relevant quarter.

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EBISA Releases Cybersecurity Guidance

On April 14, 2021, the U.S. Department of Labor (DOL) announced the following new guidance for plan sponsors, plan fiduciaries, recordkeepers and plan participants on best practices for maintaining cybersecurity:

This is the first time the DOL’s Employee Benefits Security Administration has issued cybersecurity guidance and it is designed for use by plan sponsors and fiduciaries regulated by the Employee Retirement Income Security Act, plan participants, and beneficiaries.

COBRA Premium Assistance FAQs and the American Rescue Plan Act of 2021

On April 7, 2021, the U.S. Department of Labor’s (DOL), Employee Benefits Security Administration (EBSA) released frequently asked questions (FAQs) addressing how certain provisions of the American Rescue Plan Act of 2021 (ARP) apply to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The FAQs provide answers to general questions, inquiries about premiums, notices, and more.

More information is provided on the COBRA Premium Subsidy website and EBSA also released the following model notices:

COBRA continuation coverage provides certain group health plan continuation coverage rights for participants and beneficiaries covered by a group health plan. In general, under COBRA, an individual who was covered by a group health plan on the day before the occurrence of a qualifying event (such as getting fired or a reduction in hours that causes loss of coverage under the plan) may be able to elect COBRA continuation coverage when that qualifying event occurs. These individuals are referred to as qualified beneficiaries. Under COBRA, group health plans must provide covered employees and their families with certain notices explaining their COBRA rights.

Section 9501 of the ARP provides for COBRA premium assistance to help assistance eligible individuals continue their health benefits. The premium assistance is also available for continuation coverage under certain state laws. Assistance eligible individuals are not required to pay their COBRA continuation coverage premiums. The premium assistance applies to periods of health coverage on or after April 1, 2021 through September 30, 2021. An employer or plan to whom COBRA premiums are payable is entitled to a tax credit for the amount of the premium assistance.

The DOL also provides more information about the COBRA Premium Subsidy on its website.

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Individual state labor laws

State Specific Labor Law Updates:

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Employment Law Updates: March 2021

Five Federal and ten State Law Updates have been issued. Our HR Advisors are versed and ready to answer your toughest HR questions to help your company through working remotely, coming back to work and all year long.

Federal Law Alerts for March 2021

Tipped Employee Final Rule in Flux

The Tip Regulations Under the Fair Labor Standards Act (FLSA) final rule (2020 Tip final rule) was published on December 30, 2020, with an effective date of March 1, 2021; however:

On February 26, 2021, the DOL issued a final rule delaying the effective date until April 30, 2021; and
On March 23, 2021, the Department announced two Notices of Proposed Rulemaking (NPRMs) for tipped workers as the effective date of the 2020 Tip final rule nears:
- Tip Regulations Under the Fair Labor Standards Act (FLSA); Delay of Effective Date, which proposes to further extend, until December 31, 2021, the effective date of two portions of the 2020 Tip final rule related to the assessment of civil money penalties (CMPs) under the FLSA, and the portion addressing the FLSA tip credit’s application to tipped employees who perform tipped and non-tipped duties. The Department invites public comments on this NPRM for twenty (20) days following publication of the NPRM in the Federal Register (from March 25, 2021 through April 14, 2021).
- Tip Regulations under the Fair Labor Standards Act (FLSA); Partial Withdrawal, which proposes to withdraw and re-propose the two portions of the 2020 Tip final rule addressing CMP assessments. This NPRM also seeks comments on whether to revise one other portion of the 2020 Tip final rule (addressing managers and supervisors who cannot keep employee’s tips) and asks how it might improve the recordkeeping requirements in the 2020 Tip final rule in a future rulemaking. The Department invites public comments on this NPRM for sixty (60) days following publication of the NPRM in the Federal Register (from March 25, 2021 through May 24, 2021).

However, the following portions of the final rule will continue to take effect on April 30, 2021:

Employers that do not take a tip credit may implement mandatory “nontraditional” tip pools, which are tip pools that include employees who do not customarily and regularly receive tips;
New recordkeeping requirement for employers that do not take a tip credit but collect employees’ tips to operate a mandatory tip pool; and
Employers, regardless of whether they take a tip credit, are prohibited from keeping employees’ tips for any reason, which includes prohibiting managers and supervisors from keeping tips received by employees.

Read more about the final rule on the DOL’s website.

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OSHA Updated Interim Enforcement Response Plan for COVID-19

On March 12, 2021, the Occupational Safety and Health Administration (OSHA) released an Updated Interim Enforcement Response Plan for COVID-19 which provides new instructions and guidance about how it will handle COVID-19-related complaints, referrals, and severe illness reports, summarized as follows:

OSHA will continue to implement the Department of Labor’s (DOL) COVID-19 Workplace Safety Plan to reduce the risk of COVID-19 transmission to OSHA Compliance Safety and Health Officers (CSHOs) during inspections.
Pursuant to the March 12, 2021 National Emphasis Program (NEP) for COVID-19, OSHA will prioritize COVID-19-related inspections involving deaths or multiple hospitalizations because of occupational exposures to COVID-19. The NEP also protects against worker retaliation.
OSHA will perform the following types of workplace inspections, generally on-site:
- OSHA identifies exposures to COVID-19 hazards, ensures that appropriate control measures are implemented, and addresses violations of OSHA standards and its General Duty Clause.
- OSHA will sometimes use phone and video conferencing, instead of face-to-face employee interviews, to reduce potential exposures to CSHOs. In-person interviews will be conducted when necessary and safe.
- OSHA will minimize in-person meetings with employers and encourage employers to provide documents and other data electronically to CSHOs.
- Area Directors (AD) will ensure that CSHOs are prepared and equipped with the appropriate precautions and personal protective equipment (PPE) when performing on-site inspections related to COVID-19 and throughout the pandemic.
- All inspections will generally be done so that COVID-19-related citations, and their abatement, are done quickly.
If on-site inspections cannot safely be performed (for example, if the only available CSHO has reported a medical contraindication), the AD will approve remote-only inspections that may be conducted safely.

This plan revokes the administration’s May 19, 2020 plan, remains in effect until further notice, and is intended to be time-limited to the current COVID-19 public health crisis. OSHA’s webpage will have updates about this plan and more.

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2019 and 2020 EEO-1 Reporting to Open at End of April 2021

On March 12, 2021, the U.S. Equal Employment Opportunity (EEOC) announced that the EEO-1 Component 1 data collection for 2019 and 2020 will open at the end of April 2021 and close in July 2021. Filers should begin preparing to submit data in anticipation of the April 2021 opening. The exact closing date will be posted when the data collection launches. Employers will be notified of additional details and how to access the online filing system in April. Read more on the EEOC’s employer EEO-1 Data Collection website.

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American Rescue Plan Act - Extension of EPSL and EFMLA and New COBRA Subsidies

On March 11, 2021, President Joe Biden signed the American Rescue Plan Act of 2021 (HR 1319) (ARPA) to address the ongoing economic impacts of COVID-19. The portions of the act that directly affect HR functions are discussed below.

Optional Extension of Sick and Family Leaves

Part of the ARPA is an extension of the current tax credit scheme for Emergency Paid Sick Leave (EPSL) and Emergency Family and Medical Leave (EFMLA) under the Families First Coronavirus Response Act (FFCRA). The FFCRA required many employers to provide EPSL and EFMLA in 2020, but became optional when it was previously extended to cover January 1 through March 31, 2021.

The new extension under the ARPA takes effect April 1, 2021 through September 30, 2021 and, similar to the current version, remains optional. In addition, tax credits are available but only to employers with fewer than 500 employees and up to certain caps. To receive the tax credit, employers are required to follow the FFCRA’s original provisions. For example, they cannot deny EPSL or EFMLA to an employee if they’re otherwise eligible, cannot terminate them for taking EPSL or EFMLA, and must continue their health insurance during these leaves.

Emergency Paid Sick Leave (EPSL) Changes

Key changes to EPSL, effective from April 1 through September 30, 2021, are:

Employees may take EPSL to get the COVID vaccine and recover from any related side effects.
Employees may take EPSL when seeking or waiting for a COVID-19 diagnosis or test result if they’ve been exposed to the virus or if their employer required a diagnosis or test.
Employees will be eligible for a new bank of leave on April 1. Full-time employees are entitled to 80 hours and part-time employees are entitled to a prorated amount. Unused hours from before April 1 will not carryover.
Employers cannot provide EPSL in a manner that favors highly compensated employees or full-time employees or that discriminates based on how long employees have worked for the employer (tenure). This is discriminatory and will disqualify the employer from receiving the tax credit. Failing to comply with the FFCRA (including its antiretaliation provisions) also disqualifies employers from receiving the tax credit.

Emergency Family and Medical Leave (EFMLA) Changes

Key changes to EFMLA, in effect from April 1 through September 30, 2021, are:

EFMLA may be used for any EPSL reason, in addition to the original childcare reasons. This includes the two new EPSL reasons noted above (vaccination and diagnosis/test results).
The 10-day unpaid waiting period was eliminated.
The cap on the reimbursable tax credit for EFMLA was increased to $12,000 (from $10,000). This applies to all EFMLA taken by an employee beginning April 1, 2020. This change accounts for the additional 10 days of paid time off; however, the daily cap of $200 remains the same.
Employers cannot provide EFMLA in a manner that favors highly compensated employees or full-time employees or that is based on how long employees have worked for the employer.

Reasons for Using EPSL and EFMLA

Starting on April 1, employees may take EPSL or EFMLA under the same conditions, which are:

When quarantined or isolated subject to federal, state, or local quarantine or isolation order.
When advised by a health care provider to self-quarantine because of COVID-19.
When the employee is:
1. Experiencing symptoms of COVID-19 and seeking a medical diagnosis;
2. Seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 because they have been exposed or their employer requested the test or diagnosis; or
3. Obtaining a COVID-19 vaccination or recovering from any injury, disability, illness, or condition related to the vaccination.
When caring for another person who is isolating or quarantining due to government or doctor’s orders.
When caring for a child whose school or place of care is closed due to COVID-19.

Tax Credit Review

The tax credits available between April 1 and September 30 are the same as under the original FFCRA, except for the increased aggregate cap for EFMLA. Regardless of how much EPSL or EFMLA an employee used prior to April 1, the available tax credits are as follows:

The credit available for EPSL when used for reasons 1, 2, or 3 (self-care) is up to 100 percent of their regular pay, with a limit of $511 per day.
The credit available for EPSL when used for reasons 4 or 5 (care for another) is up to 2/3 of their regular rate of pay, with a limit of $200 per day.
The credit available for EFMLA for any reason is up to 2/3 of their regular pay, with a limit of $200 per day and a cap of $12,000 per employee.

Employers may also claim a credit for their share of Medicare tax on the employee’s wages and the cost of maintaining the employee’s health insurance (qualified health plan expenses) during their absence.

COBRA Subsidies

ARPA provides a 100 percent COBRA subsidy if the employee’s work reduction or termination was involuntary. The subsidy applies for up to six months of coverage from April 2021 through September 2021 (unless the individual’s maximum COBRA period expires earlier). For group plans subject to the federal COBRA rules, the employer will be required to pay the COBRA premium but will be reimbursed through a refundable payroll tax credit.

Employers with fewer than 20 workers usually are exempt from the federal COBRA rules, but their group medical insurance plans may be subject to a state’s mini-COBRA law. In that case, it appears the subsidy will be administered by the carrier. The carrier will pay the premium and then be reimbursed by the government.

Employers will need to work with their group health plan carriers and vendors on how to administer the new subsidy provision. Although it takes effect April 1, 2021, employees who were terminated earlier but are still in their COBRA election window also are included. Federal guidance is expected to be released by April 10, including model notices that plans may use.

Note: The COBRA subsidy does not apply during FFCRA leaves because employees are entitled to maintain their health insurance during those leaves on the same terms as though they continued working.

Additional Information

The White House has a website dedicated to the American Rescue Plan, and according to the IRS, it is “reviewing implementation plans for the American Rescue Plan Act of 2021. Additional information about a new round of Economic Impact Payments, the expanded Child Tax Credit, including advance payments of the Child Tax Credit, and other tax provisions will be made available as soon as possible on IRS.gov. The IRS strongly urges taxpayers to not file amended returns related to the new legislative provisions or take other unnecessary steps at this time.”

“The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable. For those who haven’t filed yet, the IRS will provide a worksheet for paper filers and work with software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance.”

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CDC Guidance for Fully Vaccinated

On March 8, 2021, the Centers for Disease Control and Prevention (CDC) released its first Interim Public Health Recommendations for Fully Vaccinated People guidance under which fully vaccinated people can:

Visit with other fully vaccinated people indoors without wearing masks or physical distancing.
Visit with unvaccinated people from a single household who are at low risk for severe COVID-19 disease indoors without wearing masks or physical distancing.
Refrain from quarantine and testing following a known exposure if asymptomatic.

However, the CDC recommends that fully vaccinated people should continue to:

Take precautions in public like wearing a well-fitted mask and physical distancing.
Wear masks, practice physical distancing, and adhere to other prevention measures when visiting with unvaccinated people who are at increased risk for severe COVID-19 disease, including household members.
Wear masks, maintain physical distance, and practice other prevention measures when visiting with unvaccinated people from multiple households.
Avoid medium- and large-sized in-person gatherings.
Get tested if experiencing COVID-19 symptoms.
Follow guidance issued by individual employers.
Follow CDC and health department travel requirements and recommendations.

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Individual state labor laws

State Specific Labor Law Updates:

Compliance can weigh down even the most experienced professionals. Our HR Advisors, one click compliance Handbook ,Compliance Database, HR Tools and Employee Training are ready to help navigate HR all year long. Everything included with your AllMyHR™ Solutions.

Previous Labor Laws & Information

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