Newly Unveiled HEROES Act Includes Grant Program for Employers to Provide Premium Pay to Essential Workers

In addition to numerous provisions expanding paid leave and unemployment benefits, the newly introduced Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act would create a program enabling employers to provide premium pay to essential workers during the COVID-19 crisis. This provision is contained in “Division Q” of the 1,800+ page bill (which in total would spend upwards of $3 trillion in COVID-related relief).

Specifically, the bill proposes the creation of a “COVID-19 HEROES Fund,” which would allow employers in certain industries to apply for grants from the federal government, which they would then use to provide premium pay to essential workers.  It was widely expected that the next round of “Phase 4” legislation would include some form of premium or “hazard” pay for certain workers.  Whether this proposal will remain in any final bill approved by Congress is not yet clear. 

The details of the proposed “HEROES Fund” include:

Eligibility.  To be eligible to receive a grant from the COVID-19 Heroes Fund, an employer would need to employ employees who are performing “essential work,” as defined under the bill. Within three days of receiving a grant, an employer would need to provide premium pay to its essential workers at a rate of $13 for each hour of work performed between January 27, 2020 and 60 days after the end of the COVID-19 pandemic.

The total amount of premium pay an essential worker would receive could not exceed $10,000 (or $5,000 if the essential employee already earns $200,000 or more per year). The employer would need to deliver any retroactive payment to the essential worker as a lump sum in the next paycheck after the employer receives the grant. An employer receiving a grant could not otherwise reduce the pay of an essential employee or replace an essential worker with a lower-paid employee.

Employers receiving grants would be required to clearly note an essential worker’s premium pay on their paystub. The premium pay the essential employee receives would not affect the employee’s eligibility for any wage-based benefits from the employer and would not impact the essential employee’s exemption status under the federal Fair Labor Standards Act.

“Essential” Work.  The bill defines “essential” work as that involving regular in-person interactions with, or the regular physical handling of items by, patients, the public, or coworkers.  Essential work does not include telework.  Additionally, essential work must fall under one of several enumerated categories, which include (but are not limited to) the following:

  • Emergency response;
  • Health and residential care in inpatient or outpatient settings;
  • Pharmacy services; 
  • Social services, behavioral health services, physical therapy, occupational therapy, speech-language pathology, and respiratory therapy;  
  • Work performed in a medical testing or diagnostic facility;
  • Certain biomedical and clinical research;
  • Child care;
  • Grocery (including similar retail) and restaurant work;
  • Food production;
  • Warehouse work, such as distribution, storage, and call center support;
  • Sanitation work;
  • News gathering and dissemination;
  • Educational services;
  • Mortuary services;
  • Other work deemed essential by a state, local, or tribal government.

Under the bill, an employer lacks the discretion to determine what portion of an essential employee’s work qualifies as “essential”; rather, an essential employee would receive premium pay for all work up to the $10,000 or $5,000 maximum described above.

Penalties for Non-ComplianceThe Department of Labor would have the authority to investigate potential violations of the proposed Act and enforce its requirements against participating employers. Employers applying for the grant would be required to abide by the proposed Act’s terms and could not retaliate against an essential worker for filing a complaint or testifying in a proceeding relating to the enforcement of the proposed Act. Additionally, essential employees could pursue claims under the proposed Act in state or federal court.   

While this federal program, if enacted in its current form, appears to be voluntary, lawmakers in a number of states, including New York, Massachusetts, and Pennsylvania, have introduced similar “premium pay” legislation.  A bill to require “hazard pay” for essential workers is similarly pending before the New York City Council.

The proposed bill appears to address a number of employer concerns raised by Littler’s Workplace Policy Institute (WPI) to congressional policymakers. WPI will continue to monitor this legislation and report on any significant developments.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.