$1.9 Trillion COVID Relief Package on Track to Become Law

Update: On March 11, 2021, President Biden signed this bill into law.

On March 6, 2021, the U.S. Senate passed its version of President Biden’s “American Rescue Plan” by a vote of 50-49 (Vice President Kamala Harris was prepared to cast a tie-breaking vote in favor of the bill).  All Senate Democrats voted for the bill; all Republicans (except one absent due to a family emergency) voted against it.  The $1.9 trillion bill must now be sent back to the U.S. House of Representatives for approval, which is expected to occur along mostly party lines early this week.  Congress has been working to adopt a new COVID relief package before certain benefits expire on March 14, 2021.

Key provisions of the bill of interest to employers include:

  • Direct Payments.  The Senate’s package includes payment of stimulus checks of up to $1,400 to individuals; these payments are limited to those earning less than $80,000 or $160,000 for joint filers.  The amount of the checks begins to phase down for individuals earning $75,000 ($150,000 jointly).
  • Unemployment Insurance (UI).  The bill extends the federal “add-on” of $300 in extra weekly UI benefits through September 6, 2021.  It also extends UI coverage for gig workers and the self-employed, continuing the expanded UI coverage first provided for last year.  The bill also provides that the first $10,200 of UI received in 2020 will be free of federal tax in 2021 (for workers earning less than $150,000 per year).
  • FFCRA Leave.  The bill continues to allow employers with fewer than 500 employees to provide leave for certain COVID-related reasons; the cost of this leave is fully set off by way of refundable federal tax credits through September 30, 2021.  The bill also expands the leave for which reimbursed leave is permitted (such as obtaining a vaccination).
  • COBRA Subsidies.  The new package includes coverage of 100% of the cost of continuing health insurance under COBRA, where an employee has lost coverage under their employer’s health care plan due to a layoff or involuntary termination.
  • Paycheck Protection Program.  The bill adds an additional $7.25 billion to last year’s Paycheck Protection Program, which provided for fully forgivable loans for certain employers, provided they maintained payroll and headcount.
  • Restaurant/Venue Relief.  Industry-specific relief is also included in the package, with $28.6 billion set aside for the restaurant and food service industry, and $1.25 billion for venue operators (such as theatres, live performing arts organizations, and museums).
  • Gig Company Reporting Requirements.  Among the measures used to pay for the package, the bill changes current reporting requirements for “third party network” transactions.  Under current law, companies are not required to report certain information about earners who use their platforms unless the amount exceeds $20,000 and is a result of 200 or more transactions.  Under the new law, that threshold is reduced to a flat $600, irrespective of the number of transactions.  This means many third-party platforms will have dramatically increased reporting requirements.
  • Child Tax Credit.  The bill temporarily increases the child tax credit for 2021, allowing 17-year-old children to qualify, and increasing the credit to $3,000 per child ($3,600 per child under age 6).  The credit begins to phase out for individuals earning more than $75,000 or joint returns of $150,000.  It is fully refundable, even for those who have not earned sufficient income, suggesting to some that it is a first step toward a universal basic income program.
  • Multi-Employer Pension Relief.  Finally, the legislation includes $86 billion to shore up approximately 185 failing multi-employer pension plans, ensuring that pensioners continue to receive their retirement benefits for the next 30 years.  The bill does not include structural reforms to the multi-employer program, which many feel are necessary to ensure its long-term viability.

The bill is expected to pass the House later this week, and head directly to President Biden’s desk.  Littler’s WPI will keep you apprised of relevant updates.

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.