15 March 2021

Rescue Plan Enables State and Local Funding for Essential Worker Premium Pay

President Biden signed the American Rescue Plan Act of 2021 (ARPA) into law on March 11.  There is quite a lot in the new $1.9 trillion budget legislation for individuals, businesses, and organizations to unpack and digest.  How many of the Act’s provisions will affect businesses and employers remains uncertain and may be subject to forthcoming budget negotiations, rulemaking and other state/local actions.

One important part of the ARPA for employers that has not received a lot of media attention, perhaps due to its inclusion in a last minute Senate amendment, is a part of the Act that enables states to direct a portion of their share of federal appropriations to fund significant premium pay for employees.   Under Section 9901 of ARPA, which amends Section 602 of the Social Security Act, an employer who continued to operate as an “essential” business during the COVID-19 emergency may have the opportunity to secure premium pay for their employees in an amount up to $13.00 per hour, subject to a cap of $25,000 per “eligible worker.”

This would be a big deal for eligible employers and their front line employees.  What organization wouldn’t want to thank their dedicated, hardworking employees with extra pay for stepping up to provide essential services that our nation and communities counted on during the pandemic?

Premium pay to eligible employees under the ARPA is not guaranteed, however, and will differ from state-to-state.  Details on how much money will be available for this premium pay program in each state (if any), and which businesses or governmental entities will qualify are yet to be determined.  Each state will have significant control over how much of its ARPA funding is allocated to premium pay for workers, including which private sector businesses (if any) will qualify.  It is also possible that future federal regulations may impact this process.

Click here for a summary of these provisions and how the program may be established under the new law.

We believe that now is the time to take action as these programs develop and unfold.  If your business or organization has operated as an essential business during the coronavirus emergency, we encourage you to speak with the authors, a member of the Miller Johnson COVID-19 Team, or your Miller Johnson attorney about this topic.