15 March 2021

Summary of the American Rescue Plan Act Premium Pay Terms

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

  • Subtitle M, Section 9901 of the ARPA amends Title VI of the Social Security Act and adds “Coronavirus State Fiscal Recovery Funds.”
  • Section 602 of the Social Security Act authorizes payments to the states, territories, and local governmental entities. More specifically, Section 602 authorizes, and directs the Secretary of the Treasury to distribute, tens of billions of dollars among the 50 states and the District of Columbia for use as recovery funds.
  • These funds can be distributed within 60 days after each state provides a certification to the federal government that recovery funds received under this Section will be used only for specific, permitted purposes.
  • There are four permitted uses under Section 602(c), which include use of the appropriations:
    • to respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
    • to respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers of the State, territory, or Tribal government that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work;
    • for the provision of government services to the extent of the reduction in revenue of such State, territory, or Tribal government due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year of the State, territory, or Tribal government prior to the emergency; or
    • to make necessary investments in water, sewer, or broadband infrastructure.
  • How much money will be allocated for premium pay, and which workers and businesses will be included is not yet known. These decisions are subject to state and/or local determination. This is why taking early action and getting involved in that process now may be important to many clients who may benefit from premium pay for essential workers.
  • Eligible workers will be determined, in part, by each state’s governor. Section 602(g) defines “eligible workers” as “those workers needed to maintain continuity of operations of essential critical infrastructure sectors and additional sectors as each Governor of a State or territory, or each Tribal government, may designate as critical to protect the health and well-being of the residents of their State, territory, or Tribal government.”
  • Premium payments include “amount[s] of up to $13 per hour that is paid to an eligible worker, in addition to wages or remuneration the eligible worker otherwise receives, for all work performed by the eligible worker during the COVID–19 public health emergency. Such amount may not exceed $25,000 with respect to any single eligible worker.”
  • Section 602(f) provides that the Secretary may issue federal regulations to implement these terms and govern this process.
  • Section 603 includes similar funding provisions for certain cities, counties and other non-entitlement units of local government.

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.