How Will the American Rescue Plan Impact COVID-Related Leave for Small Businesses?
By: Brook Heavener, Associate - Meridian Law
COVID-Related Leave
Under the CARES Act, which was passed in 2020, businesses were required to pay employees for COVID-related leave. [1] This requirement expired on December 31, 2020.[2] Even though not mandatory, employers who provided paid time-off were given tax credits for providing coronavirus-related leave to employees until April 2021.[3]
So what is the plan moving forward? Let’s take a look at The American Rescue Plan (ARP). The ARP does not require employers to provide paid coronavirus-related leave to employees. It does, however, extend tax incentives for employers who provide COVID-related leave to employees from April 1, 2021 to September 30, 2021.[4]
Generally, the ARP provides tax credits for two types of leave:
(1) COVID-related emergency leave (80 hours or two weeks); and
(2) COVID-related family leave (12 weeks).[5] [6]
Thus, an employer can receive tax credits for up to 14 weeks per employee for the following reasons:
· An employee has coronavirus symptoms and is seeking medical treatment;
· An employee is subject to a state, federal, or local quarantine order;
· A healthcare worker advised the employee to quarantine;
· The employee is caring for someone who is subject to a state, local, or federal quarantine order or was advised to quarantine by a medical professional;
· An employee who is awaiting results for a COVID-19 test; or
· An employee who is getting or recovering from a coronavirus vaccine.[7]
In addition to the tax incentives provided by the ARP, providing paid leave for employees who need to miss work for coronavirus-related reasons should help keep work places and businesses safe. Incentivizing employees to take time off when they could spread the virus to others will also lessen an employer’s potential liability related to safety precautions taken during the pandemic. When offering this type of leave, employers should continue to follow safeguards to protect the privacy of their employees.[8]
Relief for Restaurants
The ARP is also providing aid to restaurant owners with the Restaurant Revitalization Fund (RRF). This fund provides $28.5 billion in assistance qualified businesses with fewer than 20 locations[9]. RRF grants will be given to a variety of food-related businesses, including restaurants, food carts, caterers, bars, lounges, brewpubs, and tasting rooms.[10] The grants can be used for a variety of expenses, including payroll, paid sick leave, mortgage payments, maintenance, and food and beverages.[11]
Eligibility for RRF funds is limited to businesses that are not owned by publicly traded companies.[12] The program will prioritize businesses owned by women, veterans, and socially or economically disadvantaged individuals.[13]
Entertainment Venues
The ARP includes an additional $16 billion for the Small Business Administration’s Shuttered Venue Operators Grant (SVOG) program.[14] $2 billion has been reserved for eligible businesses with 50 or fewer employees. SVOG grants are equal to 45 percent of the applicant’s gross revenue in 2019, up to $10 million.
Businesses eligible to receive aid under this program include live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, and talent representatives.[15] Businesses that received state or local aid or Paycheck Protection Program loans are still eligible to receive SVOG grants.[16]
Businesses must have been open before February 29, 2020 to be eligible for this program.[17] Publicly traded corporations and businesses owned by publicly traded organizations are also ineligible.[18]
Conclusion
Although millions of Americans have been vaccinated and millions more are being vaccinated every day, we are not out of the woods yet. The ARP is intended to provide additional aid to certain employees and vulnerable businesses while we transition from a pandemic to post-pandemic world. We look forward to the day when we can once again eat in a crowded restaurant and take in the latest blockbuster at our local movie theatre. The ARP should help to ensure that those businesses are still there when the pandemic ends.
[2] COVID-19-Related Tax Credits: Basic FAQs | Internal Revenue Service (irs.gov)
[3] Id.
[4] Emergency Paid Leave Tax Credits and the American Rescue Plan – A Better Balance
[5] Id.
[6] Id. An employee cannot take emergency leave and family leave at the same time.
[7] Id.
[8] 29 CFR 826.100 (explaining disclosure requirements for employees to take COVID-related leave).
[9] American Rescue Plan Act: How it Helps Small Businesses | Wolters Kluwer
[10] Id.
[11] Id.
[12] Restaurants Revitalization Fund Provides COVID-Relief (natlawreview.com)
[13] Id.
[14] Id.
[15] Shuttered Venue Operators Grant: Frequenty Asked Questions, March 12, 2021 (sba.gov)
[16] Id.
[17] Id.
[18] Id.