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Pay Matters: Spring 2021

04-15-2021
Malka Trump, CPA

Welcome to Pay Matters, our roundup of all the payroll and compliance news that you must know.

Stay informed and in compliance with our alerts and insights.

The American Rescue Plan Act of 2021: What You Need to Know

On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (ARPA). Included in this latest round of COVID-19 legislation are relief provisions affecting the payroll community, including extensions to paid sick and family leave (FFCRA) and the Employee Retention Credit (ERC) as well as additional Paycheck Protection Program (PPP) funding and eligibility. In addition, the tax-free dependent care benefit limit is increased from $5,000 to $10,500 for 2021, and a new COBRA premium subsidy credit is created.

To learn more about these and other ARPA provisions affecting your business, check out Part I and Part II of our article “The Arrival of ARPA” and watch our pre-recorded webinar “The American Rescue Plan Act of 2021: What It Means to You.”

IRS Releases Guidance on 2020 Employee Retention Credit

On March 1, 2021, the IRS released Notice 2021-20, providing employers with additional guidance on claiming the Employee Retention Credit (ERC) retroactively for 2020. In December 2020, the Consolidated Appropriations Act allowed employers who had taken PPP loans to claim the ERC credit for wages not used for PPP going back to the second quarter of 2020. However, many questions on the “how to” of claiming these retroactive credits were not answered.

The new IRS guidance provides 71 questions and answers on topics that include eligibility, aggregation rules, maximum credit, qualified wages, and the interaction between the ERC and the Paycheck Protection Program.

The new guidance only addresses the retroactive 2020 ERC but not the ERC for wages paid after December 31, 2020. Future IRS guidance is expected regarding the ERC in 2021.

New York Paid Vaccination Leave Law

On March 12, New York Governor Andrew Cuomo signed legislation providing all New York State employees with up to 4 hours of paid leave for each COVID-19 vaccine injection. The paid leave may not be taken from any other paid leave the employee is already entitled to, such as paid sick leave.

The law does not address many questions, such as how much advance notice the employee must give, whether proof of vaccination is required, and whether it will apply to further vaccination boosters, if necessary.

For a copy of the text of the law, click here.

California Employers Required to Provide COVID-19 Supplemental Leave

California employers with more than 25 employees must now provide supplemental paid sick leave to their employees for specific COVID-19-related reasons.

Effective retroactively to January 1, 2021, through September 30, 2021, covered employees who are unable to work or telework must be paid for leave taken for any of the following reasons:

  • The employee is subject to a quarantine or isolation order from a government health agency.
  • The employee has been advised by a health care provider to quarantine.
  • The employee is attending an appointment to receive a COVID-19 vaccination or is experiencing symptoms related to a COVID-19 vaccine.
  • The employee is experiencing COVID-19 symptoms and is seeking a medical diagnosis.
  • The employee is caring for a family member in quarantine or a child whose school or place of care is closed for COVID-19-related reasons.

Full-time employees and those who worked or were scheduled to work at least 40 hours per week in the 2 weeks preceding the leave are entitled to 80 hours of COVID-19 supplemental paid sick leave. Otherwise, they are entitled to leave that equals their normally scheduled work hours. If their work hours vary, they are entitled to 14 times the average number of hours they worked each day in the 6 months prior to taking leave.

Paid leave is generally paid at their regular rate, capped at $511 per day and $5,110 in aggregate.

Employers were required to comply with the new law by March 29, however, as the requirements are retroactive to January 1, 2021, if an employee makes a request for retroactive payment, the employer must provide it.

Wage statements must itemize COVID-19 supplemental paid sick leave separately from paid sick leave, and a poster of employee rights must be posted.

For more details on the requirements under the law, click here.

Minimum Wage Updates

Bernalillo County, New Mexico, announced that their minimum wage effective January 1, 2021, is $10.50 per hour, changing the previously announced $9.35 per hour. Tipped minimum wage is $2.55 per hour. Tipped wage had been previously announced to be $2.13 per hour.

Albuquerque, New Mexico, announced that effective January 1, 2021, their minimum wage is $10.50 per hour, regardless of whether their employer provided health care or other benefits. Previously the city had announced that employers that provide health care or other benefits could pay a reduced minimum wage of $9.50 per hour.

County of Santa Fe, New Mexico: Effective March 1, 2021, the minimum wage in Santa Fe County increased from $12.10 to $12.32 per hour. The cash wage for tipped employees increased from $3.62 per hour to $3.69 per hour on the same date.

City of Santa Fe, New Mexico: Effective March 1, 2021, the living wage rate in Santa Fe increased from $12.10 to $12.32 per hour. Tipped employees may be paid a minimum cash wage of $2.55 per hour if tips are sufficient to bring the employee’s hourly wage to $12.32 per hour.

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