Program

COVID-19 Federal Assistance e311

Topics

Premium & Hazard Pay

Is additional pay, including hazard pay and bonuses, a permitted use of ARP funds?

A municipal government may use Coronavirus Local Fiscal Recovery Fund (“CLFRF”) payments to provide premium pay to eligible workers performing essential functions during the COVID-19 public health emergency or to provide grants to third-party employers of eligible workers performing essential functions.[1] Specifically, “CLFRF provides resources for eligible state, local, territorial, and Tribal governments to recognize the heroic contributions of essential workers. Since the start of the public health emergency, essential workers have put their physical well-being at risk to meet the daily needs of their communities and to provide care for others.”[2] These are workers who have been and continue to be relied upon to maintain the continuity of operations of essential critical industry sectors, including those who are key to protecting their communities' health and well-being.[3]

CLFRF provides resources for municipal governments to recognize contributions and sacrifices made by essential workers during the COVID-19 pandemic. As previously noted, municipal governments may use CLFRF funding to provide premium pay directly, or through grants to private employers, to a broad range of essential workers who must be physically present at their jobs, including:[4]

  • staff at nursing homes, hospitals, and home care settings;
  • workers at farms, food production facilities, grocery stores, and restaurants;
  • janitors and sanitation workers;
  • truck drivers, transit staff, and warehouse workers;
  • public health and safety staff;
  • childcare workers, educators, and other school staff; and
  • social service and human services staff.[5]

The term “premium pay” is identified as an additional amount up to $13 per hour paid to an eligible worker for work during the COVID-19 pandemic. The ARP imposes a cap of $25,000 for any single eligible worker.[6], [7]

The U.S. Department of the Treasury’s Interim Final Rule emphasizes the need for recipients to prioritize premium pay for lower-income workers. Premium pay that would increase a worker’s total pay above 150% of the greater of the state or county average annual wage requires specific justification for how it responds to the needs of these workers.[8]

In addition, the Interim Final Rule encourages employers to use Coronavirus State and Local Fiscal Recovery Funds to offer retrospective premium pay, recognizing that many essential workers have not yet received additional compensation for work performed.[9] Staff working for third-party contractors in eligible sectors are also eligible for premium pay.

It is important to note that premium pay is targeted at workers who faced or face heightened risks due to the character of their work. The Interim Final Rule defines essential work as work involving regular in-person interactions or regular physical handling of items that were also handled by others. A worker performing telework from a residence, for example, would not be engaged in essential work and may not receive premium pay.[10]

Last Revised: June 2, 2021

[1] H.R. 1319, Subtitle M, Section 9901 (amending 42 U.S.C. 801 et seq., Section 602(c)(1)), https://www.congress.gov/bill/117th-congress/house-bill/1319/text#HB789EE14C1C24ED5A6B828D0DE8BF0FD.

[2] U.S. Department of the Treasury, FACT SHEET: The Coronavirus State and Local Fiscal Recovery Funds Will Deliver

$350 Billion for State, Local, Territorial, and Tribal Governments to Respond to the

COVID-19 Emergency and Bring Back Jobs, https://home.treasury.gov/system/files/136/SLFRP-Fact-Sheet-FINAL1-508A.pdf.

[3] U.S. Department of the Treasury, Interim Final Rule, 31 CFR Part 35 at 45, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[4] Department of the Treasury, Interim Final Rule, 31 CFR Part 35 at 46, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[5] U.S. Department of the Treasury, FACT SHEET: The Coronavirus State and Local Fiscal Recovery Funds Will Deliver

$350 Billion for State, Local, Territorial, and Tribal Governments to Respond to the

COVID-19 Emergency and Bring Back Jobs, https://home.treasury.gov/system/files/136/SLFRP-Fact-Sheet-FINAL1-508A.pdf.

[6] H.R. 1319, Subtitle M, Section 9901 (amending 42 U.S.C. 801 et seq., Section 603(c)(3)(b)). https://www.congress.gov/bill/117th-congress/house-bill/1319/text#HE25656956D0143CDBB71B05FF0EFF7F3.

[7] U.S. Department of the Treasury, Interim Final Rule, 31 CFR Part 35 at 43, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[8] U.S. Department of the Treasury, FACT SHEET: The Coronavirus State and Local Fiscal Recovery Funds Will Deliver

$350 Billion for State, Local, Territorial, and Tribal Governments to Respond to the

COVID-19 Emergency and Bring Back Jobs, https://home.treasury.gov/system/files/136/SLFRP-Fact-Sheet-FINAL1-508A.pdf.

[9] U.S. Department of the Treasury, Interim Final Rule, 31 CFR Part 35 at 50, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[10] U.S. Department of the Treasury, Interim Final Rule, 31 CFR Part 35 at 42, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.