Program

COVID-19 Federal Assistance e311

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Premium & Hazard Pay

Are employees of a municipality’s Police and Fire departments considered eligible to receive premium pay under the ARP? Assuming that they are eligible, would their entire salary be eligible or just the “hazard pay component increase?”

Guidance from the U.S. Department of the Treasury (“Treasury”) indicates that local police and fire department employees may be eligible to receive “premium pay” under the American Rescue Plan Act of 2021’s (“ARP”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) program, up to a statutory cap, depending on a number of factors and limitations discussed below.[1]

The CSLFRF Final Rule recognizes that “[p]remium pay can be thought of as hazard pay by another name;” it “is designed to compensate workers that … were forced to take on additional burdens and make great personal sacrifices as a result of the COVID-19 pandemic.”[2] The Final Rule defines premium pay as an “amount of up to $13 per hour in addition to wages or remuneration the eligible worker otherwise receives, for all work performed by the eligible worker” during the COVID-19 pandemic. Treasury also imposes a cap of $25,000 for any single eligible worker.[3] 

Treasury encourages recipients to consider providing premium pay retroactively for work performed during the pandemic (starting on January 27, 2020), but notes that CSLFRF may not be used to reimburse an employee or eligible employer grantee “for premium pay or hazard pay already received by the employee.”[4] Eligible workers may include workers employed by third party employers in critical infrastructure sectors.[5] The Final Rule clarifies that recipients may award premium pay to “non-hourly or salaried workers as well as part-time workers,” but that premium pay may not be awarded to volunteers.[6]

The Final Rule requires that premium pay programs “respond to” “eligible workers” performing “essential work” during the COVID-19 public health emergency.[7]

  • Eligible workers are “those workers needed to maintain continuity of operations of essential critical infrastructure sectors and additional sectors” that are designated as “critical to protect[ing] the health and well-being of the residents.”[8] Treasury’s Overview of the Final Rule identifies 25 critical infrastructure sectors and occupations, including “emergency response” and “health care” and notes the chief executive (or equivalent) of a recipient government may designate additional sectors.[9]
  • Treasury defines essential work as work that:
    • (1) is not from a residence and (2) involves either (i) regular, in-person interactions with patients, the public, or coworkers of the individual that is performing the work or (ii) regular physical handling of items that were handled by, or are to be handled by, patients, the public, or coworkers of the individual that is performing the work.[10]
    • Therefore, essential work does not include any work performed while teleworking from a residence.
  • Premium pay is responsive to eligible workers performing essential work during the COVID-19 pandemic if each eligible worker who receives premium pay falls into one of three categories:
  1. The worker’s pay is below the wage threshold.[11] The Final Rule maintains that a worker’s pay exceeds the wage threshold if either the premium pay increases the worker’s total pay above 150 percent of their residing state or county’s average annual wage for all occupations, as defined by the BLS Occupational Employment and Wage Statistics, whichever is higher, on an annual basis, or if the worker’s total pay was already above the threshold before receiving premium pay.[12]
  2. The worker is not exempt from the FLSA overtime provisions.[13]
  3. The recipient has submitted a written justification to Treasury demonstrating how the premium pay or grant is responsive to workers performing essential work during the COVID-19 pandemic.[14] Written justification is not necessary if the eligible workers fall into the first or second category included above.

As an alternative to premium pay, CSLFRF may also be used under expenditure category one for payroll and covered benefits for “public safety, public health, health care, human services, and similar employees . . . to the extent that the employee’s time is dedicated to responding” to the COVID-19 pandemic.[15] A recipient may consider a “public health and safety employee” to be “entirely devoted to mitigating or responding to the COVID-19 public health emergency, and therefore fully covered,” if the employee, or his or her operating unit or division, “is primarily dedicated (e.g., more than half of the employee’s time is dedicated) to responding to the COVID-19 public health emergency.”[16]

Recipients may use presumptions for assessing whether an employee, division, or operating unit is primarily dedicated to COVID-19 response.[17] Treasury has also stated that recipients should maintain records to support their assessments, such as payroll records, attestations from supervisors or staff, or regular work product or correspondence demonstrating work on the COVID-19 response and that recipients should periodically reassess their determinations.[18]  

Last Updated: March 31, 2022

 

[1] Treas. Reg. 31 CFR 35 at 222, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[2] Id., at 219.

[3] Id., at 230.

[4] Id., at 232.

[5] Coronavirus State and Local Fiscal Recovery Funds, Overview of the Final Rule at 35, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-Overview.pdf.

[6] Treas. Reg. 31 CFR 35 at 232, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[7] Id., at 226.

[8] Id., at 221.

[9] Coronavirus State and Local Fiscal Recovery Funds, Overview of the Final Rule at 35, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-Overview.pdf.

[10] Id., at 225.

[11] Id., at 229.

[12] Id., at 230.

[13] Id., at 229.

[14] Id.

[15] Id., at 174-176

[16] Id.

[17] Id.

[18] Id., at 175.