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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?”

The U.S. Department of Treasury’s (“Treasury”) guidance indicates that local police and fire department employees may be eligible to receive “premium pay” under the American Rescue Plan Act (“ARP”), up to a statutory cap, depending upon a number of factors and limitations as discussed below.[1] Notably, the ARP does not define “hazard pay.”[2] Only the premium pay, rather than an employee’s entire salary, would be eligible for reimbursement.

The ARP statutory language authorizes the use of Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) for premium pay to workers performing essential services during the COVID-19 public health emergency.[3] The ARP defines “premium pay” 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.[4]

  • The ARP defines eligible workers as “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” by “each chief executive officer of a metropolitan city, non-entitlement unit of local government, or county.”[5]
  • On May 10, 2021, the Treasury released an Interim Final Rule (the “Rule”) and a related Frequently Asked Questions (“FAQ”) section addressing the CSLFRF, which states that essential workers are those who “regularly perform in-person work, interact with others at work, or physically handle items handled by others.”[6] This does not include any work performed while teleworking from a residence.[7] The Rule identifies 24 categories of “critical” infrastructure sectors, including health care and emergency response.[8]

Importantly, and as noted above, the ARP does not define “hazard pay.”[9] Under Treasury’s guidance for the CARES Act’s Coronavirus Relief Fund (“CRF”), hazard pay is defined as “additional pay for performing hazardous duty or work involving physical hardship, in each case that is related to COVID–19.”[10] Based on a plain reading of the two legislative definitions, the primary distinction between  “premium pay” and  “hazard pay” appears to be that premium pay is not solely reserved for those performing “hazardous dut[ies] or work involving physical hardship,” but instead for all those performing “essential work” as outlined above.[11]

According to the May 10, 2021 FAQs, 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.”[12] The FAQs indicate that police and fire department employees fall within this group, stating: “Public safety employees would include police officers (including state police officers), sheriffs and deputy sheriffs, firefighters, emergency medical responders, correctional and detention officers, and those who directly support such employees such as dispatchers and supervisory personnel.”[13]

Recipients may use presumptions for assessing whether an employee, division, or operating unit is primarily dedicated to COVID-19 response.[14] 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.[15]  

Treasury encourages recipients to consider providing premium pay retrospectively for work performed during the pandemic (from January 27, 2020), but notes that the obligation to provide such pay must not have been incurred by the recipient prior to March 3, 2021.[16] The Rule indicates that third-party employers of essential workers may also be eligible for premium pay.[17] Additionally, “third-party contractors who employ essential workers in eligible sectors are also eligible for grants to provide premium pay.”[18] Recipients have discretion to select the third-party employers and contractors who receive grants.[19]

Additionally, the Rule “emphasizes the need for recipients to prioritize premium pay for lower-income workers.” [20] Treasury’s guidance sets limits that appear to further that priority, noting that “premium pay that would increase a worker’s total pay above 150% of the state or county average annual wage [whichever is greater] requires specific justification as to how it responds to the needs of these workers.”[21]

Last Updated: June 22, 2021

 

[1] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., American Rescue Plan Act of 2021, H.R.1319, 117th Cong. (amending 42 U.S.C. § 301-1305), at Section 9901 (amending Section 602(c)(1)(B)), available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text#toc-H65C66E46488F4CB6ACD99E77DF090885.

[2] Coronavirus Aid, Relief, and Economic Security Act (CARES ACT), Pub. L. No. 116-136, 134 Stat. 609 (2020), available at: https://www.congress.gov/116/plaws/publ136/PLAW-116publ136.pdf.

[3] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., at Section 9901 (amending Section 602(g)(3)), available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text#toc-H65C66E46488F4CB6ACD99E77DF090885.

[4] Id.

[5] Id. at Section 603(g)(2).

[8] Id. at 131-132.

[9] Coronavirus Aid, Relief, and Economic Security Act (CARES ACT), Pub. L. No. 116-136, 134 Stat. 609 (2020), available at: https://www.congress.gov/116/plaws/publ136/PLAW-116publ136.pdf.

[10] Coronavirus Aid, Relief, and Economic Security Act (CARES ACT), Pub. L. No. 116-136, 134 Stat. 609 (2020), available at: https://www.congress.gov/116/plaws/publ136/PLAW-116publ136.pdf.

[11] Treas. Reg. 35 CFR 31, at 143, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[12] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of June 17, 2021), - FAQ#2.14, at 8, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[13] Id., - FAQ#2.15, at 8.

[14] Id., - FAQ#2.14, at 8.

[15] Id.

[16] Id., - FAQ#4.7, at 15.

[17] Id., - FAQ#5.2, at 15-16.

[18] Id.

[19] Id.

[20] Id., - FAQ#5.1, at 15; see also Treas. Reg. 35 CFR 31, at 49, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[21] Id., - FAQ#5.1, at 15; see also Treas. Reg. 35 CFR 31, at 49, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.