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COVID-19 Federal Assistance e311

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Premium & Hazard Pay

Is there a distinction between premium pay and hazard pay pursuant to the ARP? Under the ARP, can municipalities award hazard pay (or premium pay) retroactively?

Unlike the Coronavirus Aid, Relief, and Economic Security Act of 2020 (“CARES”), the American Rescue Plan of 2021 (“ARP”) does not define “hazard pay.” However, under the U.S. Department of the Treasury’s (“Treasury”) guidance for the 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.”[1] Therefore, based on the legislative definition of premium pay and Treasury’s definition of hazard pay, the primary distinction between these terms is 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.”[2] Treasury’s Frequently Asked Questions (“FAQs”) on the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) describes essential workers as “those in critical infrastructure sectors who regularly perform in-person work, interact with others at work, or physically handle items handled by others,” and provides a non-exhaustive list of roles that would be considered critical.[3] Notably, under the Final Rule, the term seems to be interchangeable, as “premium pay can be thought of as hazard pay by another name.”[4]

Treasury encourages recipients to consider providing premium pay retroactively for work performed during the pandemic (as of January 27, 2020), recognizing that many essential workers have not yet received additional compensation for their services during the pandemic.[5] Additionally, third-party contractors who employ essential workers in eligible sectors are also eligible for grants to provide premium pay to their employees.[6] Recipients have the discretion to select the third-party employers and contractors who receive those grants.[7]

In addition, Treasury may provide new information when it issues additional Frequently Asked Questions (“FAQs”) specific to the Final Rule.[8]

Last Revised: March 31, 2022

 

[1] FRN Vol. 86 No. 10, Coronavirus Relief Fund, Frequently Asked Questions – FAQ# A.29, at 4190, available at: https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf.

[2] U.S. Department of Labor, “Hazard Pay,” available at: https://www.dol.gov/general/topic/wages/hazardpay.

[3] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of January 2022) – FAQ #5.1, at 27, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[4] Treas. Reg. 31 CFR 35 at 219, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[5] Id., at 232.

[6] Id., at 392.

[7] Id., at 228-230.

[8] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of January 2022), at 1, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.