Program

COVID-19 Federal Assistance e311

Topics

Premium & Hazard Pay

What are good practices a city can implement to determine how and to whom to allocate ‘premium pay’ funds under ARP?

The statutory language of the American Rescue Plan Act (“ARP”) of 2021 indicates that the use of Coronavirus Local Fiscal Recovery Funds (“CLFRF”) for premium pay to workers performing essential services during the COVID-19 public health emergency is authorized.[1] The U.S. Department of Treasury’s Interim Final Rule (the “Rule”) published on May 10, 2021 states that essential workers are those who regularly perform in-person work, interact with others at work, or physically handle items handled by others.[2] This does not include any work performed while teleworking from a residence.[3] The ARP defines eligible workers as “those workers needed to maintain continuity of operations of essential critical infrastructure sectors and additional sectors”[4] 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, nonentitlement unit of local government, or county.”[5]

As stated in the Rule, critical infrastructure sectors include:

  • health care;
  • emergency response;
  • sanitation, disinfection, and cleaning work;
  • maintenance work;
  • grocery stores, restaurants, food production, and food delivery;
  • pharmacy;
  • biomedical research;
  • behavioral health work;
  • medical testing and diagnostics;
  • home- and community-based health care or assistance with activities of daily living;
  • family or child care;
  • social services work;
  • public health work;
  • vital services to Tribes;
  • any work performed by an employee of a State, local, or Tribal government;
  • educational work, school nutrition work, and other work required to operate a school facility;
  • laundry work;
  • elections work;
  • solid waste or hazardous materials management, response, and cleanup work;
  • work requiring physical interaction with patients;
  • dental care work;
  • transportation and warehousing;
  • work at hotel and commercial lodging facilities that are used for COVID-19 mitigation and containment; work in a mortuary; and
  • work in critical clinical research, development, and testing necessary for COVID-19 response.[6]

Treasury encourages recipients to consider providing premium pay retroactively for work performed during the pandemic, recognizing that many essential workers have not yet received additional compensation for their service during the pandemic.[7] The Rule states that “third-party employers of essential workers are eligible as well.”[8] Further, “third-party contractors who employ essential workers in eligible sectors are also eligible for grants to provide premium pay.”[9] The “selection of third-party employers and contractors who receive grants is at the discretion of recipients.”[10]

Additionally, the Rule “emphasizes the need for recipients to prioritize premium pay for lower income workers.” The Rule further states “[p]remium 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.”[11]

Last Revised: May 24, 2021

 

[1] American Rescue Plan Act of 2021, H.R.1319, 117th Cong. (amending 42 U.S.C. § 301-1305), at Section 9901 (amending Section 603(g)(3)), https://www.congress.gov/bill/117th-congress/house-bill/1319/text#toc-H65C66E46488F4CB6ACD99E77DF090885

[2] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions, as of May 10, 2021, at 9, https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf

[3] U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds, 31 CFR Part 35 RIN 1505-AC77, at 132, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[4] Id. at 48.

[5] Id. at 132.

[6] Id. at 132.

[7] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions, as of May 10, 2021, at 10, https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf

[8] Id.

[9] Id.

[10] Id.

[11] Id.; see also U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds, 31 CFR Part 35 RIN 1505-AC77, at 49, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.