Employers Take Note: Recent Changes in Law Affect Paid Vaccination Leave and COBRA Requirements

March 18, 2021

Last week, Governor Cuomo signed a new law providing paid leave to all employees in New York. In addition, President Biden signed the American Rescue Plan Act (“ARPA) into law, which includes new COBRA benefits. Enclosed is a summary of what the new laws require of employers.

New York Enacts Paid Vaccination Leave Law

On March 12, 2021, Governor Cuomo signed a new law providing paid leave to all public and private employees in New York for “a sufficient period of time, not to exceed up to four hours” per COVID-19 vaccine injection. The new law is effective immediately and is set to expire on December 31, 2022.

Employees are to be paid at their regular rate of pay for all leave granted under this law. The new law, which adds Section 159-c to the New York Civil Service Law and Section 196-c to the New York Labor Law, provides that this paid COVID-19 vaccination leave may not be charged against any other entitled leave the employee has earned or accrued (e.g., paid leave under the employer’s sick leave policy, New York State Paid Sick Leave Law, or under the New York City Earned Sick and Safe Time Act). Employers, however, may choose to provide more COVID-19 vaccination leave through their own policies or collective bargaining.

The new vaccination law is silent on the types of documentation an employer can request from employees seeking this leave. While the EEOC has issued guidance, which states that employers are permitted to request vaccination proof from its employees with certain exceptions, we anticipate that New York State will issue further guidance or FAQs about implementation of this new law. In the meantime, employers should work with counsel to update their policies and navigate specific questions on how to handle requests for paid COVID-19 vaccination leave.

President Biden Signs the American Rescue Plan Act (“ARPA”) Into Law

On March 11, 2021, President Biden signed the American Rescue Plan Act (“ARPA”) into law. The ARPA has wide-ranging effects, but employers should be particularly aware of the provisions concerning the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).

The American Rescue Plan Act has temporary but significant changes to COBRA, including:

  • 100% COBRA Subsidy. Beginning on April 1, 2021 and ending on September 30, 2021, “assistance eligible individuals” (i.e., those who, either due to involuntary termination (for reasons other than gross misconduct) or a reduction of hours, (i) lose coverage in a group health plan and elect COBRA coverage (ii) are currently enrolled in COBRA coverage or (iii) are in the COBRA election period) are eligible for a 100% subsidy for COBRA premiums. In other words, these individuals will not need to contribute to the cost of COBRA premiums during this time period.
    • The subsidy will cease before September 30, 2021 for those whose COBRA coverage period ends before that date, or those who become eligible for other health plans.
  • Tax Credit for Employers. Employers will receive a payroll tax credit for the cost of the subsidy.
  • Second Election Period. Eligible individuals who have not elected COBRA coverage by April 1, 2021, or who elected COBRA coverage but have since discontinued it (i.e., those individuals who as of April 1, 2021, would still have time left in their original COBRA coverage period) may elect COBRA coverage during a special enrollment period starting April 1, 2021 and ending 60 days after the date on which the COBRA notification was delivered. These individuals will not have to retroactively pay for COBRA for the period before April 1, 2021. In other words, this second election period reaches back to qualifying events that happened prior to the ARPA enactment. However, this provision does not extend the required period of COBRA coverage.
  • Optional Coverage Election Changes. Employers may elect to give eligible individuals the option to enroll in a different employer-sponsored plan (subject to limitations, mainly that the premium cost is not more expensive than the plan in which the beneficiary is enrolled, and the option is available to similarly situated active employees).
  • Updated COBRA Notices. Employers are required to provide notices including information about (i) the enhanced 100% subsidy, (ii) the special 60-day enrollment period, and (iii) additional coverage option, if elected by the employer, by May 31, 2021. These notices must go out to individuals who (i) become newly eligible for COBRA, (ii) became entitled to elect COBRA before April 1, 2021 and (iii) are entitled to the second election period. The ARPA directs the U.S. Department of Labor (“DOL”) to provide model notices for employer use by mid-April 2021. COBRA notice forms, either as amended or as a separate document, must include:
    • The forms necessary for establishing eligibility for the COBRA premium assistance;
    • The name, address and telephone number necessary to contact the plan administrator and any other person maintaining relevant information in connection with COBRA premium assistance;
    • An explanation of the special 60-day election period provided by the ARPA;
    • A notification that the beneficiaries must tell the group health plan if they become eligible for other coverage, or be subject to a penalty;
    • A description, prominently displayed, of the beneficiary’s right to subsidized COBRA coverage, and any conditions; and
    • A description of the option to enroll in different coverage, if elected by the employer.
  • Expiration Notices. The ARPA also requires that plan administrators must send a separate expiration notice to eligible individuals when their periods of premium assistance are due to expire and notify individuals if their subsidy will end before September 30, 2021, although this notice will not be required if their subsidy is ending due to the individual's eligibility for other coverage. The DOL will provide model notices for these requirements as well.

Although the model notices are not yet available, employers should start to prepare now by (i) contacting their group plan insurer or COBRA administrators and (ii) gathering information on all individuals currently on COBRA and individuals who could be on COBRA through September 2021 but for the fact that COBRA was declined or dropped.

We expect to receive further guidance from the DOL regarding the enhanced COBRA benefits.

For more information on this issue or other employment matters, please contact:

Carol M. Goodman at +1 212 592 1465 or [email protected]
K. Heather Robinson at +1 973 274 2006 or [email protected]
Meaghan Roe at +1 212 592 1632 or [email protected]
Silvia Stockman at +1 212 592 1583 or [email protected]

@ 2021 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.