Amid the billions of dollars for roads and industry bailouts, the $789 billion American Recovery and Reinvestment Act of 2009 (ARRA) signed on Feb. 17 by President Obama includes a handful of important HR-related provisions. Comp and benefits pros must act immediately to comply with some of these provisions:
COBRA subsidies. The law provides federal funding for eligible workers to receive a 65% subsidy toward continuation of health insurance purchased under terms of the COBRA policy. This significant change requires immediate action (see box for details).
Making Work Pay Credit. The ARRA provides more take-home pay by reducing the federal income tax withheld from paychecks: $400 for singles and $800 for married couples in the 2009 and 2010 tax years. If you haven’t started already, you must make the appropriate withholding adjustments now. Download new withholding tables from the IRS web site at www.irs.gov.
Tip: Be prepared to help employees figure out whether they’ll need to make additional withholding adjustments. The way the law is structured, certain taxpayers could wind up owing more when they file their 2009 and 2010 taxes.
Unemployment compensation. The law extends the temporary emergency unemployment compensation program through December 2009. (It had been set to expire March 31.)
The stimulus legislation grants out-of-work individuals an additional $25 in unemployment benefits per week. Plus, the law uses financial incentives to encourage states to offer unemployment comp to certain part-time workers and to workers who leave a job for a “compelling family reason,” such as domestic violence or illness of an immediate family member.
Work Opportunity Tax Credit. The ARRA expands this federal program, which provides tax incentives for employers to hire members of various economically disadvantaged groups. Look for more details to come from the Labor Department.
Executive comp. If your company has received funds from the federal Troubled Assets Relief Program (TARP), your highest-paid executives face tight compensation caps, based on a sliding scale. The ARRA limits the amount of top executives’ base salaries and requires bonuses to comprise no more than one-third of total annual compensation. The law also prohibits “golden parachute” payments to departing executives.
Advice: If your organization is a TARP recipient, be sure you touch base with whomever is handling your relationship with the U.S. Treasury. You’ll need to ensure you are in compliance with the executive compensation regulations.
Want more details? Access our up-to-date coverage on the HR impact of the new economic stimulus law at www.theHRSpecialist.com/stimulus.
Note: HR Specialist is hosting an audio conference on “The New COBRA Rules” on March 25. See www.theHRSpecialist.com/events for details.