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The Treasury Confirms that American Rescue Plan State & Local Funds Can Be Spent on Paid Leave

In exciting news, the Treasury recently released a final rule confirming that American Rescue Plan funds can be used to create, expand, or support state paid leave programs.
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For a fact sheet addressing key takeaways for states and localities on using APR funds for paid leave, visit here

On Thursday, January 6th, the Treasury department released its final rule on the state and local American Rescue Plan funds. In exciting news, the final rule confirms that creating, expanding, or financially supporting paid sick time, paid family leave, and paid medical leave are permissible uses of these funds.

The Treasury emphasized the fact that lack of paid leave “exacerbates financial hardships experienced as a result of the public health emergency” for those who need to care for themselves or loved ones, and has a disproportionate impact on workers of color and low-income workers—arguments A Better Balance made in a comment on the Treasury’s interim final rule and in a detailed memo.

As A Better Balance argued in our memo, paid leave was a permissible use of the state and local American Rescue Plan funds under the Treasury’s interim final rule, but this final rule—effective April 1, 2022—makes that perfectly clear. State and local governments should feel confident spending these funds to create new rights or expand and support existing rights.

Some potential paid leave uses for these funds include:

  • Creating paid sick time and paid family and medical leave rights for government employees
  • Creating rights to paid vaccine leave for workers who are either getting a Covid-19 vaccine or recovering from its side effects or who are caring for a loved one who is getting a Covid-19 vaccine or recovering from its side effects
  • Conducting actuarial studies and covering start-up costs for new paid family and medical leave programs
  • Creating a paid sick time law that reimburses employers for certain costs of paid sick time, as in Massachusetts’ COVID-19 emergency sick time law
  • Creating requirements for contractors who deal with the city or state that their workers have paid sick time and/or paid family and medical leave and covering related costs of those new requirements in the contract
  • Shoring up existing paid family and medical leave funds, which may have seen increased costs due to the pandemic
  • Engaging in strong outreach, education, and enforcement of existing paid sick time and paid family and medical leave laws
  • Expanding existing paid sick time or paid family and medical leave laws, including to ensure that benefits are easily accessible by workers who are often left out of such programs
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