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  • Writer's pictureTammy DePhillip

Premium Pay: Who is Eligible, and For How Much?

Updated: Sep 29, 2021

NCLM Research Strategist Tammy DePhillip outlines the requirements, intentions and guidelines of the ARP's Premium Pay spending category.



One eligible use of American Rescue Plan funds is providing premium pay to workers performing essential work during the COVID–19 public health emergency. But who is eligible, and for how much?


First, it is important to note the intention of this allowance, as detailed by the U.S. Treasury: to compensate low-wage essential workers for the risks they have taken throughout the pandemic. The 150% threshold, which is detailed below, helps ensure that funds are used for that purpose.


The below information serves as a general overview of the premium pay spending category.


UNC School of Government professor and resident ARP expert Kara Millonzi recently wrote a blog post looking into the legal framework of giving premium pay to local government employees. Kara shares helpful information on the state law authority, applicable uniform guidance requirements, and fulfilling the US Treasury reporting requirements. Read the entire post here.


What is considered premium pay?

Premium pay is in addition to an employee’s regular salary and benefits. The spirit of this expense eligibility is to provide recognition of the health and safety risks of essential workers who have been and continue to be relied on to maintain continuity of operations. US Treasury’s Interim Final Rule communicates an intention that premium pay should address “the heightened risk to workers who must be physically present at a jobsites and, for many whom, the costs associated with illness were hardest to bear financially.”



Who is eligible to receive premium pay?

Essential workers are those whose work involves regular in-person interactions or regular physical handling of items that were also handled by others. Treasury guides local governments to prioritize lower income eligible workers in providing premium pay to address the disparity between the risk these workers have carried and the relatively low compensation they tend to receive.


US Treasury provides a non-exhaustive list of workers considered to be eligible for premium pay:

  • Staff at nursing homes, hospitals, and home care settings;

  • Workers at farms, food production facilities, grocery stores, and restaurants;

  • Janitors and sanitation workers;

  • Truck drivers, transit staff, and warehouse workers;

  • Public health and safety staff;

  • Childcare workers, educators, and other school staff; and

  • Social service and human services staff.


Premium pay can be provided to private sector workers in the form of grants. If local governments choose to provide premium pay in the form of grants, the local government remains responsible for monitoring and overseeing the use of ARP funds.



How is premium pay calculated?

  • Premium pay is defined as an amount up to $13 per hour in addition to wages and should not exceed $25,000 per eligible worker.

  • Premium pay must be in addition to a worker’s regular wages and cannot supplant a worker’s normal earnings.

  • Premium pay may be provided retrospectively for work performed any time since the start of the COVID-19 public health emergency.

  • Funds cannot be used by local governments to repay themselves for premium pay that has previously been provided to workers.


If premium pay would increase a worker’s total pay above 150% of the ARP fund recipient’s state or county average annual wage, whichever is higher, there are additional reporting requirements to justify the expenditure.


To assist North Carolina local governments in calculating this 150% premium pay threshold, NCLM has compiled data from the Bureau of Labor Statistics’ Occupational Employment Wage Statistics. This is the data source referenced in the Interim Final Rule. That resource can be found below:


US BLS - Premium Pay 150 percent threshold resource
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Download PDF • 101KB
US BLS - Premium Pay 150 percent threshold resource
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Download XLSX • 13KB

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