Late Wednesday night, the Senate passed a sweeping coronavirus economic rescue package that would pump $2 trillion into America’s economy. The House is expected to take up the bill as early as Friday, March 27.
The final version of the Senate bill includes, among other things, provisions that will send checks directly to households, invest $150 billion into the nation’s healthcare system, and invest another $150 billion in state and local governments to shore up coronavirus relief efforts.
Employers should pay close attention to Division A of the bill, which includes assistance for workers, families, and businesses. Title II of Division A specifically aims to keep workers employed, keep businesses afloat, and support those who file for unemployment as a result of the current pandemic. Below, we break down the highlights of the legislation that pertain specifically to employers and employees.
Unemployment Benefits
The bill would create a temporary “Pandemic Unemployment Assistance” program that would operate through December 31, 2020. The program would provide payments to those who are not traditionally eligible for unemployment. For example, people who are self-employed, or are classified as independent contractors, who are unable to work as a direct result of the pandemic would now qualify for benefits.
The bill also expands on current unemployment benefits by providing an additional $600 per week to unemployment recipients, on top of state unemployment payments. States must opt-in to this program to qualify for the additional funds. The federal program would pay recipients in qualified states additional funds through, at the latest, July 31, 2020.
Short-Time Compensation
Another section of the bill provides funding for “short-time compensation” programs. This program is designed to help employers who, instead of laying off workers, reduce employee hours. Under the program, employees whose hours have been reduced would receive a prorated unemployment benefit. This program would be administered by the states and would only be available where the state has opted into an agreement with the federal government. Employers would be required to pay the state 50% of the costs of the short-time compensation paid to employees.
Tax Credits
The bill provides a payroll tax credit for 50% of wages paid by employers to employees during the pandemic. This credit is available to employers whose: (1) operations are fully or partially suspended due to a COVID-19 shutdown order; or (2) gross receipts declined by more than 50% as compared to the same quarter in 2019.
The credit would apply to the first $10,000 of compensation — including health benefits — paid to an employee and would be available for wages paid or incurred from March 13, 2020, through December 31, 2020. Eligible wages are those paid to employees when they are not providing services due to the pandemic (for businesses with over 100 full-time employees) or all employee wages, regardless of the COVID-19 impact (for businesses with 100 or fewer full-time employees).
The bill also allows employers to receive an advance tax credit from the Treasury rather than being reimbursed on the back end.
Delay of Payroll Taxes
This provision allows employers to defer payment of federal Social Security taxes, paying half by December 31, 2021, and the other half by December 31, 2022.
Paid Leave
The bill creates a cap on paid leave, and states employers will not be required to pay more than $200 per day and $10,000 in aggregate for each employee. It also creates a cap on emergency paid sick leave, stating that an employer will not be required to pay more than $511 per day and $5,110 in aggregate for sick leave or more than $200 a day and $2,000 in aggregate to care for a quarantined individual or child for each employee.
The bill also allows for an employee who was laid off any time after March 1, 2020, to access paid family and medical leave if they are then rehired by the same employer.
So What Does the Future Hold?
While the future of the bill is uncertain, many of these provisions would provide welcome support to employers and employees during this unprecedented moment in time.