COVID-19 Relief Bill - What Employers and Individuals Need to Know
This past Sunday, December 27, 2020, President Trump signed new legislation providing some additional coronavirus relief. This bill contains several provisions that will impact both public and private sector employment in 2021. This article is a brief overview of what employers and individuals need to know about the new covid relief bill.
Changes to FFCRA Leave
The Families First Coronavirus Response Act ("FFCRA") originally provided up to 80 hours of paid sick and family leave under the Emergency Paid Sick Leave Act ("EPSLA"), along with up to 10 weeks of partially paid family and medical leave under the Emergency Family and Medical Leave Expansion Act ("EFMLEA") to eligible employees who were unable to work for covid-related reasons. For private employers, the requirement to provide these FFCRA leaves was offset by tax credits for wages paid to those employees taking leave. These provisions will expire on December 31, 2020 and the new bill does not expand those provisions.
Tax Credit for Private Employers
The bill does, however, permit private employers to claim tax credits on wages paid to employees taking leave for covid-related reasons between January 1 and March 31, 2021, under the employer's paid leave policy. These credits are available until March 31, 2021 if the employer paid leave would be required to be paid under the original FFCRA.
Employers now need to consider whether they should continue to offer paid leave consistent with the FFCRA in 2021. If a private employer is financially struggling, entitlement to future tax credits may be of little value in comparison with providing paid leave under the FFCRA. Public sector employers are ineligible to claim tax credits under the FFCRA. But a private employer may decide that it still makes sense for their business to rely on receiving tax credits. Regardless, employers subject to the FFCRA will most likely need to update or eliminate their existing FFCRA paid leave policies due to the new bill.
The bill expands unemployment assistance by extending the amount of time that unemployed workers can collect unemployment insurance benefits by an extra 11 weeks. This adds to the original 13 week period, making the total unemployment eligibility period 24 weeks. The bill also reinstates the supplemental federal unemployment benefit provided under the CARES act, but at a lower rate than originally instituted. Under the CARES act, the federal government supplemented state unemployment insurance benefits by $600 per week for eligible persons. Those benefits expired in July. This new bill provides for additional benefits in the amount of $300 per week. Unless extended, this benefit will expire on March 14, 2021.
Individuals receiving benefits beyond the standard 26-week period as of March 14th, 2021 will continue receiving benefits through April 5th, 2021 if they have not reached their maximum number of benefit weeks. Workers with at least $5,000 in self-employment income may be eligible for an additional $100 per week benefit as part of the Mixed Earner Unemployment Compsneation.
Other Individual Benefits
Other individual benefits that are included in the new covid relief bill include:
$600 direct payment checks for every adult and child earning up to $75,000.These payments are similar to the original $1200 payments eligible persons received. They are based on 2019 income and begin to phase out in value beginning at $75,000 for single filers, $112,500 for heads of household, and $150,000 for married persons filing jointly. The payments completely phase out at $87,000 for single filers with no qualifying dependents and $174,000 for married persons filing jointly with no qualifying dependents. Children are also eligible for the same benefit amount as eligible adults, and families with members of mixed immigration status with a valid Social Security number for one spouse are also eligible for the payments, unlike the original CARES Act rebates.
Rental Assistance: The new bill includes $25 billion to help families pay rent, and extens the eviction moratorium until January 31, 2021.
SNAP Assistance: The new bill includes an additional $13 billion for SNAP.
Benefits for Small Businesses
PPP Loans: The new bill includes $284 billion for Paycheck Protection Program loans. $15 billion of this is reserved for live venues, independent movie theaters, and cultural institutions. The bill also expands eligibility for nonprofits. If a business already received money through the PPP, second-time loans are limited to businesses with fewer than 300 employees and at least a 25 percent drop in gross receipts in a 2020 quarter compared to the same quarter in 2019. The maximum loan size for second-time borrowers is $2 million. Businesses taking a PPP loan will now be able to take the Employee Retention Tax Credit. PPP loans can be used to pay qualifying expenses, which now include property damage, supplier costs, and worker protection expenditures, in addition to employee wages and operating expenses. When used for qualified expenses, PPP loans are forgivable. Businesses can also deduct expenses paid with forgiving PPP loans.
Child care centers: The new bill includes $10 billion for child care centers to help providers safely reopen.
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This Wandro & Associates Update is intended to inform firm clients and friends about legal developments, including recent decisions of various courts and administrative bodies. Nothing in this Practice Update should be construed as legal advice or a legal opinion, and readers should not act upon the information contained in this Update without seeking the advice of legal counsel.