The $2 trillion bill is designed to stimulate the economy in the wake of Covid-19. Here are some highlights:
Paid Sick and FMLA Leave:
Addressing the paid leave provisions of the Families First Coronavirus Act (FFCRA), the Act confirms that employees laid off after March 1, 2020, who are thereafter rehired are entitled to FFRCA emergency family leave and emergency sick leave. It also provides funds to federal agencies to reimburse federal contractors for paid leaves as a result of the Covid-19 crisis. If FFCRA benefits are paid, there are tax credits available by way of offsets of payroll taxes.
Unemployment insurance (UI) is a joint state-federal program providing cash benefits to eligible workers; thus, states must enter into specific agreements with the U.S. Department of Labor (DOL) to receive the Act’s increased benefits which include:
- Temporary Pandemic Unemployment Assistance (PUA) through December 31, 2020, to include workers who are not traditionally eligible for UI, such as the self-employed or independent contractors who cannot work as a result of this public health emergency.
- An additional emergency increase of $600 per week payment—referred to as “Federal Pandemic Unemployment Compensation” for up to 4 months.
- Availability of payment for the first week of UI (normally unpaid) through December 31, 2020.
- Thirteen additional weeks of unemployment benefits through December 31, 2020.
- One hundred percent funding of “short-time compensation” programs through December 31, 2020, when employers reduce employee hours rather than laying off workers, providing employees with reduced hours and prorated unemployment benefit. Consider this benefit along with the Arizona Shared Work Unemployment Compensation Program as a potentialalternative to a RIF. The Shared Work program allows an employer to divide the available work or hours of work among a group of affected employees in lieu of a RIF, while allowing the employees to receive a portion of their Unemployment Insurance benefits while working the reduced hours. Employees may be eligible for Shared Work Benefits when hours have been reduced by at least 10% but not more than 40%. https://des.az.gov/services/employment/unemployment-employer/shared-work-program-faqs
- Grants and start-up costs for states to develop short time compensation programs.
- Arizona has passed legislation to expand access to unemployment benefits for Arizonans affected by COVID-19 by waiving certain Arizona Department of Economic Security (DES) eligibility requirements and align with federal guidelines. Retroactive to March 10, 2020, Arizona UI will now cover:
- Individuals who are not receiving wages due to their workplace closing due to COVID-19 — even if the individual intends to go back to work when the business reopens.
- Individuals who are following directives to self-quarantine and intend to return to work.
- And individuals who leave employment to care for a family member.
Arizona has also waived the one-week waiting period.
Small Business Administration (SBA) “Paycheck Protection Program”
This $349 billion lending program is designed to keep small businesses running and keep their workers employed. It generally covers small businesses and nonprofits with less than 500 employees, including hospitality businesses with less than 500 employees at each location, sole-proprietors, independent contractors, and self-employed workers. This program provides loan forgiveness equal to the amount spent on payroll (capped at $100,000 in wages), rent, mortgage interest, and utilities for eight weeks from the loan origination. Loan forgiveness is reduced in proportion to any reduction in employees and to a reduction in employees’ pay of greater than 25 percent. To encourage rehiring, this program is retroactive to cover loans from February 15, 2020, to June 30, 2020. Implementing regulations will follow.
Business Tax Benefits
- The CARES Act provides a payroll tax credit for eligible employers up to 50 percent of wages paid, up to $10,000 per employee and permits a tiered deferral of the employer’s payment of its share of the Social Security tax , half may be deferred to December 31, 2021, and the other half may be deferred until December 31, 2022.
- The Act allows single-employer pension plan companies to delay for contribution otherwise due during 2020 until January 1, 2021 and waives the required minimum distribution rules for certain defined contribution plans and individual retirement accounts (IRAs) for 2020. It also waives a withdrawal penalty for distributions of up to $100,000 from qualified retirement accounts for COVID-19-related purposes.
Individual Stimulus Payments
Finally, the Act provides U.S. residents with adjusted gross incomes of up to $75,000 ($150,000 for married couples), up to $1,200 ($2,400 for married couples) and an additional $500 per child.
This is an evolving area as changes and new information is released daily.
The lawyers at Faulkner Law Offices, PLLC have decades of experience and can help employees and employers maneuver through these challenging times.