COVID-19: Congressional Action

Overview

Congress has taken a series of bold actions in response to the COVID-19 crisis. It has passed three phases of emergency relief legislation to date—and is now weighing a fourth—to bolster the nation's response to the public health crisis and stem the economic fallout. These major pieces of legislation contain important provisions affecting employers and employees.

Phase Three: Coronavirus Aid, Relief and Economic Security (CARES) Act
Small business loan programs; large employer financial assistance; employee retention tax credits

Phase Two: Families First Coronavirus Response Act
Emergency paid sick, family and medical leave for employees; Refundable tax credit for employers

Phase One: Coronavirus Preparedness and Response Supplemental Appropriations Acts
Emergency paid sick, family and medical leave for employees; Refundable tax credit for employers

 

Phase Three: The Coronavirus Aid, Relief and Economic Security (CARES) Act

On 3/27/20, President Trump signed into law the biggest economic recovery package in American history. The CARES Act provides financial assistance to employers and independent contractors through lending programs backed by the Small Business Administration, U.S. Treasury Department and Federal Reserve. The new law totals 880 pages, authorizing more than $2 trillion in new federal spending to stabilize and stimulate the economy.

Key provisions for motor carriers:

Small Business Loans

For independent contractors, small- and mid-size carriers, the CARES Act creates new SBA lending programs, and expands upon existing ones, to help maintain payrolls and other business expenses.

Paycheck Protection Program

For ICs and businesses with 500 or fewer employees, or who otherwise meet SBA size standards, the newly created Paycheck Protection Program provides eight weeks of cash-flow assistance through 100% federally guaranteed loans to maintain payroll during this emergency. The loan size would equal 250% of an employer’s average monthly payroll, with a maximum loan amount of $10 million and a maximum interest rate of 4%. Loan payments will be deferred six months, and the program will be available retroactively from February 15, 2020—enabling employers to rehire any recently laid-off employees through June 30, 2020.

PPP loans can be used to cover costs of:

  • Employee salaries and commissions;
  • Insurance premiums and other group healthcare benefits during periods of paid sick, medical, or family leave;
  • Mortgage interest payments; 
  • Rent and utilities; and 
  • Interest on debt obligations that were incurred before the covered period.

These small business borrowers are eligible for partial loan forgiveness subject to certain conditions.

 

Frequently Asked Questions:

How can I capitalize on the Paycheck Protection Program to receive eight weeks of payroll cash-flow assistance?

Carriers interested in the Paycheck Protection Program can contact their financial institution and ask if they are a SBA 7(a) approved lender or if they intend to participate in the PPP loan program.The application can be found here. Information on finding an approved SBA lender can be found here.

How soon can I apply for PPP loans?

Starting April 3, 2020, small businesses and sole proprietorships can apply. For ICs and self-employed individuals, the application window opens April 10, 2020. 

Is there a deadline to apply?

Applicants are eligible to apply for the loan until June 30, 2020.

Is any documentation required?

Documentation verifying the business was operational after February 15, 2020, and had employees for whom they paid salaries and payroll taxes (or a paid independent contractor), is required. More information on the application is available here from the Treasury Department. 

 
Debt Relief

The CARES Act requires SBA to pay all principal, interest and fees on existing SBA loan products (outside of PPP loans) including 7(a), Community Advantage, 504 and Microloan programs—for a period up to six months. 

Express Loans

The Cares Act increases the maximum amount of SBA express loans, which can be obtained in a streamlined process for a variety of business needs, from $350,000 to $1 million.

Disaster Loans

The new law also expands eligibility for entities suffering economic harm from COVID-19 to access SBA’s Economic Injury Disaster Loans, while also giving SBA more flexibility to process and disperse small dollar loans. In addition, businesses that apply for an EIDL expedited access to capital through an Emergency Grant—an advance of $10,000 within three days to maintain payroll, provide paid sick leave and to service other debt obligations.  

 

How can I apply for an EIDL loan?

Click here. The SBA District Offices are another good resource when applying for SBA assistance.

 

Large Employer and Industry Support

Larger businesses will be eligible for assistance in the form of loans, loan guarantees and investments through Federal Reserve lending programs. The CARES Act allocates $454 billion to the U.S. Treasury’s Exchange Stabilization fund for this purpose.
 
Among other requirements, firms receiving loans will be prohibited from engaging in stock buybacks for the duration of the loan plus one year. Borrowers must, until September 30, 2020, maintain their employment levels as of March 24, 2020, to the extent practicable, and retain no less than 90% of their employees as of that date.

The law requires the Treasury Secretary to publish application procedures and minimum requirements by April 6, 2020. More information will be published at treasurgy.gov/cares. 

Employee Retention Tax Credits

The CARES Act created a program called the Employee Retention Credit to provide a refundable payroll tax credit of 50% of wages paid by employers to employees during the COVID-19 timeframe. To qualify, a business must either have operations fully or partially suspended due to a COVID-19 shut down order OR have gross receipts decline by more than 50% when compared to the same quarter in the prior year.
 
Eligible businesses can get a refundable 50% tax credit on wages up to $10,000 per employee. The credit can be obtained on wages paid or incurred from March 13, 2020 through December 31, 2020.  If an employer has more than 100 full-time employees, qualified wages for the credit are wages paid to employees when they are not providing services due to the COVID-19 virus.  If an employer has less than 100 full-time employees, all employee wages qualify for the credit whether the employer has suspended business or is open and operating.  Processes for receiving the credit are being formulated by the Treasury Department.  Additional information is available here.
 
Important note:  If an employer receives a Paycheck Protection Program loan, it not eligible for a tax credit.

Direct Assistance to Individuals and Families

The CARES Act also provides direct financial assistance to most American citizens, depending on income level. U.S. residents or citizens with adjusted gross income under $75,000 ($112,500 for head of household / $150,000, married), who are not the dependent of another taxpayer and have a work-eligible Social Security Number, are eligible for the full $1,200 ($2,400 married) rebate. They are also eligible for an additional $500 per child. A typical family of four is eligible for a $3,400 recovery rebate. More information is available here from Senate Finance Committee here.

Phase Two: Families First Coronavirus Response Act

On 3/18/19, President Trump signed the Families First Coronavirus Response Act into law, which marks "Phase Two" of emergency relief legislation that Congress has approved. The law contains important provisions on paid sick leave and family and medical leave summarized below.

Emergency Paid Sick Leave

  • Requires employers with fewer that 500 employees to provide two weeks of paid sick leave (80 hours for FT; average hours over a two-week period for PT). Employer may not require employees to use other available paid leave first.
  • Employees are eligible if they are unable to work (or telework) because they are subject to a quarantine or isolation order related to COVID-19; have been advised by a health care provider to self-quarantine; are experiencing symptoms of COVID-19 and seeking a diagnosis; are caring for an individual subject to a quarantine/isolation order or self-quarantining per health care provider advice; are caring for children whose schools are closed or whose care provider is unavailable due to COVID-19 precautions; or are experiencing another substantially similar condition specified by HHS
  • Employees must be compensated at the higher of their regular rate of pay, the federal minimum wage, or the local minimum wage, capped at $511/day and $5,110 total for employees who are themselves quarantined or ill; or 2/3 of their regular rate, capped at $200/day and $2,000 total, for those caring for others.
  • Gives employers a refundable tax credit against quarterly payroll taxes for family leave wages paid. Gives self-employed individuals a credit against self-employment taxes of equivalent amounts.
  • DOL has the authority to exempt businesses with fewer than 50 employees if the requirements would jeopardize the viability of the business as a going concern.
  • Provision sunsets at the end of 2020.

Family and Medical Leave

  • Requires employers with fewer than 500 employees to provide up to 12 weeks of paid FML.
  • Employees are eligible if they have been employed at least 30 days and are unable to work (or telework) in order to care for children whose schools are closed or whose care provider is unavailable due to a public health emergency.
  • First 10 days may be unpaid (employee may elect to substitute other paid leave, if available), after which employees must be compensated at least 2/3 of their regular rate, capped at $200/day and $10,000 total. For employees with irregular hours, amount is based on the average hours over the past six months, or employee’s reasonable expectations at time of hiring for employees who have not been on the job for six months.
  • DOL can exempt businesses with fewer than 50 employees if the requirement would jeopardize the viability of the business as a going concern.
  • Employers with fewer than 25 employees are not obligated to restore employees to their position post-leave, if their position no longer exists due to the emergency, and the employer has made reasonable efforts to restore the employee to an equivalent position and to offer the employee such a position if it becomes available over a one-year period.
  • Gives employers a refundable tax credit against quarterly payroll taxes for family leave wages paid. Gives self-employed individuals a credit against self-employment taxes of equivalent amounts.
  • DOL has the authority to exempt businesses with fewer than 50 employees if the requirements would jeopardize the viability of the business as a going concern.
  • Provision sunsets at the end of 2020.
Frequently Asked Questions

Important note: These FAQs are based on our initial review of the Families First Coronavirus Response Act, complex new legislation. As with any new legislation, members are encouraged to work with their own counsel in fully understanding their obligations. The following is both tentative and not intended to be a comprehensive summary of the bill.
 
What new benefits does the legislation establish, and what triggers them?

The new legislation provides for two weeks of paid sick leave for employees who are unable to work or telework because they are subject to a COVID-19-related isolation order or recommendation from a health-care professional; are caring for such an individual; or are caring for children whose school or daycare is unavailable due to COVID-19 precautions. It also provides for up to 12 weeks of paid family leave for employees have been employed for at least 30 days, and who are unable to work or telework because they are caring for such children.
 
What employers are covered?

The new requirements apply to employers with fewer than 500 employees. DOL has the authority to exempt employers with fewer than 50 employees, if the requirements would jeopardize the viability of the business as a going concern. (Employers under 25 employees are exempt from the obligation to return employees to their positions after they return from family leave, subject to a number of conditions and limitations beyond the scope of this FAQ.)
 
What does the new paid sick leave benefit provide?

Full-time employees who qualify for the new paid sick leave benefit are entitled to 80 hours of paid sick leave; part-time employees are entitled to their average hours over a two-week period. Employees must be compensated at the higher of their regular rate of pay, the federal minimum wage, or the local minimum wage, capped at $511/day and $5,110 total for employees who are themselves quarantined or ill; or 2/3 of their regular rate, capped at $200/day and $2,000 total, for those caring for others. Employers may not require employees to use other available paid leave first.
 
What does the new paid family leave benefit provide?

Employers are not required to pay the first 10 days of family leave, though employees may elect to use other available paid leave. After the first 10 days, employees must be compensated at 2/3 their regular rate, capped at $200/day and $2,000 total. For employees with irregular hours, the amount is based on the average hours over the past six months, or the employee’s reasonable expectations at the time of hiring for newer employees.
 
What tax relief is available to employers who pay benefits under the new law?

Employers are entitled to a refundable credit against payroll taxes for benefits paid under the new requirements. As with any tax matter, there may be circumstance-specific ramifications or complexities, and businesses are highly encouraged to confer with their counsel or tax professional regarding the implcations of these tax credits to their particular situation.
 
Does the bill provide any benefits to independent contractors?

Individuals who qualify as self-employed under the Internal Revenue Code and who would have been entitled to the paid sick or family leave benefits if they were an employee are allowed a refundable credit against self-employment taxes corresponding to those benefits. 

The Department of Labor has more information here on common issues employers and employees face when responding to COVID-19, and its effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act.

 

Phase One: Emergency Supplemental Package

On 3/6/20, President Trump signed an $8.3 billion emergency funding package into law, which unleashes a trove of federal resources to assist in the fight against COVID-19. From Politico: 

The legislation will bolster vaccine development, research and equipment stockpiles, as well as boost state and local health budgets, as government officials and health workers fight to contain the outbreak. More than $400 million will be disbursed to states within the first 30 days of the bill’s enactment, with each state receiving no less than $4 million.