CARES Act (Coronavirus Aid, Relief and Economic Securities) Act

UPDATE: 03/27/2020 7:00PM

There is SO very much in the CARES Act it’s hard to get it all here quickly, so this is just a quick run down of what I could do fast to get information out to you.  I will be adding to this as I continue to read summaries and the Act itself. This piece of the COVID-19 legislation is also referred to as Phase 3.

Basic Breakdown (Estimated)

  • $500 Billion for Corporations
  • $560 Billion for Individuals
  • $377 Billion for Small Businesses
  • $339.8 Billion for State & Local Governments
  • $153.5 Billion for Public Health
  • $43.7 Billion for Education / Other
  • $26 Billion for Safety net

What are Individuals Getting:  $560 Billion

This piece is broken up into 2 Spending parts (1) $300 Billion for Direct Cash Payments to People and (2) $260 Billion for Unemployment Assistance

The Part everyone has been waiting for:  One time Cash Payments into peoples pockets.  This supposed to start in approximately 3 weeks.  Based on your 2018 or 2019 Tax return, Single Tax payers earning upto $75,000 can expect payment of $1,200 and Married taxpayers with income upto $150,000 can expect twice that or $2400.  Taxpayers with Children can expect an additional $500/child  The payments are phased out to $0 when a single taxpayer reaches $99,000 or Married couple reaches $198,000.   

You must have filed a tax return in either 2018 or 2019, or be collecting Social Security in order to receive payment.  If you are a taxpayer who is not required to file because your income is below the filing threshold, you’ll want to file a tax return (even with no tax due) in order to qualify for payment.

2nd part of this allocation is the Extra unemployment payments.  There are 3 Important pieces to the Unemployment expansion:

First, this Provision adds $600/WEEK (yep, you read that right – I had to check twice) on top of what ever the worker receives from the State for Unemployment benefits for a period of upto 4 months.

Second, this piece of the legislation also adds 13 weeks of additional unemployment insurance to the states window for claims.  So if your state (like Wisconsin) provides for 13 weeks of Unemployment, the CARES Act increases that benefit to 26 weeks.

The Third piece of this is directed to Gig Workers and Freelancers.  Both Gig workers (ie Uber) and Self Employed Contractors can now file thru unemployment and can receive assistance through the end of the year through a newly created Temporary Pandemic Unemployment Assistance Program.

Other non-monetary things that this part of the Bill does is (a) Extend Tax Returns for 2019 and their payments out to a new due date of July 15th (b) Employers can also now pay upto $5,250 of an employees student Loan debt without having to add those payments to the employees income and (c) the bill requires that all private insurance plans cover COVID-19 treatments and Vaccines and makes all coronavirus tests Free!

What are Small Businesses Getting:  $377 Billion

For employers with less than 500 employees, this piece establishes Emergency Grants and Forgivable Loan programs. 

The Emergency Grant portion of this piece provides upto $10,000 in emergency funds to cover immediate Operating Costs including Payroll, Rent, and operating expenses.

Most of the money in this piece of the legislation comes in the form of Forgivable loans provided by the Small Business Administration in amounts upto $10Million.  Any portion of the loan that is used to maintain payroll and keep workers on payroll (except payroll under payroll paid under the expanded Sick Leave and EFMLA passed in Phase 2), or used to pay Rent or Mortgage and EXISTING debt could be forgiven provided that workers stay employed on the payroll through the end of June.  How much your business can get depends on the following:

  1. Must have less than 500 employees per Location
  2. Lenders will determine eligibility based on whether the business was operational as of February 15, 2020
  3. Loan amounts are available based on the lessor of
    1. Average Monthly Payroll costs during 2019 x 2.5 -or-
    1. $10 Million

The Federal Government will forgive these loans in an amount equal to what was spent on QUALIFYING expenses spent during the eight week period after the Loan Origination.   Qualifying costs are Payroll, rents, mortgages, utilities and debt in place prior to February 2020.

A Small 3rd piece in this piece of the legislation is $17billion in funds to cover six months of payments for businesses already using SBA Loans.

What are Big Businesses getting:  $500 Billion in Government Backed Repayable Loans

Although this piece is largely for Corporations, tucked in this piece of the bill is Fully Refundable tax credits to businesses of all sized that closed or are distressed to help them keep workers on the payroll.  The goal is to get them rehired and put on paid furlough protecting their jobs in the process.   The credit covers 50% of the payroll upto the first $10,000 of Compensation including Health benefits for each employee.  Under this provision though, they split the usage into 2 groups

  • Employers with over 100 employees can only receive credit for Wages paid to employees when they are NOT providing services due to COVID-19
  • Employers with Under 100 employees can use the credit even if they are not closed.

What does Public Health get:  $153.5 Billion

Because my focus in on Small business, I’m just going to mention what’s in this piece.

Hospitals, Community Health, CDC, Veterans, Telehealth, Medical Supplies and Drug Access is all addressed in this section

What does the Safety Get:  $26.0 Billion

Important pieces in this part:

  • Schools are getting $8.8 Billion for Student Meals
  • Food Stamps (SNAP) is getting additional $15.5 Billion
  • Food Banks are getting $450 Million for community food distribution programs

What does Education/Other get:  43.7 Billion

Although my focus of this is Employees and Small business, there is a couple things in this that effect the family and students.

  • Student Loans:  All Loan and Interest Payments are deferred through Sept 30 without penalty on Federal Student Loans
  • Work Study Funds:  Those funds that have unused funds can now use those funds for supplemental grants and continue to pay work study wages while schools are suspended
  • Students who had to drop out due to COVID-19 will  not have to pay back grants or other aid they received because they left school due to COVID-19



ADDED: 03/27/2020 4:35PM
Today the CARES ACT (Coronavirus Aid, Relief, and Economic Security Act) was passed. The document is 883 pages long. I’m working on a summary of information that will benefit both you personally and your company. Please stay tuned while I learn about what they did. I should have something up here by early tomorrow!

COVID-19: House bill HR 6201

Below is the final bill as it pertains to Paid leave.  This is SUBSTANTIALLY different from the Bill as it existed Saturday and all the Media about this being passed with no changes is false.  Below is what you need to know for your employees.  Mind you, none of this interferes with anything you want to provide for your employees.  Note though that they made substantial changes with what you HAVE to do.

Note – The employer shutting the doors is NO LONGER a qualifying event for PAID SICK LEAVE or PAID FAMILY MEDICAL LEAVE.

The Business or Employees must be unable to work due to Government Quarantine or Isolation ordered by a Health Care provider.

If the business lays off an employee due to a DOWNTURN OF WORK, Standard Unemployment Rules apply.  The way I now read this is, If an employee leaves due to their own concerns of Safety, they could be jeopardizing their ability to claim unemployment.

It is clear to me this is the reason why Congress is discussing the $1,000 tax checks to tax payers as they limited who and when they qualified.

Families First Coronavirus Response Act

Who’s eligible, Who’s not and When

Effect date of this legislation:  15 days following presidential signature or APRIL 2ND

Expiration of this Legislation:  December 31st 2020

EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT

This act covers Employers with 500 or Fewer Employees.  Employers with under 50 employees can be EXEMPTED FROM THIS ACT if the Required leave would jeopardize the viability of their business.

Employees Eligible:  Must be employed for 30 days (BEFORE the 1st day of leave) to take leave under the Emergency Family Medical Leave Expansion Act.  An eligible employee is one who is unable to work or telework, to care for the employee’s child (under 18 years of age) due to child’s school or place of care being closed.  ALL OTHER COVID-19 RELATED NO LONGER APPLY – THIS IS THE ONLY QUALIFYING NEED IN THE FINAL ACT.

What’s paid…

The First 10 days are UNPAID under the FMLA portion of this ACT but employer MAY substitute Accrued Sick Pay or Vacation pay to cover some or all of the 10 days.

After the 10 day period:

  • Full time employees are paid at 2/3rd the employee’s regular rate of pay (if Full time) multipled by the number of hours the employee would otherwise normally be scheduled – upto a maximum amount of $200/day for a maximum amount of $10,000/employee
  • Part-time or irregular scheduled employees are paid based on the average number of hours the employee worked for the 6 month period prior to taking FMLA

Employers with less than 25 employees are not subject to job retention requirements if the employee’s position no longer exists following the Emergency FMLA leave

EMERGENCY PAID SICK LEAVE

Eligible Employees may take PAID sick leave because the employee is:

  1. Subject to Federal, State or Local Quarantine or Isolation Order related to COVID-19
  2. Advised by a Health Care Provider to Self-Quarantine due to COVID-19
  3. Experiencing COVID-19 symptoms AND seeking Medical diagnosis
  4. Caring for an individual subject to Federal, State or Local Quarantine or Isolation Order -or- Advised by a health care provider to Self-Quarantine due to COVID-19
  5. Caring for the Employees child if the child’s school or child’s school or place of care is closed or the care provider is unavailable due to public health emergency
  6. Experiencing any other substantially similar condition specified by the Secretary of Health and Human Service IN CONSULTATION WITH the Secretary of the Treasury and Secretary of Labor

Who’s eligible under Emergency Sick Leave:

Full time employees (regardless of employee’s duration of employment)

Part time employees or irregular scheduled employees are entitled to be paid based on the average number of hours the employee worked for the SIX MONTHS prior to taking the sick leave.

How much is paid:

  1. For items #1, 2, or 3 above:  80* hrs of Paid sick leave at the employee’s regular rate upto a maximum of $511/day or $5,110 total
  2. For items #4, 5 or 6 above:  2/3rds* of the employees regular rate of pay with “QUALIFYING REASONS”. Maximum of $200/employee per day for caring for others

    *If Full time, part time is paid based on average hours for the preceeding 6 months

Employers will still be reimbursed through a series of tax credits for employers who are required to provide Emergency Paid Sick Leave and Emergency Paid Family Medical Leave for 100% of the qualified sick leave wages paid.


Updated: 03/18/2020

COVID-19 (Corona Virus) :  Your Business and Your Employees

H.R. 6201 – Families First Coronavirus Response Act (FFCRA), was passed by the House of Representatives on Saturday 03/14/2020 and expected to pass the Senate later this afternoon and then move the Presidents desk for signature.  FFCRA covers several topics that directly Impact Families, Healthcare / Emergency Response Workers, and Small businesses and their employees.   This post is going to focus only on the Small Business portion of the Act, DIVISION D – Emergency Paid Leave Act of 2020.  After gaining an understanding of the benefits of what this bill provides to Workers, the kicker in the bill to Businesses is that the Businesses need to have available funds in order to pay the Required Benefits.  They are however, refunded to the Employer Quarterly BUT having to lay out Payroll funds when Revenue is greatly reduced is the issue that this bill does not address.   Not all states have been added to the SBA Disaster Relief list so this piece is still an open issue, for now. Additionally, the bill gives the Secretary of Labor the authority to exempt small Businesses where the Bill would impose requirements that would jeopardize the viability of the small business.

First it is important to Note that this piece of the FFCRA works in conjunction with your State Unemployment Insurance and your Internal Policies on Paid leave as well as the FMLA (Family Medical Leave Act).  Because I am based in Wisconsin and most of my clients are as well, my analysis is going to be based on my State, however, this act picks up where your State leaves off.

The first thing that this Act addresses defines the Qualifications under FMLA in order to qualify for this piece of the relief.  As an Employee, YOU WILL QUALIFY IF THE STATE OR BUSINESS SHUTS DOWN DUE TO COVID-19 RESPONSE – IF, you were employed by that employer for a minimum of 30 days PRIOR to being Impacted by COVID-19. 

Since this bill works in conjunction with FMLA, you need to know how this piece works first.  The Family Medical Leave Act has been around since 1993.  Its purpose was to provide up to 12 weeks of UNPAID leave to employees who needed time off to tend to relatives who were sick or for an employee or their family who was sick (such as child birth) without fear of losing their jobs.  States typically kicked in after this to allow additional unpaid time off.   The FMLA act applied to Only Employers with 50 or more employees. The Emergency Paid Leave ACT modifies these basics.

Who Qualifies:

Employers with FEWER than 500 employees now Qualify under the Act but the Employer MUST provide job protections under the ACT.  There are no exemptions in place to exempt employers from notifying the employees of their rights to utilize FMLA so, just to ensure your compliance and potential tax credits, you should right now notify your employees.  Employers with more than 50 employees were also required to add this to the Employee notices bulletins but this now expands the law to all Employers with 0-500 employees.

What Triggers FMLA under FFCRA:

  • Workers with Current diagnosis of COVID-19
  • Worker Caring for a person with COVID-19 or Quarantined due to the person with COVID-19
  • Worker Caring for child or other individual who is unable to care for themselves due to COVID-19 related to closures of the child’s school, daycare or other care program
  • Workers Quarantined (including Self-Quarantine) at the instruction of Care Providers, Employers, or Government Official prevent the spread COVID-19

What are you paid under FMLA:

The first 2 weeks (80 hours) under FMLA are covered by the Employers Paid leave plan (if any) – The Emergency Paid Leave ACT (EPLA), which fills in this gap, is discussed below.

Subsequent weeks off under FMLA are paid 2/3s of the employee’s regular rate.

Important to note: YOU MAY NOT CHANGE YOUR CURRENT POLICIES TO KICK PEOPLE INTO THE ELPA after enactment of this bill.

So that’s the basics of the FMLA changes that are included in the FFCRA.   Here’s whats new:

EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT (EFMLEA)

This is a temporary change to FMLA act to cover more businesses and more employees. 

  • Under FMLA employees needed to be employed for 1 year and 1,250 hours, The EFMLEA lowers that requirement to just 30 days employment.
  • Employees are eligible for up to 12 WEEKS PAID, JOB PROTECTED LEAVE (vs unpaid leave under FMLA)
  • The initial 2 weeks have not changed, Pay is provided thru the Employers Paid Time Off policies for up to 14 days (However, The Emergency Paid Sick Leave Act kicks in here to cover this lapse IF the business has no Company policy)
  • After the initial 14 days, Employees are paid 2/3rd of their regular rate of pay.  Monthly earnings are Capped at $4,000/month per Employee
  • This Modification will be effective within 15 days of enactment and be in Effect thru Dec 31st, 2020

EMERGENCY PAID SICK LEAVE ACT (EPSLA)

This piece of the legislation REQUIRES all Businesses with less than 500 employees to provide 80 hours of paid sick leave at the Employees Regular Rate of pay – UNLESS, one of the following applies then the rate is at 2/3rds of the employees regular rate:

  • Child’s school or Care facility is closed due to COVID-19
  • To care for a Family Member who is SELF ISOLATING and exhibiting symptoms
  • Or who is complying with a recommendation or Quarantine requirement

This is where the Employer MAY NOT CHANGE THEIR CURRENT POLICIES

TAX CREDITS

Now here’s the part that the Employer wants to know… How does this help the business if I need to pay employees even 2/3rds of their pay?
So how do you get repaid on these new Policies: 

For the EPSLA:  Employers will receive a REFUNDABLE Tax Credit equal to 100% of the Qualified Sick Leave paid by Employers each Calendar Quarter up to a maximum of $511/day ($200/day if caring for child or family member) for up to 10 days per employee per calendar quarter.  This Credit is applied on your Quarterly 941 return and goes against the EMPLOYER portion of taxes reported.  The Refundable portion comes in, if and when your EMPLOYER FICA & Medicare Taxes are less than the Sick Leave paid.

For the EFMLEA:  Employers are entitled to a REFUNDABLE tax credit equal to 100% of the Qualified Family leave wages paid by Employers for each Calendar Quarter in accordance with the new provisions under this act.  The Qualified wages are capped at $200/day/employee up to a Maximum of $10,000/Quarter.  This piece of the program operates in conjunction with other Benefits & Leave programs INCLUDING unemployment compensation. 

So – the way I read this is that Employees should apply for Unemployment Benefits FIRST.  The Amount of the EFMLEA benefits paid by the Employer is reduced by the amount the Employee receives from Unemployment insurance.  These payments do not reduce the UC compensation that would normally be available to the employee.
In addition to the Contributions being provided by the State UC insurance, States will be reimbursed by the Fed Government under funding provided in this act and Employer UC rates should also not be affected or increased.  Employers MUST notify their employees that they are eligible for this benefit.

Benefits paid under the Emergency Leave Benefits are NOT subject to Federal income taxes!!

Congress is working on a 2nd COVID-19 package however the details of that package are yet to be released.  Per a press conference earlier today – potential inclusions in that package could be:

  • Stimulus checks mailed direct to taxpayers in the amount of $1,000 per adult and $500 per child.  However, before you go “Yeah” – they are suggesting this won’t happen until late April
  • Extension for Tax Payments due on the 4/15 income tax return filing deadlines.   Extending time to make any Federal Tax payments out to 7/15/20 with No interest and No penalties being accessed on the balance.  However, it sounds like returns would need to be filed timely by 4/15 to take advantage of this offer.  6 month Extensions on TIME to file are also still available to extend your FILING, not your taxes due.

As information changes, I will be updating and adding to the information in this post. I hope this helps.