Federal Action Including the Coronavirus Aid, Relief, and Economic Security Act

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The Federal Government has been acting swiftly since the crisis began and there has been much legislation passed in haste. Not all of the actions taken fall within the scope of this Guide; many do pertain to employers in California during this crisis but are primarily about financial matters. As such we advise all businesses to become personally aware of all available Federal remedies and to stay abreast of changes that pertain to them on a daily basis. Each employer also must have accountant and financial advisers to walk them through the details of the law and guide their actions during a chaotic and uncertain time. In this and the next three sections we do provide the fundamentals of some of the most significant Federal legislation.

EMPLOYER RETENTION CREDIT

Employers whose operations are fully or partially suspended during the COVID-19 pandemic or whose quarterly receipts dropped by more than 50% as compared to the same quarter in the prior year, may receive a refundable payroll tax credit for 50% of wages (up to $10,000 per employee) paid during each calendar quarter during the COVID-19 pandemic.

FUNDING FOR PROGRAMS

States that have or will implement certain workshare programs for employees, are eligible to receive additional funding. Under workshare programs, employers reduce the average hours of current employees, across the board, rather than conducting layoffs or furloughs. These employees then receive pro-rated unemployment benefits known as Short Term Compensation Benefits (STC). The federal government will reimburse states 100% of the STC paid under a state’s existing workshare program, through December 31, 2020.

California has a workshare program and it can be accessed at https://www.edd.ca.gov/unemployment/Work_Sharing_Program.htm.

THE CARES ACT

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is primarily intended to provide benefits and relief for small business owners (under 500 employees) and employees eligible for unemployment insurance benefits. There are three main provisions in the CARE Act, and they presented in the next three sections of this Guide.

1. The first is a Federal supplement to the each state's Unemployment Insurance benefits system (UI). Its main provision is to provide and extra $600 per week for all employees that are receiving any amount of UI.

2. The second is the Payroll Protection Program. It provides for a loan to small businesses of 250% of their monthly payroll, up to ten million dollars. This loan is fully forgivable if the funding is spent in the two months following funding on payroll and rent. Otherwise it has a six month grace period, and is repayable over ten years at no more than a 4% interest rate.

3. The third is emergency loans and grants. These are available up to two million dollars to small business, to be used only where the corona virus has a demonstrated negative effect on the business. It has been overshadowed by the PPP, since the loans/grants cannot be in addition to one another.

All three areas have greatly taxed the resources of the SBA, banks everywhere and local EDD offices all over the state. There have been limits on funding which have caused high pressures for access. There have been contentions and issues in conception and administration of all of them.

For a full text of the Act see https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf (PDF).

For additional guidance see https://home.treasury.gov/policy-issues/cares.

SEE ALSO

• Federal and California Worker Adjustment and Retraining Notification Acts
• Federal Health and Safety Orders: Centers for Disease Control and Prevention Guidance

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