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What Employers Should Know About the New Congressional COVID Relief Bill

After months of debate, Congress has passed, and President Trump is expected to sign, a COVID-19 relief, appropriations, and tax bill. Doubtlessly, the Bill, which is nearly 6,000 pages long, will undergo much scrutiny and analysis over the ensuing days and weeks.

But, judging from available legislative summaries, the following are key provisions of which employers should be aware.

Tax Provisions

  • Extension and Expansion of the Employee Retention Tax Credit (ERTC):
    • The Bill extends and expands, through July 1, 2021, the CARES Act’s refundable ERTC. The extension is aimed at helping to keep additional US workers on payroll and more small businesses and nonprofits across the country remain afloat. Specifically, the Bill, among other things:
      • Increases the tax credit rate from 50% to 70%;
      • Raises the limit on per-employee creditable wages from $10,000 for the year to $10,000 for each quarter;
      • Expands eligibility for the credit by reducing the required year-over-year decline in gross receipts from 50% to 20%; 
      • Modifies the threshold for treatment as a “large employer” by increasing the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees; and
      • Permits businesses taking a PPP loan to be able to take the ERTC, which previously only allowed businesses to opt into one or the other program.

Unemployment Insurance Provisions

The Bill contains $120 billion in additional federal funding for workers by extending the CARES Act’s unemployment insurance expansion through March 14, 2021. The Bill accomplishes this by, among other things:

  • Providing enhanced unemployment insurance benefits through the Federal Pandemic Unemployment Compensation (FPUC) program — an additional $300 per week to supplement all state and federal unemployment benefits, starting after December 26, 2020, and ending March 14, 2021.
  • Extending the Pandemic Unemployment Assistance (PUA) program, which provides continued unemployment assistance to self-employed, freelancers, gig workers, part-time workers, and other individuals in non-traditional employment.
  • Increasing the number of weeks of PUA benefits an individual may claim, from 39 to 50.
  • Extending the Pandemic Emergency Unemployment Compensation (PEUC) program, providing additional weeks of federally-funded benefits to workers who have exhausted their regular state unemployment benefits.
  • Increasing the weeks of PEUC benefits an individual may claim from 13 to 24.
  • And, providing full federal financing of state Shared Work programs, allowing employers to avoid layoffs during the downturn by connecting their employees who are working reduced hours with partial unemployment compensation, through March 14, 2021.

Paid Leave Credits Extension

The Bill extends, through March 31, 2021, the refundable payroll tax credits for paid sick and family leave, established under the Families First Coronavirus Response Act (FFCRA).

Congress did not, however, change the December 31, 2020 end date for mandated FFCRA. From January 1, 2021, through March 31, 2021, covered employers may choose to provide emergency paid sick leave or emergency paid FMLA Leave under the FFCRA. And, employers may claim the associated payroll tax credit through March 31.  

We will publish additional information about the new Bill as we delve into it more deeply and key agencies issue their guidance. Meantime, here’s a link to an Alert that discusses the Bill’s key Paycheck Protection Program’s components. 

Contacts

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