Congress Passes Coronavirus Aid, Relief, and Economic Security Act (CARES)

Mar 30, 2020 | Written by: Leslie A. Parikh, Esq. | Share

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), a roughly $2 trillion stimulus measure that includes payments to millions of Americans in need of assistance, support for the health care system, unemployment benefit expansions, and loans to struggling businesses.

Below are some highlights of the Act that we expect employers will want to know.   

SMALL BUSINESS LOANS

PAYCHECK PROTECTION PROGRAM

The Paycheck Protection Program provides $349 billion in relief to businesses who are Small Business Act (SBA) eligible and have 500 or less employees.  The Program provides loans equaling the lesser of 2.5 months of normal payroll costs or $10 million to cover salaries, benefits, payroll costs, mortgage interest, rent, utilities, and interest on certain preexisting debt obligations.  The program also contains a debt forgiveness provision that equals the sum of the forgoing covered costs incurred over an 8-week period beginning on the origination date of the loan.

Importantly, this program does not cover payroll costs related to employees who make over $100,000.00 annually. Further, debt forgiveness will be reduced for those businesses that let employees go or reduced their compensation by more than 25% over the course of the pandemic.  The program runs retroactively from February 15, 2020 to June 30, 2020. 

ECONOMIC INJURY DISASTER LOANS

The CARES Act expands access to Economic Injury Disaster Loans up to $2 million under the Small Business Act. Businesses are also eligible for an immediate grant of up to $10,000, which can be used to cover payroll and is not required to be repaid even if the loan request is denied.

UNEMPLOYMENT AND LEAVE PROVISIONS

EXPANDED UNEMPLOYMENT BENEFITS

The CARES Act increases the amount of unemployment benefits a person can receive by adding an additional $600 per week to any state benefits for up to four months. It also adds an additional 13 weeks of benefits offered by the federal government after state benefits expire.

Eligible workers could receive unemployment benefits for up to 39 weeks (usually, unemployment benefits may only be collected for 26 weeks).

PAID LEAVE

In addition to the protections provided by the Families First Coronavirus Response Act (“FFCRA”), the CARES Act clarifies the emergency paid leave provisions of FFCRA to reflect that the payment caps are for each employee, not for the organization as a whole.  FFCRA is amended to provide that an employer will not be required to pay for each employee more than either:

$511 per day or $5,110 total, when the employee takes leave due to a government quarantine or isolation order, when an employee is advised by a health care provider to self-quarantine due to concerns related to COVID-19, or when the employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;

    or

$200 per day or $2,000 in the aggregate, when the employee must take leave to care for any individual who is subject to a government quarantine or isolation order, to care for a person who has been ordered by a health care provider to quarantine because of COVID-19, or when the employee must stay home to care for any child under 18 if the child’s school has been closed or the childcare provider is unable to provide the childcare due to the public healthcare emergency.

The amendment clarifies that the benefit will expire at the earlier of (i) when the employer has paid the employee under the act for 80 hours of leave (or the equivalent of two weeks’ time for part-time employees), or (ii) when the employee has returned to work after taking paid leave.

Additionally, if an employee has previously worked for an employer for at least 30 calendar days, is laid off on or after March 30, 2020, but later returns, the employee will not have an additional 30-calendar-day service period before being eligible for the paid leave benefits if a qualifying event occurs.