CARES: The Impact on Business, Employers and Employees
Today, March 27, 2020, President Trump signed the largest and most comprehensive act to aid businesses, employers and employees, particularly in the small business segment, during this COVID-19 pandemic. The hefty price tag, $2 trillion, will provide direct relief to businesses, with the specific goal of assisting employers wishing to retain employees on their payroll; there is also direct aid to individuals in the Act. The law, called “CARES,” or the Coronavirus Aid, Relief and Economic Security Act (the “Act”), will impact:
- Unemployment insurance
- Business loans
- Employer-sponsored health insurance
- Retirement savings
- Employer-provided education assistance
THE KRCL CARES TASK FORCE
In specific response to CARES, KRCL has established THE KRCL CARES TASK FORCE, consisting of top transactional and employment lawyers, to assist clients, as they maneuver through CARES. The team will work with businesses and employers in figuring out the most expeditious process for obtaining federal government assistance, as well as making the best, real-time decisions as to employees and payroll. These critical emergency decisions will have impact across the board, and the KRCL team will be there to provide the legal guidance in the midst of these practical realities. The initial task force members are:
- Gordon Russell, Director (Dallas – transactional)
- Arthur Nathan, Director (Houston – transactional/tax)
- Doug Bracken, Director (Dallas – employment law)
- Andrea “AJ” Johnson, Director (Houston – employment law)
- Richard Hathaway, Director (Dallas – employment law)
- Demetri Economou, Director (Houston – employment law)
- Emily Green, Associate (Houston)
- Jade Peterkin, Associate (Dallas)
- Drew Robertson, Associate (Dallas)
- Kathleen Thompson, Associate (Dallas)
The Act covers a lot of ground and will be studied closely over the next few days. Further guidance and regulations from the government, e.g., the Department of Labor, are expected and needed to define and aid companies as they make these decisions. KRCL’s team is developing the materials, ideas, and advice needed to assist in this difficult time, as it has since the beginning. For example, almost daily the Employment Law Group has posted essential articles on the Law in the Workplace blog – covering compensation, working at home, and the brand-new Families First Coronavirus Response Act (FFCRA).
What we currently know about CARES:
- Businesses with less than 500 employees may be eligible for emergency loans—to help make payroll and cover other employer expenses (g., rent). These loans may be forgiven, depending on a company’s retention of employees.
- Also part of the law is a temporary unemployment assistance program, which will run through Dec. 31, in order to aid workers who may not be entitled to unemployment benefits, such as independent contractors and the self-employed.
- Further, some unemployment benefits may be enhanced with expanded eligibility and the offer of $600 a week through July 2020.
- Finally, the Act also offers other loans ($500 billion) for the airlines and large corporations.
A couple of further notes:
Payroll-Protection Loans – Link to Continued Employment
Given this current emergency, CARES permits low interest (4%) loans to employers so that they may continue to cover payroll costs and other expenses. As to these loans, the Small Business Administration will be in charge. Expenses to be covered will run from Feb. 15 through June 30, 2020, and may include payroll costs, healthcare, rent, utilities and other business debts. Moreover, FFCRA “payroll costs” may be included, though reimbursement for FFCRA payments should also be provide through tax credits (see https://lawintheworkplace.com/).
The CARES loans may be forgiven, though the amount of loan forgiveness may be reduced by any change in staffing or payroll expenses. Thus, the amount of loan forgiveness may be limited if the employer reduces the number of employees as compared to the prior year, or if the employer reduces the pay of any employee by more than 25% compared to pay in the last calendar quarter.
NOTE: Employers who re-hire workers previously laid off as a result of the COVID-19 crisis will not be penalized for having a reduced payroll at the beginning of the relevant period. Much more about this important issue will be coming from KRCL.
The CARE Act also provide direct payments to individuals–$1200 for U.S. adults and $500 for children. An individual must earn less than $75,000 or $150,000 for a married couple (who would receive $2400 combined). No one who earns more than $99,000 will be eligible for any such money, but those below that amount, though above $75,000 might be eligible for some payments.
More data about CARES will be coming in the next few days. The KRCL CARES Task Force will be here to assist you.
As noted the KRCL Employment Law Group has posted numerous client advisories and data throughout this COVID-19 time period, including several about FFCRA, which, generally put, provides expanded job-protected leave (12 weeks to care for children) and paid sick leave for two weeks. Please see the blog posts here discussing these topics.
The KRCL EMPLOYMENT LAW GROUP is co-chaired by Andrea “AJ” Johnson and Doug Bracken, who may be contacted by email or phone:
Andrea “AJ” Johnson (Houston)
Doug Bracken (Dallas)