Coronavirus Financial Relief for Business
The Coronavirus, Aid, Relief, and Economic Security (CARES) Act Summary
Self-Employed, Sole Proprietors and Independent Contractors Now Eligible for Unemployment Compensation Benefits – The CARES Act makes unemployment compensation benefits available for persons not traditionally eligible (self-employed, independent contractors, those with limited work history, and others) who are unable to work as a direct result of the coronavirus public health emergency. The bill also includes provisions that would mirror the work sharing programs many state and local governments have already adopted to incentivize employers to cut workers’ hours as an alternative to mass layoffs. Work-sharing programs allow affected workers to work reduced hours and receive partial unemployment compensation benefits for the hours they did not work due to COVID19.
Small Business Relief for Maintaining Payroll – Under the CARES Act, eligible businesses (companies with up to 500 employees) that maintain their payroll while workers are forced to stay home would be able to receive up to 8 weeks of cashflow assistance. Small businesses would get loan guarantees while workers have to stay home. This is delivered through the SBA Economic Injury Disaster Loans or expanded 7(a) Program loans. Employer can qualify to have a certain amount of the 7(a) loans forgiven with no tax consequences.
Grants of up to $10,000 – These are available as part of the SBA’s EIDL program. SBA must distribute EIDL emergency grant within 3 days Applicants are not required to repay emergency grant, even if they are ultimately denied EIDL.
Payroll Tax Deferrals – Employers and self-employed individuals may also defer payment of the employer share of the Social Security tax on employee wages. Deferred employment tax must be paid over the following two years, with half of the amount required to be paid by December 31, 2021, and the other half by December 31, 2022.
Payroll Tax Credit – The bill would provide a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis. The credit would be available to employers whose: (1) operations were fully or partially suspended, due to a COVID-19 related shutdown order; or (2) gross receipts declined by more than 50% when compared to the same quarter in the prior year. The credit would be provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit would be provided for wages paid or incurred from March 13, 2020, through December 31, 2020.
COVID-19 SMALL BUSINESS LOANS – A COMPARISON CHART
Following the declaration of a national emergency to combat the Coronavirus (COVID-19) pandemic, the Small Business Administration (SBA) launched the Economic Injury Disaster Loan Assistance (EIDL) program for small business owners in all US states, Washington D.C., and other US territories. EIDL loans are now available.
On March 27th, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a stimulus bill that includes a loan program to keep small businesses afloat during mandated COVID-19-related closures. The CARES Act includes a Paycheck Protection Program (PPL) which authorizes federally guaranteed loans to qualifying small businesses. This new loan program is based on the existing SBA 7(a) loan program and will make forgivable loans of up to $10 million available to qualifying small businesses.
Download a chart that compares the key terms of the EIDL and PPP loans:
BUSINESS TAX PROVISIONS
Employee Retention Credit
Eligible employers are entitled to a refundable payroll tax credit for 50% of wages paid to certain employees during the COVID-19 crisis.
Eligible employers – The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel, or group meetings. The credit is also provided to employers who have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis.
→ Before You Claim the Credit: The credit is not available to employers receiving Paycheck Protection Program loans from the Small Business Administration.
Applicable Payroll Period – Applicable for all wages paid, including cost of benefits, between March 12, 2020, and before January 1, 2021.
Calculating the Credit – The credit is computed on a calendar-quarter basis and equals 50 percent of qualified wages up to $10,000 paid to each employee or $5,000 in actual credit. Eligibility for the credit begins with the first 2020 calendar quarter in which the employer’s gross receipts declined by greater than 50 percent of the corresponding calendar quarter of the prior year, and ends with the calendar quarter following the calendar quarter in which the gross receipts exceed 80 percent of the corresponding calendar quarter of the prior year.
Refundable Payroll Tax Credits For Required Employee Leave
Small and midsize employers, as well as self-employed persons, can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for 100% of the cost of providing Coronavirus-related leave to their employees. This applies to wages paid for qualified employee leave taken between April 1 and December 31, 2020.
→ Distinction from Employee Retention Credit. The employee retention credit is applicable to all employees and all wages paid. The refundable payroll tax credits are applied only to wages paid for workers eligible and taking paid sick leave or family care leave required under the Families First legislation.
Qualifying Paid Sick Leave for Workers
▪ Paid Sick Leave – Employees can receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee’s pay where the employee is unable to work because the employee is quarantined, and/or experiencing COVID-19 symptoms, and seeking a medical diagnosis.
▪ Child/Family Care Leave – An employee who is unable to work because of a need to care for an individual subject to quarantine, to care for a child whose school is closed or child care provider is unavailable for reasons related to COVID-19, and/or the employee is experiencing COVID-19 symptoms can receive two weeks (up to 80 hours) of paid sick leave at 2/3 the employee’s pay. An employee who is unable to work due to a need to care for a child whose school is closed or child care provider is unavailable for reasons related to COVID-19, may in some instances receive up to an additional ten weeks of expanded paid family and medical leave at 2/3 the employee’s pay.
Small Business Protection
Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or childcare is unavailable in cases where the viability of the business is threatened. Detailed guidance is forthcoming from the Department of Labor concerning criteria for exemption.
▪ Paid Sick Leave Credit – Employers may receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.
▪ Child/Family Care Leave – Employers may claim a credit for two-thirds of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
▪ Additional Child Care Credit – In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child-care facility is closed or whose child care provider is unavailable due to the Coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child-care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Employers receive 100% reimbursement for paid leave pursuant to the act. Health insurance costs are also included in the credit. Self-employed individuals receive an equivalent credit.
Fast Funds – How to Claim the Credit
Reimbursement will be quick and easy to obtain. When employers pay their employees, they are required to withhold from their employees’ paychecks, and later deposit with the federal government, federal income taxes and the employees’ share of Social Security and Medicare taxes. Employers who pay qualifying sick or child-care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child-care leave that they paid, rather than deposit them with the IRS. Payroll taxes available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes and the employer share of Social Security and Medicare taxes with respect to all employees (not just employees entitled to leave).
▪ If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
▪ If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
Delay of payment of employer payroll taxes
The CARES Act allows taxpayers to defer paying the employer portion of social security taxes through the end of 2020. This applies to all employers, regardless of whether a business has been negatively impacted by the COVID crisis, or has employees taking COVID-related leave for themselves or their family. The deferral applies only to the employer’s share of social security tax, typically 6.2% up to the social security wage base ($137,700 for 2020). It does not apply to the employer’s Medicare taxes nor to the employee’s share of social security or Medicare taxes. Specifically, all employer social security taxes otherwise required to be deposited between the date of enactment and December 31, 2020, are not required to be deposited on the normal deposit schedule. Instead, half of such taxes would be required to be deposited by December 31, 2021. The remaining deferred social security taxes would be required to be deposited by December 31, 2022.
Is an employer’s knowledge that an employee has COVID subject to HIPAA’s privacy restrictions?
Not usually, unless the employer acquired the information in its role as the administrator of the health insurance plan. Because most employers will learn of a COVID-19 diagnosis from the employee or his or her family, the Health Insurance Portability and Accountability Act (HIPAA) usually will not be implicated.
May an employer disclose an employee’s actual or probably COVID diagnosis to others?
Yes, according to the CDC, employers should inform fellow employees of their potential workplace exposure, but only to the extent necessary to adequately inform them of their potential workplace exposure, while maintaining confidentiality under the ADA (i.e., without revealing the infected individual’s name unless otherwise directed by the CDC or applicable public health authority). Employers may communicate to non-exposed employees generally that there has been a potential COVID-19 exposure, without sharing additional identifying information. Employers also may be able to communicate to appropriate non-employees (e.g., customers, vendors, and others with whom the employee may have come in contact while working) that there was a potential COVID-19 exposure, again without sharing identifying information. In all cases, time and circumstances permitting, employers may find it helpful to coordinate with state or local health authorities for guidance and direction regarding the scope and content of disclosures.
Employers also should evaluate any applicable state privacy law or state “mini-ADA” laws to ensure they do not contain different or additional requirements or provisions.
What are employer obligations under the HIPAA privacy rules if contacted by officials asking for emergency personal health information about one of its employees?
The privacy restrictions mandated by HIPAA only apply to “covered entities” such as medical providers or employer-sponsored group health plans, and then only in connection with individually identifiable health information. Employers are not covered entities, so if you have medical information in your employment records, it is not subject to HIPAA restrictions.
Nevertheless, disclosures should be made only to authorized personnel, and care should be taken even in disclosures to government personnel or other groups such as the Red Cross. Further, you should be careful not to release information to someone until you have properly identified them.
May covered entities share protected health information with public health authorities?
When there is a legitimate need to share information with public health authorities and others responsible for ensuring public health and safety, covered entities may share PHI to enable them to carry out their public health responsibilities. This may arise with the current outbreak of COVID-19. The key, as always, is to limit disclosures to the minimum necessary to the purpose, strictly in accordance with these parameters.
For example, covered entities may share information as necessary with the Centers for CDC, as well as health departments authorized by law to receive such information, to prevent or control disease or injury. You may even disclose PHI to foreign government agencies that are working with authorized public health authorities.
May an Employer require Employees to engage in body temperature screenings?
Yes. On March 17, 2020, the U.S. Equal Employment Opportunity Commission (EEOC) issued an update to its guidance that now expressly acknowledges that employers may implement temperature screening measures in response to the current COVID-19 pandemic. The EEOC noted that “[b]ecause the CDC and state/local health authorities have acknowledged community spread of COVID-19 and issued attendant precautions, employers may measure employees’ body temperature.”
If an employer is hiring, may it screen applicants for symptoms of COVID-19?
Yes. An employer may screen job applicants for symptoms of COVID-19 after making a conditional job offer, as long as it does so for all entering employees in the same type of job. This ADA rule applies whether or not the applicant has a disability.
May an employer take an applicant’s temperature as part of a post-offer, pre-employment medical exam?
Yes. Any medical exams are permitted after an employer has made a conditional offer of employment. However, employers should be aware that some people with COVID-19 do not have a fever.
May an employer delay the start date of an applicant who has COVID-19 or symptoms associated with it?
Yes. According to current CDC guidance, an individual who has COVID-19 or symptoms associated with it should not be in the workplace.
May an employer withdraw a job offer when it needs the applicant to start immediately but the individual has COVID-19 or symptoms of it?
Based on current CDC guidance, this individual cannot safely enter the workplace, and therefore the employer may withdraw the job offer.
BENEFITS/GROUP HEALTH PLAN ADMINISTRATION
If employees are no longer working, are they still entitled to group health plan coverage?
Not necessarily. You need to check your group health plan document (or certificate of coverage if your plan is fully insured) to determine how long employees who are not actively working may remain covered by your group health plan. Once this period expires, active employee coverage must be terminated (unless the insurance carrier or self-funded plan sponsor otherwise agrees to temporarily waive applicable eligibility provisions), and a COBRA notice must be sent. If your plan is self-funded and you would like to waive applicable plan eligibility provisions, you should first make sure that any stop-loss coverage insurance carriers agree to cover claims relating to participants who would otherwise be ineligible for coverage.
What happens to group health plan coverage if employees are not working and unable to pay their share of premiums?
In the normal course of events, group health plan coverage will cease when an employee’s share of premiums is not timely paid. However, several actions might be taken that could allow coverage to continue.
First, the insurance carrier providing the health coverage may voluntarily continue the coverage while the disaster is sorted out and until an employer reopens its doors. More likely, the employer may make an arrangement with the insurance carrier providing health coverage to pay the employees’ share of premiums to keep coverage in place (at least temporarily) and possibly until the employer can reopen its doors. Each situation will be different, depending upon the insurance carrier and the relationship between the employer and the insurance carrier. Therefore, each factual situation will need to be individually assessed.
Must we keep paying employees who are not working?
Under the Fair Labor Standards Act (FLSA), for the most part the answer is “no.” FLSA minimum-wage and overtime requirements attach to hours worked in a workweek, so employees who are not working are typically not entitled to the wages the FLSA requires.
The DOL Wage and Hour Division recently reminded employers that they are required to pay non-exempt employees only for hours worked. Thus, if you are forced to close your business temporarily due to COVID-19 issues, you are not required to pay non-exempt employees for hours the non-exempt employees do not work, even though they may have been scheduled to work. However, employers should evaluate any applicable state wage and hour laws to ensure they do not contain different or additional requirements or provisions. In addition, employees may be entitled to unemployment compensation or other state benefits during closures or other periods away from work necessitated by COVID-19.
May employers require exempt employees to take PTO time during COVID-related absences? Yes, as long as the policy and applicable state and local laws allow it, and the exempt employee’s overall salary/pay is not docked, pay can be taken from the PTO category in less than full-day increments. The DOL recently acknowledged the permissibility of these practices under federal law in its pandemic guidance posted on March 9, 2020.
One possible difference relates to employees treated as exempt FLSA “white collar” employees whose exempt status requires that they be paid on a salary basis. Generally speaking, if such an employee performs at least some work in the employee’s designated seven-day workweek, the salary basis rules require that they be paid the entire salary for that particular workweek. There can be exceptions, such as might be the case when the employer is open for business but the employee decides to stay home for the day and performs no work. A U.S. Department of Labor (USDOL) opinion letter addressing these matters can be accessed here.
Also, non-exempt employees paid on a “fluctuating-workweek” basis under the FLSA normally must be paid their full fluctuating-workweek salaries for every workweek in which they perform any work. There are a few exceptions, but these are even more limited than the ones for exempt “salary basis” employees.
Of course, an employer might have a legal obligation to keep paying employees because of, for instance, an employment contract, a collective bargaining agreement, or some policy or practice that is enforceable as a contract or under a state wage law.
Can time missed for Covid-19 related absences be charged to vacation and leave balances?
Yes, as long as the illness is not an FMLA-qualifying serious health condition (see the section covering FMLA-related questions below), in which case the employer should comply with the FMLA’s prohibition on counting these types of absences against an employee. Note that there may be times when complications arising from COVID-19 (or COVID-19’s effects on a preexisting medical condition) could be considered a disability, in which case the ADA may be implicated and a reasonable accommodation may be required, such as a modification to the employee’s attendance requirements. Here again, though, employers may wish to consider the implications of doing something that might be perceived as creating a financial penalty for staying away from work while sick
The FLSA generally does not regulate the accumulation and use of vacation and leave. The salary requirements for exempt “white collar” employees can implicate time-off allotments under various circumstances. The USDOL has provided some guidance on this topic in an opinion letter that is accessible here. Again, however, what an employer may, must, or cannot do where paid leave is concerned might be affected by an employment contract, a collective bargaining agreement, or some policy or practice that is enforceable as a contract or under a state wage law.
May an employee refuse to come to work due to a fear of becoming infected with COVID?
Potentially. Employees may be protected from retaliation under the Occupational Safety and Health Act (OSH Act) in certain circumstances when they refuse to perform work as directed. Specifically, an employee may refuse an assignment that involves “a risk of death or serious physical harm” if the following conditions apply : (1) the employee has “asked the employer to eliminate the danger and the employer failed to do so”; (2) the employee “refused to work in ‘good faith’” (a genuine belief that “an imminent danger exists”); (3) “[a] reasonable person would agree that there is real danger of death or serious injury”; and (4) “[t]here isn’t enough time, due to the urgency of the hazard, to get it corrected the hazard through regular enforcement channels, such as requesting an OSHA inspection.” While each situation is different, and a generalized fear of contracting COVID-19 is not likely to justify a work refusal in most cases, employers may want to conduct a thorough review of the facts before any disciplinary action is taken against an employee who refuses to perform his or her job for fear of exposure to COVID-19.
Should Employer pay expenses, such as internet or phone service costs for employees who are asked or required to telework?
If an employer requires an employee to work remotely who is not normally set up to do so, the employer may need to reimburse employees for any additional phone, internet, or other expenses incurred (beyond what the employee would otherwise have paid for their personal use) to enable the employee to telework at the company’s request. While not directly addressing whether employers must reimburse home expenses used in the course of telework, the DOL advised that if employers require a non-exempt employee to work from home, employers may not require the non-exempt employee to pay for business expenses, where doing so reduces the non-exempt employee’s earnings below the required minimum wage or overtime compensation. For exempt employees not subject to required minimum wage or overtime requirements, additional phone, internet, or other expenses may be viewed as impermissible deductions under the FLSA “salary” basis test. Employers should evaluate any applicable state wage and hour laws to ensure they do not contain different or additional requirements or provisions.
Government Resources: Wage/Hour
US Department of Labor:
Families First Coronavirus Response Act:
Does family and medical leave apply to this situation?
Employees requesting leave could conceivably be protected by the Family and Medical Leave Act (FMLA) to the extent they otherwise meet FMLA-eligibility requirements. Even in the absence of state or federal protection, an employer’s internal policies may extend protection to such individuals. Of course, there is nothing to prevent you from voluntarily extending an employee’s leave, even in the absence of any legal obligation.
Generally, employees are not entitled to take FMLA to stay at home to avoid getting sick. As with many employment laws, the worst thing an employer (or as is often the case, an untrained supervisor) can do at times like this is to reject immediately an unorthodox leave request before the facts are in. When in doubt, the wisest approach is to work with counsel to ensure legal compliance, thereby minimizing exposure to costly litigation.
Does contraction of COVID-19 coronavirus implicate the ADA?
Generally, no, because in most cases the COVID-19 coronavirus is a transitory condition. However, some plaintiffs could make an argument that the ADA is implicated if the virus substantially limited a major life activity, such as breathing. Moreover, if an employer “regards” an employee with COVID-19 as being disabled, that could trigger ADA coverage.
Can employers send employees home who exhibit potential symptoms of contagious illnesses at work?
Yes, sending an employee home who displays symptoms of contagious illnesses would not violate the ADA’s restrictions on disability-related actions.
When employees return to work, does the ADA allow employers to require doctors’ notes certifying their fitness for duty?
Yes. Such inquiries are permitted under the ADA either because they would not be disability-related or, if the pandemic influenza were truly severe, they would be justified under the ADA standards for disability-related inquiries of employees. As a practical matter, however, doctors and other health care professionals may be too busy during and immediately after a pandemic outbreak to provide fitness-for-duty documentation. Therefore, new approaches may be necessary, such as reliance on local clinics to provide a form, a stamp, or an e-mail to certify that an individual does not have the pandemic virus.
During a pandemic, may an ADA-covered employer ask employees who do not have symptoms to disclose whether they have a medical condition that the CDC says could make them especially vulnerable to complications?
Generally, no. However, if the pandemic becomes severe or serious according to local, state, or federal health officials, ADA-covered employers may have sufficient objective information to reasonably conclude that employees will face a direct threat if they contract COVID-19. Only then may ADA-covered employers make disability-related inquiries or require medical examinations of asymptomatic employees to determine which employees are at a higher risk of complications.
An employee alleges that they contracted the coronavirus while at work. Will this result in a compensable workers’ compensation claim?
It depends. If the employee is a health care worker or first responder, the answer is likely yes (subject to variations in state law). For other categories of employees, a compensable workers’ compensation claim is possible, but the analysis would be very fact-specific.
It is important to note that the workers’ compensation system is a no-fault system, meaning that an employee claiming a work-related injury does not need to prove negligence on the part of the employer. Instead, the employee need only prove that the injury occurred at work and was proximately caused by their employment. Additionally, the virus is not an “injury” but is instead analyzed under state law to determine if it is an “occupational disease.”
To be an occupational disease (again subject to state law variations), an employee must generally show two things:
- the illness or disease must be “occupational,” meaning that it arose out of and was in the course of employment; and
- the illness or disease must arise out of or be caused by conditions peculiar to the work and creates a risk of contracting the disease in a greater degree and in a different manner than in the public generally.
The general test in determining whether an injury “arises out of and in the course of employment” is whether the employee was involved in some activity where they were benefitting the employer and was exposed to the virus. Importantly, special consideration will be given to health care workers and first responders, as these employees will likely enjoy a presumption that any communicable disease was contracted as the result of employment. This would also include plant nurses and physicians who are exposed to the virus while at the worksite.
As for other categories of employees, compensability for a workers’ compensation claim will be determined on a case-by-case basis. The key point will be whether the employee contracted the virus at work and whether the contraction of the disease was “peculiar” to their employment. Even if the employer takes all of the right steps to protect the employees from exposure, a compensable claim may be determined where the employee can show that they contracted the virus after an exposure, the exposure was peculiar to the work, and there are no alternative means of exposure demonstrated.
Absent state legislation on this topic, an employee seeking workers’ compensation benefits for a coronavirus infection will still have to provide medical evidence to support the claim. Employers who seek to contest such a claim may be able to challenge the allowance if there is another alternative exposure or if the employee’s medical evidence is merely speculative.
Who should apply for unemployment compensation benefits?
Employers whose operations have been impacted by the COVID-19 pandemic should encourage their workers to apply for unemployment compensation (UC) benefits. Your UC rating will not increase as a result of COVID-19 related claims. Businesses that are temporarily closed due to COVID will be granted relief from charges.
Should my employees file for unemployment compensation?
Workers should file for UC benefits after exhausting all available paid sick leave. If you are not sure whether you are required to provide paid leave, please contact us because some cities (Philadelphia and Pittsburgh) have mandatory paid leave laws of which you may be unaware. Employees are eligible even if they are only temporarily laid off or working but at reduced hours.
The customary “waiting week” has been eliminated so eligible employees will be paid benefits beginning the week they apply. In addition, claimants are not required to prove they have applied or searched for a new job to maintain eligibility for UC benefits.