On Friday, March 27, the President signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The new law is a $2 trillion economic stimulus package aimed at providing relief for individuals and businesses that have been negatively impacted by the Coronavirus outbreak. While most of the act pertains to direct payments to individuals and loans, there are some sections that affect employers.
The CARES Act gives employers the following options and benefits, which may allow them stay open and keep more people employed:
- Small businesses may be eligible for emergency grants of up to $10,000 to cover immediate operating costs.
- The Small Business Administration (SBA) may provide loans of up to $10 million per business; any portion of that spent to pay employees, keep workers on payroll, or pay for rent, mortgages, or existing debt could be forgiven, provided workers remain employed through the end of June.
- Small businesses with existing SBA loans may have up to six months of payments waived.
- Businesses who have experienced a decline in gross receipts of 50% as compared to the same quarter of 2019 or who have been fully or partially shutdown by order may be eligible to receive a refundable tax credit for 50% of qualified employee wages up to $10,000 per employee. This is unrelated to the dollar-for-dollar payroll tax credit that can be taken for FFCRA leaves.
- Businesses may defer payment of employer payroll taxes imposed between the enactment of this law and December 31, 2020 with half of the deferred taxes due by December 31, 2021 and the rest due by December 31, 2022. This is unrelated to the dollar-for-dollar payroll tax credit that can be taken for FFCRA leaves.
Detailed guidance on how to access these financial resources should be coming soon from those sources.
Impact on Unemployment Insurance
The Act expands unemployment benefits by 13 weeks and adds $600 to the weekly amount an individual would usually receive. While these unemployment benefits are generous, employers should still consider their options and incentives under the CARES Act mentioned above before making decisions about reduced hours, furloughs, or layoffs.
Employees who experience reduced hours, furloughs, or layoffs should be encouraged to file for unemployment insurance as soon as possible. We recommend that both employers and employees visit their state’s unemployment insurance department website and track local and state news, as departments across the country are updating their rules to facilitate displaced workers during this time.
Payroll Tax Provisions
Axiom Human Resource Solutions and sister company Apex Benefits have put together a video that breaks down the employer payroll tax provisions including employee retention credits, social security tax deferments, retention of payroll taxes and more. Click HERE to watch.