Over the holiday weekend, President Trump narrowly avoided a government shutdown by signing the Consolidated Appropriations Act of 2021. Tucked inside this 5,600-page omnibus spending bill is a $900 billion COVID-19 relief package, making this new Act the most significant piece of coronavirus legislation since the CARES Act was passed more than nine months ago.
This new relief package is multifaceted. In addition to funding a new wave of $600 stimulus checks and providing more than $20 billion for vaccine distribution, much of its focus is directed toward extending certain CARES Act or FFCRA provisions that were set to lapse at the end of 2020. Of particular interest to employers, the Act refunds the Paycheck Protection Program (PPP), extends revised versions of the CARES Act’s federal unemployment programs, and modifies the previously mandatory coronavirus-related paid sick leave into an optional tax credit.
Funding for New PPP Loans:
First, the new Act allocates $284 billion for certain small businesses to receive their first or second PPP loan. As before, businesses can request these forgivable loans in amounts up to 2.5 times their monthly payroll costs. However, these second-wave loans are now capped at $2 million, representing a sizable decrease from the $10 million maximum in the original CARES Act.
The eligibility requirements for these new PPP loans are also slightly different than before. Whereas businesses with 500 or fewer employees were eligible for the first round of loans, that threshold has now been lowered to 300 or fewer employees. Additionally, publicly traded companies can no longer receive PPP loans. On the other hand, the new Act expands PPP eligibility in a few other areas – many previously ineligible non-profit or faith-based organizations can now receive loans for the first time. We encourage you to direct any specific questions about eligibility to your business’s legal or financial advisors.
Extension of Federal Unemployment Benefits:
The Act also extends several CARES Act unemployment programs into the Spring. Back in March, the CARES Act created three new federal unemployment programs: Federal Pandemic Unemployment Compensation (FPUC), Pandemic Unemployment Assistance (PUA), and Pandemic Emergency Unemployment Compensation (PEUC). Collectively, these programs used federal funding to make state unemployment programs more generous, more widely available, and longer-lasting. With the last of these programs set to expire December 31, the new Act temporarily extends modified versions of these unemployment benefits until March 14, 2021. As before, the federal government will cover the cost of any qualifying claim for benefits under these three programs.
The FPUC program, which expired back in July, gave individuals claiming unemployment an additional $600 per week on top of what they already would have received from their state’s unemployment program. This new Act revives these FPUC payments from December 26 until March 14, but reduces the amount to an extra $300 per week. Also, the new act temporarily extends the PUA and PEUC programs, both of which were set to expire December 31, until March 14. PUA extends unemployment benefits to individuals who are ordinarily excluded from state programs, such as independent contractors and self-employed individuals, and PEUC allows claimants who would have otherwise exhausted their unemployment claims to continue receiving benefits for an additional thirteen weeks.
It is unclear when individuals can expect to receive these payments, but if the CARES Act’s rollout is any indication, we expect it to take at least a few weeks. If your current or former employees have any questions about these unemployment payments, we suggest you refer them to their state’s unemployment website for the latest information.
Expiration of Pandemic Sick Leave:
Perhaps as significant as what this Act includes is what it leaves out – specifically, it does not extend the December 31st expiration of the Families First Coronavirus Response Act (FFCRA), which provided paid family and emergency sick leave to employees who miss work for coronavirus-related reasons. However, in its place the Act continues dollar-for-dollar tax credits available to employers who voluntarily continue to offer paid coronavirus leave to their employees. The credit covers 100% of wages paid to employees who take leave consistent with the FFCRA’s requirements between January 1 and March 31, 2021. It should be noted that, effective January 1, this tax credit is only available to private employers – the new Act does not create an incentive for public employers to continue offering FFCRA leave into 2021.
With the expiration of FFCRA leave – but continuance of tax credits – employers are faced with a choice of what to do with accrued but unused FFCRA leave at year’s end. Employers can, in their discretion, choose to allow accrued FFCRA leave to expire at midnight on December 31, 2020, or employers can continue to allow employees to use accrued FFCRA leave into the new year. Employers should not, however, refresh employees’ leave balances with an award of new FFCRA leave.
As we saw earlier this Spring when Congress enacted the FFCRA originally, hastily constructed legislation of this size leaves several questions unanswered. This Act is no different. For example, the new law is ambiguous on whether employers are obligated to return employees on FFCRA leave in 2021 to the same or substantially same position as before the leave. Likewise, the law is unclear on whether the FFCRA’s anti-retaliation provisions survive into 2021.
We expect new guidance in the coming days and weeks that will clarify some of these lingering uncertainties about this new Act, and we will be sure to update you as this information is released. In the meantime, please reach out to our professionals with any questions you may have. Here at K|W|W, your workforce is our priority.