On March 27, 2020 President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Below is a summary of several key provisions of the more than 800-page law. However, if you are home with little to do and have already finished watching The Tiger King, feel free to peruse the law itself here.
The CARES Act provides small businesses an incentive to keep their employees working (or at least pay their employees) by providing loans that are forgivable, in part. Under the Paycheck Protection Program, loans to employers may be used to cover payroll costs, as well as most mortgage interest, rent, and utility costs. The loan amounts will be forgiven for certain costs over an eight-week period after the loan is made, so long as employee head count and compensation levels are maintained. Already furloughed, laid off, or reduced salaries of your employees? Not to worry; if you rehire and restore compensation before June 30, 2020, businesses will be eligible for this loan forgiveness program. Read more about the program in our article, CARES Act introduces the Paycheck Protection Program.
The Families First Coronavirus Response Act (FFCRA) was passed on March 18 with haste and urgency and created two types of paid leave: Emergency Family Medical Leave (EFMLA) and Emergency Paid Sick Leave (EPSL). The CARES Act modifies FFCRA by making several clarifications and changes to help employers understand the timeline of providing paid leaves and which employees are eligible. Perhaps most importantly, the CARES Act provides for advances from the Treasury on anticipated tax credits for employers paying the EFMLA and EPSL costs. See How the CARES Act changes the Families First Coronavirus Response Act (FFCRA) for more information.
The CARES Act made several changes to unemployment benefits available to employees who have been laid off, furloughed, or had their hours reduced directly or indirectly in connection with COVID-19. The Act expanded unemployment benefits for many individuals, including increasing the amount of benefits eligible claimants can receive, lengthening the duration for which they can receive benefits, and broadening the reasons they can be eligible for benefits.
Note: the unemployment changes are not requiring employers to do anything differently if they are already planning to conduct layoffs, furloughs, or other reductions to their workforce. This is contrasted with the incentives the CARES Act provides to employers to maintain their employees' pay or continue working (see Paycheck Protection Plan above). To learn more, see Expanded unemployment benefits under the CARES Act.
The CARES Act created certain benefits to eligible employers around health and welfare plans. This includes, among other things, negotiated costs for certain testing and care related to COVID-19. See Health and Welfare Plan Changes in the CARES Act for a detailed list of the provisions.
The CARES Act made several relief measures around retirement plans. Along with the extended deadline for filing taxes (now July 15, 2020), the due date for IRA and plan contributions is also extended to July 15. The CARES Act also waives certain taxes related to early distributions, giving individuals the opportunity to access funds for certain events without being penalized. It also allows for delayed contribution payments into certain plans. See CARES Act: Retirement plan changes and considerations for additional information.
The CARES Act includes a one-time payment to individuals. This is sort of like a business giving its employees their holiday/Christmas bonus now, but then reconciling it with actual profits and losses come December. Through the CARES Act, the IRS is giving individuals a one-time payment now, called a recovery rebate, which is basically an advance of a tax credit on an individual’s 2020 tax return. Individuals do not need to do anything to receive their payment if they filed taxes in 2018 or already filed their 2019 return. See CARES Act authorizes individual recovery rebate to learn more about this provision.
The CARES Act increases charitable contribution deductions for taxpayers for the tax year 2020. Much like the rest of the economy, many non-profits are hurting right now. And with jobless claims currently above six million, fewer people will have the capacity to donate to their favorite charities. The Act allows for greater deductions for individuals (including those only taking the standard deduction) and corporations as a way to incentivize charitable contributions. Read more about this in our article, CARES Act increases charitable contribution deductions for taxpayers.
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Heather offers practical guidance and helps employers find solutions to employment law and compliance matters.
Heather educates and advises employers on all aspects of employment law, including compliance with state and federal laws, leaves of absence, discrimination, harassment, accommodations, discipline and discharge, wage and hour obligations, unfair competition, and other issues that arise in the workplace. In addition to Heather’s employment counseling, her background includes nearly a decade of litigation experience. Her prior experience includes litigating for a regional insurance company, business disputes, and employment.
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