Congress & Coronavirus: HR 6201 Passed, Senate Stimulus Package Released & House Stimulus on the Way

This article covers the significant changes made between the initial House passage of HR 6201 and the bill the President signed into law Wednesday. Also included are some top-level takeaways from the Senate GOP Stimulus proposal that was dropped late last night, and what we are hearing about a competing House Democratic bill. NPMA continues to monitor Congress as it moves more quickly than it has in recent memory and additional updates are likely over the next week.

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HR 2601 Breakdown: What has changed since the Initial House vote

Senate GOP Stimulus Proposal: What you need to know

House Democratic Proposal: What We’re Hearing

HR 6201 Signed into Law: What’s Different about the Bill?

NPMA has provided an updated breakdown of HR 6201 as it has now been signed into law by President Trump. It will take effect on April 2nd, 2020 and remain in effect through December 31, 2020.

Passed by the House on Saturday and the Senate on Wednesday, this bill has moved more quickly than any bill in recent memory especially given the price tag will likely be close to $200 Billion. Technical corrections were passed by the House late Monday which have changed – in some cases significantly – what the bill offers. Below is our original summary with the changes noted.

Who does this Bill apply to? If an employee has worked at least 30 calendar days with your company, then they are eligible for the benefits below – this is a change as under FMLA the employee would normally have to be employed for 12 months. These programs are for companies with 500 employees or less.

Update: FMLA changes are available if an employee has worked 30 calendar days with your company. Sick Leave is available immediately. These programs are for companies with 500 employees or less, except for several possible exceptions noted for businesses either under 50 or under 25 employees.

Changes to FMLA in the Bill for 2020: Under current law, employers are required to give up to 12 weeks of job-protected medical leave (meaning an employee cannot be fired), but they are not required to provide any pay during that time. HR 6201 would provide paid leave for workers if they have been diagnosed with the coronavirus, if they are caring for a family member (expanded to include any of the following: an adult child, next of kin, grandchild and grandparent, if the individual is pregnant, a senior citizen, or an individual with a disability, or with access or functional needs, foster and adoptive parents, stepparents, parents of a domestic partner, parent-in-laws, and guardians) or if they are caring for a child or another dependent because of a school or care facility closing. The bill provides 12 weeks of job-protected paid Family and Medical Leave Act (FMLA) leave—of which the ! first 14 days may be unpaid—for employees of employers with fewer than 500 employees. During those first 14 days an employee can use personal or sick leave, but employers may not require employees to do so. After those 14 days, the employer must compensate at 2/3 the rate of the employee’s regular rate of pay. This applies only to coronavirus related absences, not for any other reason and will only hold through 12/31/20, so this is not a permanent change to FMLA. Employers can take 100% of the amounts paid to employees as a refundable tax credit against the employer portion of Social Security taxes.

Update: Paid leave is now available only for if they are caring for a child or another dependent because of a school or care facility closing and are unable to work or telework as a result. Payment is $200/day or $2000 in the aggregate.

The bill also grants the Department of Labor the ability to provide an exemption for businesses with 50 or less employees who find allowing employees off work to care for a sick child or dependent would jeopardize the business.

Paid Sick Leave Changes for 2020: Employers with 500 employees or less will be required to provide additional sick leave. Full time employees will be given 80 hours of paid sick leave and part time employees are given paid sick leave equivalent to the hours they work on average over a 2-week period. This paid sick time must be used in relation to coronavirus infection (for example: doctor’s visits, voluntary or mandated self-isolation, etc.)

Update: Paid sick leave available to employees will be limited to $511/day or $5111 in the aggregate if the employee is home due to his/her own isolation/quarantine. Employers may require “reasonable notice” from an employee after the employee has triggered paid sick leave under this section. Should an employee’s hours vary from week to week the bill sets out a formula to determine at what rate the employee shall be compensated. The bill outlines an exception for employers with less than 25 employees if the employee’s job no longer exists due to the coronavirus pandemic, which requires employers to make reasonable efforts to restore the employee to an equivalent position over a one-year period.

All paid sick time – whether part or full time- is to be compensated at the regular rate of pay and employers would have to post a notice informing employees of this right. Employers are not allowed to change their policies to in any way evade this requirement. This would also expire on 12/31/20.

Update: The provision that prohibited employers from changing their currently existing paid sick leave policies in response to H.R. 6201 has been removed.

Small Business Assistance

The Small Business Administration has loan programs specifically geared to help businesses affected by the pandemic. More information is here.

Note on Exemptions for small businesses: While these exemptions are in the law, there is no explanation of how to show that it would jeopardize a business. It is expected that the Department of Labor will clarify this through the regulatory process, but it is not guaranteed that a business would qualify.

The Senate CARES Act (no bill number as of time of writing)

The Senate GOP dropped the text of their 247-page, $1 trillion stimulus bill yesterday evening. A few of the highlights are below and a section by section summary of the tax portion is here and a section by section summary of the small business portion is here. McConnell has vowed to move the package at “warp speed.” Treasury Secretary Mnuchin has said he would like the bill passed Monday although this timeline is ambitious, and it would require the House to agree by unanimous consent, which is very unlikely given they are drafting their own package.

Please note: This is proposed legislation and is not guaranteed to pass in its current form. It is likely that some provisions will pass, but this will have to get Democratic support in the Senate and then also secure House passage.

Checks mailed to individuals: All calculations would be based on the 2018 tax filings. A $1,200 tax rebate ($2400 for married couples) would be sent to people who earned $75,000 ($150,000 for married couples), with a gradual decrease in the check as income rises, with those earning above $99,000 ($198,000 for married couples) getting nothing. Lower-income people would receive less, as taxpayers with little or no income tax liability but at least $2,500 of qualifying income would be eligible for a minimum rebate check of $600 ($1,200 married). There is also a $500 per child credit.

Small Business Loans: The bill allocates up to $300 billion to provide additional loans for small businesses (defined as 500 employees or under) for up to $10 million per business. Items that can be covered by the loan include: payroll support (including paid sick, medical, or family leave, and costs related to the continuation of group health care benefits during those periods of leave) employee salaries, mortgage payments, rent, utilities and any other debt obligations that were incurred before the covered period. Eligibility for a loan will only be based on whether the borrower was in operation on March 1, 2020 and had employees for whom the borrower paid salaries and payroll taxes. Fees related to the loans will be “removed or reduced to the extent possible” and prepayment penalties removed.

Taxes:

• Filing deadline extended to July 15, 2020.
• Corporations and individuals can postpone estimated tax payments until October 15, 2020.
• Employers and self-employed individuals can defer payment of the employer share of the Social Security tax. The deferred employment tax can be paid over 2 years, with half due by December 31, 2021 and the other half by December 31, 2022.
• Net operating losses from 18/19/20 can be carried back 5 years and would temporarily remove the taxable income limitation to allow an NOL to fully offset income. This would also modify the loss limitation applicable to pass-through businesses and sole proprietors, so they can benefit from the NOL carryback rule.
• Temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing from 30% limitation to 50% of the taxable income for 2019 and 2020.

Paid Leave: This bill would amend HR 2601 by changing the amount an employer would be required to pay under FMLA leave (leave granted if an employee is not able to work due to a child being home due to closures of school/daycare from COVID-19). Under HR 2601 the cap is $2000, under The CARES Act the cap is $10,000.

NPMA continues to review this proposal and will provide updates as this bill moves through the legislative process. Much is likely to change between this proposal and the final passage.

House Democratic Proposal

The House Democrats are racing to prepare a stimulus proposal to counter the one rolled out by the Senate Republicans. Lawmakers held a conference call Thursday with over 200 members of the House Democratic caucus to brainstorm what could be included.

Items mentioned were a boost in infrastructure spending, an expansion of Social Security, funding for states to set up an all-mail voting system in the event the pandemic extends into November’s elections, a broader expansion of unemployment benefits, new funding for job training, death benefits to families of TSA officers who die from the coronavirus, financial incentives for companies to pursue “risky and unprofitable research” aimed at finding a coronavirus vaccine, additional unemployment insurance payments, expanded Medicaid coverage, an airline rescue package, relief for homeowners and renters, support for small businesses, and additional food security measures and 100 percent broadband coverage.

Pelosi and Schumer have called for a “4 corners” negotiation of the top four leaders (Schumer, McConnell, Pelosi and McCarthy) but McConnell shot down the idea. McConnell has invited Democrat and Republican Senate negotiators to sit down with him and Trump officials this morning. Any bill must pass both chambers, so jamming a bill through either chamber and expecting the other to pass it is not a good scenario.

Text is expected Monday of this Democratic proposal, but they may release earlier now that the Senate text is available.