Federal Action on COVID-19: What Does it Mean for Your Business?
As businesses, communities, and families across the country continue to reel from the COVID-19 pandemic, Legislators are working to pass a series of relief bills to curtail the virus’ spread and soften its economic impacts. Detailed below are the two primary pieces of legislation that have been signed into law thus far and how they will affect Vermont’s business community.
We’re expecting more coronavirus response measures in the near future, so please stay tuned for updates and if you have any questions or concerns, please feel free to contact Jordang@vbsr.org.
Phase I: H.R. 6074, Coronavirus Preparedness and Response Supplemental Appropriations Act
Passed with almost unanimous consent in both the House and Senate, a rarity in Washington, the bill provides $8.3 billion in emergency funding for federal agencies to respond to the coronavirus outbreak. This includes $20 million for the Small Business Administration (SBA) disaster loans program to provide loan subsidies for businesses financially impacted by the coronavirus. Now that the Small Business Administration has approved Governor Scott’s request for a disaster declaration, business and nonprofit organizations across Vermont can apply for disaster assistance.
SBA’s Economic Injury Disaster Loans (EIDL) are now available up to $2 million per business. While employers experience temporary losses of revenue, these loans are intended to provide economic support to pay debts, payroll, and other expenses during this ongoing crisis. For additional guidance and to apply for an EIDL click here.
Phase II: H.R. 6201, The Families First Coronavirus Response Act
This bill provides free testing for coronavirus, expands funding for food security programs and paid sick, family, and medical leave for employees at companies with 500 employees or fewer. Below are the three key provisions that will impact Vermont businesses and their employees. A full summary of the bill is available here.
Emergency Paid Sick Leave: Social distancing and quarantine are two key ways to contain the spread of the coronavirus, but paid sick leave benefits are not afforded to everyone. In fact, about a quarter of U.S. workers currently receive no paid sick leave at all. H.R. 6201 requires employers to give their workers two weeks of paid sick leave, at the employee’s full pay, to quarantine, get tested, or seek care for the coronavirus. It also requires employers pay two-thirds of the employee’s regular pay should they need to stay home to care for an infected family member or provide childcare in the event of school closures. Recognizing the fiscal challenges this poses to businesses, H.R. 6201 also provides employers with a refundable tax credit equal to 100% of qualified paid sick leave wages paid. The tax credit is applied against the employer portion of payroll taxes. Any paid leave costs that go beyond the amount of payroll taxes owed will be refunded to the employer at the end of each quarter.
Emergency Family and Medical Leave Expansion: H.R. 6201 also expands the number of workers who can take up to 12 weeks of leave under the Family and Medical Leave Act. The first two weeks of leave may be unpaid, but the employee may use other forms of leave during that time. From there, employees will then receive no less than two-thirds of their usual pay plus job protection. Workers can take emergency leave if they are diagnosed with COVID-19, need to self-quarantine, are caring for an infected person or someone under quarantine, or caring for a child due to COVID-19 school and care facility closures. Like the sick leave provision, the bill also provides a refundable tax credit equal to 100 percent of qualified family leave wages paid by an employer for each calendar quarter and are allowed against the employer portion of payroll taxes.
Important Notes on H.R. 6201:
- The sick, family, and medical leave provisions in H.R. 6201 do not apply to businesses with 500 employees or more.
- Employers with under 50 employees and those providing key healthcare services can apply for an exemption from the Secretary of the Department of Labor.
- Employees must have worked for the employer for at least 30 days and provide the employer with a notice of leave as is practicable.
- The tax credits apply to both businesses but nonprofits as well which is a new development. Normally, income tax credits are not given to tax-exempt employers since they don’t pay income taxes. This brings up another important point, employers will need to pay for the leave up front and will then be reimbursed later with a tax credit applied to their payroll tax. If a business does not endure this crisis, they will not receive said tax credit.