State and local governments—particularly in areas hardest hit by the COVID-19 pandemic—have been implementing a series of initiatives to help address the economic impact of the outbreak on affected businesses and their employees. At the same time, Congress is considering legislation that would affect businesses and employees nationwide.
We have compiled a sampling of how some of the hardest-hit locales have responded to the outbreak’s economic effects in an effort to help businesses navigate this fast-changing landscape. An update on federal legislation is included here as well. We encourage business leaders to visit their state and local government websites for further updates on benefits in their specific jurisdictions.
- California is offering an Unemployment Insurance Work Sharing Program for employers who are contemplating layoffs due to the slowdown in the economy caused by the coronavirus. The state will also grant a 60-day tax extension for businesses to file state payroll reports and deposit state payroll taxes.
- The state of New York is offering small businesses up to $75,000 in interest-free loans to compensate for lost profits. To qualify, businesses must have fewer than 100 employees and have seen a sales decrease of at least 25 percent because of COVID-19, Small businesses with fewer than 5 employees are being offered a grant to cover 40 percent of payroll costs for up to two months.
- On the local level, San Francisco is deferring annual small business license and permit fee due dates until June 30. The city’s Office of Economic and Workforce Development has also created the Small Business Resiliency Fund to offer up to $10,000 in emergency grants to small businesses who apply and can demonstrate a loss of revenue as a result of COVID-19. San Francisco also provides access to capital and technical assistance through its Revolving Loan Fund and the Emerging Business Loan Fund, which offers loans of up to $250,000 for qualifying commercial projects.
- Virginia has directed the Commissioner of the Virginia Employment Commission to waive the one-week waiting period to ensure workers can receive benefits as soon as possible. And workers may be eligible to receive unemployment benefits if an employer needs to temporarily slow or cease operations due to COVID-19. Additionally, regional workforce teams will be activated to support employers that slow or cease operations. Employers who do slow or cease operations will not be financially penalized for an increase in workers requesting unemployment benefits. The governor also is authorizing rapid response funding, through the Workforce Innovation and Opportunity Act, for employers eligible to remain open during this emergency. Funds may be used to clean facilities and support emergency needs.
- The state of Washington has implemented layoff assistance programs and is waiving financial penalties for employers that file taxes late as a result of COVID-19. Through its SharedWork program, the state is also offering easier access to unemployment insurance benefits for affected employees.
In addition to state relief efforts, the federal government’s response continues to evolve. Here are a few critical developments affecting businesses and employees:
- Paid Family Leave: As originally drafted, H.R. 6201, the Families First Coronavirus Response Act, would have temporarily provided workers with two-thirds (67 percent) of their wages for up to 12 weeks of qualifying family and medical leave for a broad range of COVID-19-related reasons. The revised bill will only provide such leave when employees can’t work because their minor child’s school or childcare service is closed due to a public health emergency. Workers who have been on the payroll for at least 30 calendar days will be eligible for paid family leave benefits, which will be capped at $200 a day (or $10,000 total) and expire at the end of the year.
- Paid Sick Leave: Under H.R. 6201, many employers will have to provide 80 hours (2 weeks) of paid-sick-leave benefits for several reasons, including if the employee has been ordered by the government to quarantine or isolate or has been advised by a health care provider to self-quarantine because of COVID-19. Employees could also use paid sick leave when they have symptoms of COVID-19 and are seeking a medical diagnosis, if they are caring for a relative who is in quarantine or isolation, or their child’s school or childcare service is closed because of the public health emergency. Paid-sick-leave benefits will be immediately available when the law takes effect and capped at $511 a day for a worker’s own care and $200 a day when the employee is caring for someone else. This benefit will expire at the end of 2020.
- Large Business Exception: Private businesses with more than 500 employees are not covered by H.R. 6201, because of bipartisan opposition. “I don’t support U.S. taxpayer money subsidizing corporations to provide benefits to workers that they should already be providing,” Pelosi said on Twitter. Treasury Secretary Steven Mnuchin also said that “big companies can afford these things.”
- Small Business Tax Credits. Covered employers that are required to offer emergency Family Medical Leave Act benefits or paid sick leave will be eligible for refundable tax credits. Employers with fewer than 50 workers can apply for an exemption from providing paid family and medical leave and paid sick leave if it “would jeopardize the viability of the business.” Gig-workers and other self-employed workers will be eligible for a tax credit to cover the benefits.
Kaplan Voekler Cunningham & Frank will continue to closely monitor the state and federal response to the coronavirus outbreak. Please contact us to help navigate specific issues involving your business.