Madeline L. Stein, a law clerk at Cole Schotz P.C., co-authored this article
On the evening of December 21, 2020, the House and Senate approved a $900 billion stimulus package included as part of the Consolidated Appropriations Act of 2021 (the “Act”). The President signed the Act into law on December 27, 2020. The stimulus package provides COVID-19 pandemic relief to Americans, including direct payments, unemployment benefits, and small business loans. In part, the legislation extends and amends provisions of the CARES Act, an earlier pandemic relief package. The Act is designed to provide relief for the first quarter of 2021, and additional relief is expected to be passed in early 2021. Numerous aspects of the Act impact employers.
Small Business Loans
The Act addresses small business loans by providing $284 billion in loans through the Paycheck Protection Program (“PPP”), $20 billion for businesses in low-income communities, and $15 billion for struggling live venues, movie theaters and museums. See the blog post from Jennifer Horowitz, Samantha Epstein, and Philip Hirschfield, “Continuation and Expansion of the Paycheck Protection Program” for a more detailed account of the PPP provisions in the Act. Accordingly, employers can determine their potential eligibility for new or additional PPP loans and plan for the first quarter of 2021.
Payroll Tax Repayment
The Act provides various tax credits and deductions, some of which have been extended from the CARES Act. Section 274 provides an extension of certain deferred payroll taxes. Additionally, under Section 286, there is a payroll tax credit for employers providing paid sick leave under the Families First Coronavirus Response Act (“FFCRA”). However, this Act does not continue the mandatory sick leave required pursuant to the FFCRA. The Act expands the Employee Retention Tax Credit (“ERTC”) chiefly by permitting employers who obtain PPP loans to also claim the credit under the ERTC. Additionally, the Act extended the ERTC to wages paid between January 1, 2021 to July 2, 2021.
As many employers are aware, the FFCRA is set to expire on December 31, 2020. Thereafter, the Act provides that employers MAY (but are not required to) continue voluntarily providing FFCRA benefits from January 1, 2021 until March 31, 2021, and receive the tax credits provided therein. Employers should note that all provisions of the FFCRA remain in place through March 31, 2021, so if employers choose to continue providing paid sick and emergency family and medical leave benefits through such date they remain bound by all qualifying guidelines.
The Act extends the CARES Act unemployment provisions and for an additional 11 weeks (up to a maximum of 50 weeks) and those who have already exhausted benefits will get benefits through March 14, 2021. The Act also provides unemployment compensation benefits of $300 per week in addition to state benefits through March 14, 2021. The workers eligible for these benefits include self-employed individuals, gig workers, and individuals who have exhausted their state benefits. Under the Act, states must develop methods for addressing unemployment compensation claimants who refuse to return to work or accept an offer of suitable work without good cause. Such methods shall include “a reporting method for employers . . . to notify the State agency when an individual refuses an offer of employment.” Employers should therefore review their state-specific notification method and requirements.
Notably, the Act does not include a liability shield for employers from state and federal law claims alleging COVID-19 exposure. Employers should review the updates provided in this Act and adjust their employment and financial planning accordingly.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.