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President Biden has signed the largest aid bill in US history – The $1.9 Trillion “American Rescue Plan” not only provides economic relief and stimulus to Americans, but includes many measures that can directly “rescue” employers.
This latest COVID-19 aid bill provides relief for small businesses, an enormous boost for vaccine efforts, and an extension on Families First Coronavirus Response Act (FFCRA) tax credits. It is critical for employers to understand the finalized legislation and the actions necessary to take economic advantage for their business and assist employees.
What didn’t make it into the final American Rescue Plan?
To avoid any confusion regarding what is in the final legislation, it is important for businesses to understand three critical elements impacting employers that are NOT in the final bill:
- $15 Minimum Wage: Despite House passage of a bill including a minimum wage hike and efforts by Senator Bernie Sanders and others, the Senate (with bipartisan support) removed the minimum wage provisions from the American Rescue Plan before sending it to Biden for signature.
- Elimination of Tip Credit: Though it has gotten little press, buried in the provisions to raise the minimum wage was language which would have phased the tip credit out of existence. Hospitality employers hope this is more than a temporary reprieve.
- Paid Leave: The White House originally planned to include paid leave for employees needing to be absent for COVID-19 reasons, including to get vaccinated or to recover from side effects related to the vaccination. These paid leave benefits were not included in the House bill and were not added as the bill proceeded.
Actions recommended: None right now! While these provisions did not make it into the final American Rescue Plan, the White House and Democratic leaders have stated intent to introduce new legislation to fulfill these campaign promises.
Items Included in The American Rescue Plan and Actions Employers Must Take
1. Welcome Relief for Small Businesses: The American Rescue Plan provides additional funding for small businesses, with a focused effort on those in hard-hit industries like restaurants and bars.
a) Provides $25 billion for a new Small Business Administration (SBA) program focused on supporting restaurants and other food and drink establishments. These grants are available for up to $10 million for those eligible and can be used to pay expenses like payroll, mortgage, rent, utilities, and food and beverages.
b) Provides an additional $7 billion for the Paycheck Protection Program (PPP), which provides small businesses with the potential for 100% forgivable loans. The additional PPP funding brings the total for the current round of the program to more than $813 billion. Likewise, both bills expand PPP eligibility for certain nonprofit organizations.
c) Provides $15 billion to the Economic Injury Disaster Loan (EIDL) Advance program designed to provide economic relief to businesses currently experiencing a temporary loss of revenue due to COVID-19. Like the PPP, the EIDL program is administered through the SBA to help qualifying businesses meet financial obligations and operating expenses that could have been met had the disaster not occurred. Priority funding is also allocated to businesses with less than 10 employees that have been severely impacted by the pandemic.
d) Includes funding under the Shuttered Venue Operators Grant (SVOG) program, which had previously appropriated $15 billion in the December 2020 stimulus package. Eligible entities for the SVOG include live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, and talent representatives. Eligible entities for the SVOG program can also qualify for loans under the PPP.
Action Recommendation: All small businesses operating in a hard-hit industry such as the hospitality sector, should quickly determine eligibility for funding. Even if not a bar or a restaurant, some businesses might still be eligible for economic assistance through the various grants or loan programs detailed in the plan if their business was severely impacted because of the COVID-19 pandemic. Check that out!
2. Enormous Boost for Vaccine Efforts: The rescue package provides over $15 billion aimed toward enhancing, expanding, and improving the nationwide distribution and administration of the COVID-19 vaccine.
a) Support efforts to increase access, especially in underserved communities.
b) Increase vaccine confidence and fund more research, development, and manufacturing.
c) Procurement of vaccines and related supplies as needed.
Actions Recommended: New developments will make vaccines more widely available in the short term. Most employers are unprepared to deal with the initial administration process and safety protocols in terms of mask mandates, physical distancing, and related rules. To prepare for the imminent widespread distribution of vaccines, we recommend you immediately implement a plan.
3) Extension of Tax Credits from the Federal Families First Coronavirus Response Act: The FFCRA expired on December 31, 2020 – and with it, covered employers’ obligation to provide emergency paid sick leave and emergency family and medical leave. Shortly before the end of the year, Congress extended the tax credit for employers who voluntarily continued to provide such paid leave through March 31, 2021. Here is what it does:
a) Extends the tax credits available for employers who voluntarily provide FFCRA leave from March 31, 2021 to September 30, 2021.
b) Provides available tax credits for paid sick leave and paid family leave provided for the additional following qualifying reasons:
1) Employee is obtaining immunization (vaccination) related to COVID-19
2) Employee is recovering from any injury, disability, illness, or condition related to such vaccination.
3) Employee is seeking or awaiting the results of a diagnostic test or medical diagnosis for COVID-19 (or their employer has requested such a test or diagnosis).
c) Adds non-discrimination rules: to provide that no tax credit is available if the employer, in determining availability of the paid leave, discriminates against highly compensated employees, full-time employees, or employees based on tenure with the employer. This provision appears designed to compel employers who make the decision to voluntarily provide leave do so in a uniform manner, without discriminating against certain categories of workers.
d) Resets the 10-day limit tax credit under FFCRA sick leave as of April 1, 2021. As a result, an employer could voluntarily provide an additional 10 days of FFCRA paid sick leave beginning April 1, 2021 and would be eligible for a tax credit for doing so. However, since this is voluntary, employers are not required to provide this additional leave.
Actions Recommended: Continue to monitor developments at the federal level. We could see new leave mandate proposals in the immediate future, so this will be one to watch closely.
4) Unemployment Benefits: The CARES Act and Stimulus 2.0 were set to expire in mid-March. The American rescue aid extends the $300 weekly unemployment benefits until September 6, 2021.
Actions Recommendation: Employers need to be aware that the benefits will expire September 6 and adjust hiring plans accordingly.
5) Stimulus Payments: The American Rescue Plan calls for an additional $1,400 stimulus check for all eligible Americans. Those earning $75,000 or less per year and couples earning $150,000 or less will still receive the full $1,400-per-person benefit but those earning more than $80,000 and couples earning more than $160,000 will not be eligible.
6) Tax Credits and Benefits: The bill expands three important tax credits: the child tax credit, the earned income credit, and the employee retention credit. The bill also increases certain health and pension benefits.
a) The child tax credit increases from $2,000 per child under age 17 to $3,000 for those age six through 17 and to $3,600 for those under age six. Currently, the credit phases out at $200,000 for single tax return filers and $400,000 for joint filers. The new bill lowers those thresholds to $75,000 and $150,000 respectively. Another key provision makes the credit fully refundable – meaning that those who pay little or no taxes will still be able to take full advantage of the credit. Recipients can receive monthly installments (which would facilitate paying monthly living expenses) or a lump sum.
b) The earned income credit for lower income taxpayers has also been expanded. The amount has nearly tripled and the minimum age to claim the credit is reduced from 25 to 19. No upper age limit is imposed under the new bill.
c) The employee retention credit (ERC) is extended through December 31, 2021. It also is expanded to include certain start-up businesses (with an ERC capped at $50,000 per quarter) that otherwise would not have qualified for the ERC.
d) The bill also provides for a 100% COBRA premium subsidy effective April 1 through September 2021 for those who are involuntarily terminated and want to remain on their employer’s health insurance. The employer would pass along the subsidy so that qualifying individuals would pay nothing for their COBRA coverage during this period.
e) The bill expands the class of those who are entitled to help with the cost of their insurance under the Affordable Care Act. Consumers would be able to receive assistance if their premiums exceed 8.5% of their incomes rather than the current income cutoff of $51,000. The bill provides over $24 billion to shore up childcare facilities which have been hit particularly hard by the pandemic. It provides help to childcare workers making less than $12 per hour.
Employer Advantage is always following the latest legislation impacting employers and will continue to provide updates.
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