The latest stimulus bill passed by Congress and signed by President Trump on December 27, 2020, contains several key provisions employers need to be aware of as they navigate the latest developments of the pandemic.
First, with respect to the paid leave provided to employees by the Families First Coronavirus Relief Act (FFCRA), the bill extends the tax credit employers can take for the amount of paid leave provided under the FFCRA through March 31, 2021. Whether an employer elects to provide paid leave after December 31, 2020 is optional; thus, employees no longer will be entitled to take such leave unless the employer voluntarily offers leave as provided under the FFCRA. To be eligible for the tax credit, employers must continue to follow the same rules as in 2020, including job protection upon return from the leave. Importantly, employees do not receive a new amount of Emergency Paid Sick Leave for 2021 – if they used their entire allotment in 2020, they are not entitled to additional hours for 2021. As for Emergency Family and Medical Leave (EFMLA), employees are not entitled to additional hours for 2021 unless their employer calculates FMLA hours on a calendar year basis effective each January 1 (or some other 12-month cycle that resets prior to March 31, 2021). Under this limited scenario, employees may be eligible for an additional 10 weeks of EFMLA.
The new stimulus bill also provides several other forms of economic assistance to employers that businesses should explore with their counsel and tax advisors to determine their eligibility.
- Payroll Protection Program (PPP). Another $285 billion has been set aside to businesses, but this provision is available only for businesses with less than 300 employees that have been affected by the pandemic. Eligible companies must have used all of their money from their first PPP loan and suffered a decrease in revenue during any particular quarter of more than 25% from the same quarter in the previous year. Loans can be forgiven over either an 8-week or 24-week period and are limited to $2 million.
For businesses with existing PPP loans, such loans can be increased.
Forgivable expenses include not only payroll, payroll-related expenses, and all rent/mortgage expenses, but now also includes operations expenditures (computer software, administrative needs, etc.), property damage costs not covered by insurance, supplier costs, and personal protective safety equipment purchased during 2020 to comply with applicable safety regulations pertaining to COVID-19. In addition, expenses utilized in determining/justifying PPP loan forgiveness are tax deductible.
- Economic Injury Development Loans. $20 billion has been allocated to this program, which has been made available through 2021. The loans can be repaid over 30 years and are fixed at 3.75%.
- Shuttered Venue Operator Grant Program. A new program, $15 billion is available to the Small Business Administration (SBA) to assist eligible operators or promoters of live venue facilities, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, and talent representatives. These grants will be made available to those who suffered the greatest decline in revenues first, gradually becoming available to others after an initial period of time has passed.
- Low to Moderate Income Area assistance. Additional funds have been marked for businesses located in low to moderate income areas with 10 or fewer employees. In addition, money has been set aside for small community banks, small credit unions, and small agricultural credit institutions.
- Employee Retention Tax Credit. Extended to July 1, 2021, the credit rate has been increased to 70% from 50% of qualified wages, the level of decline in gross receipts has been lowered to 20% from 50%, and the limit on the per-employee creditable wages was increased from $10,000 for the year to $10,000 for each quarter.
- Social Security Tax Deferral. Employers may defer their share of social security taxes through March 2021. In addition, employers may the deferred amounts until the end of 2022. Keep in mind the amount deferred still must be paid at some point.
- Business Meal Deductions. To help the decimated restaurant industry, 100% of business meals provided by a restaurant are now tax deductible through the end of 2022.
- Non-Profit Benefits. Charitable contributions are extended through 2021, allowing individuals to take the standard deduction and deduct up to $600. In 2020, the deduction is limited to $300.
Finally, the law provides assistance to individuals who have suffered as a result of the pandemic.
- Certain individuals with incomes at or below $75,000, and married couples with income at or below $150,000 are eligible to receive $600, or $1,200 respectively, in stimulus payments and $600 per dependent child. As an individual’s income increases, the payments are reduced and, eventually, phase out.
- Through March 14, 2021, supplemental unemployment benefits are available of up to $300 per week. In addition, pandemic unemployment assistance – applicable to gig workers and self-employed individuals – and pandemic emergency unemployment compensation – available to individuals who have exhausted state unemployment benefits – have been extended through March 14, 2021.
The new law contains many provisions that can provide assistance to employers who have suffered as a result of the pandemic. Companies are encouraged to take advantage of these opportunities and consult with legal counsel.
The St. Louis employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters for over sixty years, and are available to discuss these issues and others. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.