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The Coronavirus Aid, Relief, and Economic Security (CARES) Act:

What Employers Need to Know


The Coronavirus Aid, Relief, and Economic Security Act (the Act) was signed into law by President Trump on March 27, 2020. The Act is intended to deliver a $2.2 trillion economic stimulus and contains a multitude of provisions aimed at providing financial assistance to employers and individuals affected by the COVID-19 public health emergency.


Small Business Loans and Payroll Tax Credits

Two provisions of the Act are aimed at providing support to employers. First, small business loans under the Small Business Act will be available through December 31, 2020 to non-profits and businesses with fewer than 500 employees, as well as to franchises, sole-proprietors, and self-employed individuals. The loan can be used to pay employee wages, paid leave benefits, and insurance premiums. The Act sets the maximum interest rate of these loans at 4%.


Second, the Act contains provisions for a refundable payroll tax credit for 50% of wages paid by employers whose operations were totally or partially suspended as a result of COVID-19 lock-down orders, or whose gross receipts declined by more than 50%. The amount of the credit is based on qualified wages paid during the COVID-19 public health emergency, from March 13, 2020 through December 31, 2020.


Expanded Unemployment Assistance

The Act creates a temporary unemployment assistance program to provide benefits to individuals who are traditionally ineligible for unemployment benefits, such as the self-employed and independent contractors. These expanded benefits will be available through December 31, 2020 to those who are unable to work as a direct result of the COVID-19 health emergency.


Benefits will be provided for a duration of up to 39 weeks and will not be subject to a one-week waiting period. The amount of the benefit is calculated pursuant to applicable state law but includes an additional $600 per week for up to four months. Unemployment benefits will not be available to otherwise-eligible individuals who have the ability to perform work remotely or who are receiving paid leave benefits.


Employee Benefits Provisions

The Act includes a number of provisions that relate to employee benefits, including group health plans, retirement plans, and educational assistance programs.


Individual Rebate Checks

Finally, the Act provides direct financial assistance to U.S. residents in the form of a rebate check. Residents with adjusted gross income up to $75,000, or $150,000 filing jointly, who are not claimed as a tax dependent and who have a work-eligible social security number will receive a rebate check in the amount of $1,200, or $2,400 if married. An additional $500 is available for each child. For residents whose income exceeds $75,000, the rebate is reduced by $5 for each $100 of excess income. No rebate is available for single-filers with income in excess $99,000, head-of-household filers with income greater than $146,500, or joint-filers without children with income above $198,000.


Though the Act is now law, federal agencies will be tasked with issuing more detailed guidance to address practical elements of the Act’s various provisions. Employers should anticipate the release of this information over the coming weeks.





This Benefits Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

Posted by in Blog, Health & Benefits, Human Resources

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