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Coronavirus: Updates on Congressional Support and the Paycheck Protection Program, and What It Means for Employers

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Posted: June 25, 2020 by Paul Roberts

America has been experiencing a fast-spreading, wide-reaching health emergency pandemic of seismic proportions. Residents nationwide are sick and/or quarantined, unable to work, and unable to earn incomes. In communities across the country, many Americans are forced to stay home, and non-essential businesses are barred from operating.

Congress has been presented with an insurmountable task in response to the pandemic. It must create and enact new legislation, and develop economic stimuli to protect the health of America’s citizens and businesses. Congress does not have the luxury of time, as it does in other circumstances. Congress must act fast, must adapt quickly, and work – at least – at the same speed of the growing pandemic itself. Unfortunately, the pandemic is moving much quicker than the usual pace of Congress.

As of the date of this article’s publishing, Congress has rolled out four phases of COVID-19 pandemic response –with additional phase(s) likely to follow. As the COVID-19 pandemic continues to evolve, so do the actions of Congress. Some laws have been altered, and new laws have been introduced. As this is a constantly evolving satiation, we will continue to see additional movement from Congress. This article contains the latest updates through the end of June 2020.

The first phase of Congressional Relief, called “Coronavirus Preparedness and Response Supplemental Appropriations Act,” addressed Congress’s initial action item: to fund vaccine and research development for COVID-19. It was signed into law on March 6, 2020, and created $8.3 billion of funding for this purpose.

The second phase addressed Congress’s secondary action item: working citizens must be encouraged to stay home when they are sick or dealing with COVID-19. Furthermore, working citizens must be assured they will continue to be paid while unable to work because they are experiencing COVID-19 symptoms, caring for someone with COVID-19 symptoms, or while caring for a child whose school or childcare provider is unavailable due to COVID-19. This second phase birthed the “Families First Coronavirus Relief Act” (FFCRA), which was signed into law on March 18, 2020. Review our previous column for additional information on the FFCRA’s mandates and what it means for employers.

The third and fourth phases address the biggest issue: stimulating the entire national economy – providing loans and grants to businesses and direct financial assistance to citizens. The third phase, “Coronavirus Aid, Relief, and Economic Security Act” – referred to as the “CARES Act” – does just that, and was signed into law on March 27, 2020. It creates $2.2 trillion of funding to: expand the availability and length of unemployment benefits; provide economic stabilization for distressed industries (passenger airlines, cargo airlines, etc.); give individual stimulus payments of up to $1,200 to citizens, and create tax credits and loan programs to fund businesses’ payroll and rent/utility obligations.

The latter portion of the CARES Act authorized $349 billion of federally guaranteed Paycheck Protection Program (PPP) loan funds, which can be 100% forgiven so long as borrowers use the loans to maintain payroll and jobs. Unfortunately, though, the maximum $349 billion was claimed just 13 days into the funds’ availability.

Less than four weeks after the passage of the CARES Act, the Paycheck Protection Program and Health Care Enhancement Act was signed into law on April 24, 2020, which added another $310 billion into the Paycheck Protection Program. That’s in addition to $75 billion for hospitals/providers, $25 billion for COVID-19 testing, and $60 billion for the SBA’s existing Economic Injury Disaster Loan (EIDL) program, which provides employers up to $10,000 in emergency relief that does not have to be repaid.

The PPP is available to small employers through June 30, 2020. Although the first round of funding was depleted in less than two weeks, the second round of funding has kept funds available in the program for all small businesses in need of assistance.

To date, nearly five million employers have utilized the PPP; many uncovered and experienced flaws in the program, which were later addressed by the Paycheck Protection Program Flexibility Act, signed into law on June 5, 2020. These included provisions related to loan forgiveness.

Formerly, employers had only eight weeks (which begins on the loan’s disbursement date) to use their PPP funding in order to attain loan forgiveness. Furthermore, employers were required to spend at least 75% of the funds on payroll (including health care premiums) and no more than 25% of the funds on administrative items (rent, utilities, etc.). Lastly, employers were required to rehire laid off employees and restore pre-pandemic pay rates by June 30, 2020, in order to have PPP loans forgiven. These requirements were highly problematic for employers subject to local shutdown orders in April, May, and June (or later) with no payroll to make, and no positions to re-hire.

With the passage of the Paycheck Protection Program Flexibility Act, employers now have up to 24 weeks to utilize their PPP funds (although they may choose an eight-week period at their discretion). The 75/25 ratio requirement has been reduced to 60/40 – meaning employers now must spend at least 60% of the PPP loan on payroll (including benefits), with no more than 40% going toward administrative costs. Lastly, employers now have until December 31, 2020, to rehire laid-off positions and restore pre-pandemic pay rates. These changes were highly welcomed by all employers, and had major bipartisan support in Washington.

Because the situation continues to evolve, Congress may develop, re-think, and further change any of these laws.

Congress is currently in talks about potentially releasing a fifth, and likely final, version of congressional relief in response to COVID-19. The House of Representatives attempted to pass a fifth phase of relief on May 15, 2020, when it created and passed the $3 trillion “Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act.” When the HEROES Act landed in the Senate, it was dismissed by senators and labeled as a grab bag of Democratic priorities; it did not advance further. The HEROES Act will not be signed into law as written, but it tells us what some of our House members are thinking. The HEROES Act looked to amend the PPP program, which was later addressed by the Paycheck Protection Flexibility Act, as previously outlined. It would have extended the FFCRA’s reach and eligibility, extended the federal government’s $600/week Unemployment Benefit through 1/31/2021, created $600/week “hazard pay” for essential workers, provided billions in aid for state/local governments, and re-established another round of $1,200 stimulus payments to most Americans (a widely popular component of the CARES Act).

While we, unfortunately, do not have a crystal ball and cannot predict when the pandemic will reach its end – nor can we predict what Congress may pass – we do know what is in place today. As Congress continues to devise its next steps, Word & Brown will certainly keep you updated.

Stay tuned to Word & Brown for more details on continued actions by Congress and plans for Coronavirus/COVID-19 support. Visit the W&B COVID-19 Response Forum, where you will find a comprehensive carrier survey on policy questions related to COVID-19, an employer FAQ, as well as industry and carrier resources (for brokers, employers, and employees). Word & Brown is here for you, always – we are in this together, and sincerely extend our warmest hearts to you, your family, clients, and loved ones.


More about the author:

Paul Roberts is the Director of Education and Market Development at the Word & Brown General Agency, responsible for leading Word & Brown’s educational initiatives and providing oversight of the WBCompliance team in California and Nevada. Paul is a tenured veteran in the health insurance industry, carrying a long history of health insurance experience and an education in business management. He has performed nearly every operational role at Word & Brown General Agency in his fourteen-year tenure, and was a leader in the creation and development of Word & Brown’s legendary in-house Compliance team. Paul is passionate about education and keeping health insurance brokers and employers in-line with compliance. Paul can be found at many industry events across the nation delivering CE, HRCI and SHRM courses, educating himself, advocating for the role of the agent, and working directly with brokers and employers. This gives Paul the best ability to innovate and improve Compliance and educational resources to support the businesses and abilities of brokers. Paul is passionate about education, diversity and helping others. He is grateful for his opportunity to support both brokers and employers and is committed to your success.

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