COVID-19 Stimulus Package – feedback requested

As we indicated in our previous update, the House successfully passed the second coronavirus response bill on Saturday evening that focuses new resources on covering testing for the insured and uninsured and supports paid time off for parents whose children are out of school and certain other employees. However, yesterday evening after a full day of bipartisan negotiations, the House passed technical corrections that made some substantial changes to the original bill passed over the weekend. The biggest adjustment is that the emergency leave that grants an additional 10 week leave at a reduced rate of 2/3rds regular salary (beyond the two week paid leave) now only applies to individuals who need to care for a child who is either sick or for whom childcare is unavailable due to the COVID-19. This requirement now applies to all employers of over 50 employees.

Currently, the House Representatives is in recess and its Members are already back in their home districts (the technical fix bill was passed via a unanimous consent procedure, meaning an in-person vote was unnecessary). The Senate is still at work in Washington this week and is currently working to meld the bill just passed by the House with a third response bill (which remains undrafted at this time) aimed at larger economic impacts. The resulting stimulus and response package would be the largest in U.S. history, totaling over $1 trillion in support to the American people and economy. At the moment, additional support could look like the following: $50 billion for the airline industry, $250 billion for small-business support, $500 billion for a payroll tax holiday, and $250 billion for direct federal payments to families and individuals. These numbers are very fluid and could continue to rise as the White House negotiates with Senate Republicans and Democrats.

At the same time, Senate Democrats are currently pitching a package of at least $750 billion that would include emergency aid for hospitals, expanded unemployment insurance, more funds for small business, help with childcare, and food assistance for seniors.

In a separate action today, Treasury Secretary Steve Mnuchin announced that families and small businesses can defer tax payments for 90 days, but are still asking Americans to file by the April 15th deadline. This covers a broad range of Americans, including small businesses that file as individuals who owe up to $1 million, and other categories of small businesses, sole proprietors, and corporations owing up to $10 million. Penalties and interest that would otherwise apply during this nearly three-month period will be waived, offering up a large amount of liquidity to the economy at a crucial point in the fight against the coronavirus.

A lot of these proposals are in flux as negotiations continue. Other provisions in discussion include large-scale public works projects, tweaks to the EB-5 visa program, and tariff relief (the US is currently still imposing tariffs on multiple countries). Most options for relief and response are on the table still and prior political and ideological positions regarding deficits and spending are out the window.

But it is important that as you assess the impact on you and your stakeholders to let us know what assistance and/or relief you need from the federal government. Please communicate your needs to us ASAP so that we can pass them along to legislators as these relief packages are negotiated. The time to engage is now. We’re also happy to have our team participate in any upcoming conference calls in order to provide real time updates and answer questions, as needed.

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Update on COVID-19 Response Package (as of Sunday 3.15)

Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have reached an agreement on the second round of Coronavirus legislation. The agreement received the President support and passed with bipartisan votes shortly after midnight Saturday morning. The Senate is expected to take a vote on it early this week and we anticipate that it will pass. House Speaker Nancy Pelosi has already announced that the Democrats have begun drafting a third round of legislation that would focus primarily on the economic impacts of the virus, once that is known with more clarity. This third round has been likened to the level of relief that was passed back in 2009.

The current response package is primarily focused on the healthcare concerns and immediate potential life-or-death impacts. Through various mechanisms, the bill covers the costs of testing for both insured and uninsured individuals. To slow the spread of the virus, the bill mandates paid sick leave and family leave. Eligible employees are granted two weeks paid leave and up to 10 additional weeks of job-protected emergency leave. This can be due to their own illness or to care for an act-risk family member or to care for a child who no longer can go to school or if a child-care provider is unavailable due to the coronavirus.

The two-week paid leave is 80 hours or the two-week equivalent for a part-time employee. After the initial two weeks of paid leave, employees must receive at least two-thirds their usual pay through the remainder of their leave allowable 12-week emergency leave. If the leave is taken to care for a family member, employers may pay two-thirds the regular rate for the entire 12 weeks. These leave provisions expire at the end of the year.

Businesses and self-employed individuals would get refundable tax credits to cover some of the costs. The bill provides businesses a payroll tax credit on qualified wages of up to $511 per day for each employee who takes sick leave to self-quarantine or get a diagnosis. They get a credit of up to $200 per day for workers caring for children or other family members who have been affected by the virus. Self-employed people get the same credit if they are caring for family members and up to $511 per day or the average of their self-employment income per day, whichever is lower. These credits apply to the two-week paid leave requirement.

For the wages that are required for the up to 10 additional weeks beyond the initial two-week leave, which can be paid at two-thirds the employees regular pay rate, the bill provides refundable tax credit of up to $200 per day. This credit is capped at $10,000 for all calendar quarters. The cap also applies to a self-employed individual, but they will need to provide documentation establishing their eligibility at the full cap amount.

The bill also provides $1 billion in emergency grants for states to provide and manage additional unemployment insurance benefits to workers who may be laid off as a result of the virus.

The bill also includes $1 billion in additional food assistance for low-income students, families and workers. States are allowed to use money from the food stamp program to give extra aid to families with school-age children who qualify for free or reduced-price meals. If their schools have been closed for at least five days, families can receive extra SNAP benefits equal to the value of school meals. This has the potential to impact more than 20 million school children who qualify across the country. Prior to this, USDA had waived rules so that 25 states and DC can give meals to students outside of group settings, making it easier to provide food for low-income students where schools are closed.

The bill also sets aside $500 million in food aid for pregnant women and mothers under WIC. It also includes $400 million for emergency food assistance through a USDA program. Another $100 million in nutrition assistance grants will go to Puerto Rico, the Northern Mariana Islands and American Samoa. Finally, the bill also includes $250 million for a program to provide about 25 million home-delivered and pre-packaged meals to low-income seniors.