COVID-19 Relief Bill Extends Unemployment Benefits and Paycheck Protection Program
The $900 billion COVID-19 relief bill, passed by Congress and signed into law on Dec. 27, includes a number of provisions that affect employers and their workers in terms of paid sick leave and Emergency Family and Medical Leave Act provisions.
The legislation also boosts unemployment benefits to out-of-work Americans, as well as reopening and expanding the Paycheck Protection Program that was introduced in March as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Paid Sick and Family Medical Leave.
The new law did not extend the obligation for employers to provide emergency paid sick leave, expanded family and medical leave beyond Dec. 31, 2020, instead making it voluntary after that date. From Jan. 1, employers can continue receiving tax credits if they provide emergency paid sick leave (EPSL) and emergency family medical leave (EFML) to employees for COVID19-related purposes through March 31. Here are the caveats:
- Tax credits will be available for leave granted to employees who did not already exhaust 80 hours of EPSL or 12 weeks of EFML. For example, if a worker who was entitled to 80 hours of EPSL last year used 50 of those hours, they’d have 30 hours left to use between January 1 and March 31 this year.
- Employers must protect the job of any employee that is granted EPSL or EFML.
The legislation extends some CARES Act unemployment programs:
Unemployment benefits – The new law restores the federal increase for all unemployment benefits, which adds $300 to each week of benefits for up to 11 weeks through March 13.
Gig worker unemployment benefits extended – The law also extends the Pandemic Unemployment Assistance (PUA) program, which covers independent contractors and gig workers who would usually not be eligible for unemployment insurance payments. This program (originally created by the CARES Act) is also extended to March 14, and then a three-week phase-out period will run until April 5.
The law increases the number of weeks gig workers are eligible for unemployment benefits by 11 additional weeks, on top of the 39 weeks under the original program.
Extra weeks for those whose benefits ran out – The Pandemic Emergency Unemployment Compensation (PEUC) program, which provides 11 additional weeks of unemployment insurance benefits to individuals who use up all of their state unemployment benefits, will be extended until March 14. The law increases the number of benefit weeks to 24, from 13 under the original version of the program. After March 14, this program will be phased out over three weeks until April 5.
More money – Taxpayers with annual incomes below $75,000 will receive a $600 check, plus another $600 per dependent child. Payments are phased out for people with incomes in excess of $75,000.
Paycheck Protection Program (PPP)
Part II – The law sets aside $284 billion for forgivable loans to struggling businesses as part of a second PPP. Companies that receive funds will have to use the money on payroll and other specific expenses if they want the loan to be forgiven. Depending on the loan, employers will have either 8 or 24 weeks after receiving the loan to spend it on approved expenses.
But PPP part 2 has additional prerequisites that differ from the original. It lowers the employee threshold for businesses to 300 employees or fewer (down from 500). Additionally, the maximum loan is now $2 million, compared to $10 million under the original PPP. Qualifying expenses are also different in this version, which means any business thinking about applying needs to read all the fine print.
FSA rollover expanded – For years, flexible spending arrangement rules included a “use it or lose it” provision, meaning whatever funds an employee didn’t use in their FSA during a year would be forfeited. However, the rules did allow employers to let employees carry over $550 to the next year, as long as they used those funds by March 15 of each year.
The COVID-19 relief law eliminates the health FSA carryover limit, allowing employees to carry over any unused amounts from the 2020 or 2021 plan year to the next plan year. It also permits dependent care FSA rollovers for those years, which are not permitted under current law.
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