Lewis Roca Blog

After much haggling, Congress passed its second major COVID-related relief package on December 21, 2020. The $900 billion package is included in the 5,593-page Consolidated Appropriations Act of 2021, which is expected to be signed by President Trump shortly and will provide funding for the federal government between now and the end of the current fiscal year on September 30, 2021.

COVID-related Provisions

The COVID-related provisions include, among other things:

• Direct payments of up to $600 per adult and child, subject to household income limits;
• More than $284 billion for further “second draw” Paycheck Protection Program (PPP) loans;
• $15 billion "in dedicated funding for live venues, independent movie theaters and cultural institutions";
• $300 per week for enhanced unemployment insurance benefits;
• $25 billion for rental assistance and an eviction moratorium extension;
• $82 billion for education providers;
• $10 billion for child care assistance;
• $13 billion in increased Supplemental Nutrition Assistance Program and child nutrition benefits;
• $7 billion to increase broadband-internet access;
• Billions of dollars for COVID vaccine distribution, testing, and contact-tracing efforts; and
• A tax credit "to support employers offering paid sick leave.”

Employer Impacts

Organizations in particular sectors, including air travel, entertainment, real estate, child care, broadband internet and healthcare, should consult with their counsel to determine eligibility for specifically earmarked funds and potential employment implications.

More broadly, the key provisions for employers are likely to be the second-draw PPP loans; enhanced unemployment insurance benefits; COVID vaccine distribution, testing, and contact-tracing funds; and the continued tax credit for paid sick leave and family leave.

Paycheck Protection Program

With regard to the PPP, the package allows certain businesses to take second-draw loans. Those loans will be generally limited to businesses with fewer than 300 employees that have seen gross revenue reductions of at least 25% during the first, second, or third quarter of 2020. The package also reduces the amount a borrower can receive from $10 million to $2 million, gives businesses more flexibility regarding uses for the money, and simplifies the forgiveness process for loans under $150,000.

The bill also includes limitations on loan amounts for seasonal employers and prohibits loans to (among others) any entity “primarily engaged in political or lobbying activities,” any entity in which Chinese or Hong Kong entities own more than 20%, and any entity with a Chinese resident on its board of directors.

In addition, although it provides more flexibility regarding the uses of funds, the bill generally limits forgiveness of the loans to 166.66% of the amount of the loan used for payroll costs. In other words, most employers will still need to spend at least 60% of the loan proceeds on payroll costs in order for 100% of the loan to be forgivable.

Unemployment Benefits

The package includes a $300 weekly federal enhancement in unemployment benefits for 11 weeks, from the end of December 2020 through March 14, 2021. This amount is half of the earlier pandemic-related enhancement, which expired at the end of July. The package also extends two other unemployment programs that were created by the CARES Act in March, both of which were set to expire at the end of this week:

• The Pandemic Unemployment Assistance program expands jobless benefits to gig workers, freelancers, independent contractors, the self-employed, and certain other people affected by the coronavirus; and
• The Pandemic Emergency Unemployment Compensation program provides an additional 13 weeks of payments to those who exhaust their regular state benefits.

Under this bill, both programs will close to new applicants on March 14 but will continue through April 5 for existing claimants who have not yet reached the maximum of 50 weeks.

COVID Testing and Related Provisions

The package also includes numerous health-related provisions meant to address the ongoing COVID pandemic. Among other things, it provides $22.4 billion for the “Public Health and Social Services Emergency Fund,” to be distributed to states, localities, territories, tribes, tribal organizations, urban Indian health organizations, and other health service providers to tribes “for necessary expenses for testing, contact tracing, surveillance, containment, and mitigation, including support for workforce, epidemiology, [or] use by employers...”

It remains unclear exactly how these funds will be distributed by the recipient governments and organizations, but employers may be eligible based on the extent of their involvement in COVID-related testing, contact-tracing, or related efforts.

Notably, it does not appear that this bill includes any changes to current law regarding employer testing relating to COVID, nor does it include any limitations on employer liability, which had been proposed in earlier drafts of the package.

Tax Credit for Paid Leave

Finally, the package extends certain tax credits under the Families First Coronavirus Response Act (the “FFCRA”) for amounts paid by employers from December 30, 2020 to March 31, 2021. Among other things, the package provides a “payroll credit for paid sick leave” for amounts paid by an employer “by reason of the Emergency Paid Sick Leave Act . . .” and a separate “payroll credit for paid family leave” for amounts paid by an employer “by reason of the Emergency Family and Medical Leave Expansion Act.”

Conclusion

Employers may find limited relief in this bill, but the terms are lengthy and complex, and many of the provisions are industry-specific.

Please contact a member of the Labor & Employment Team at Lewis Roca if you have questions or would like to discuss the bill as it applies to your organization and your unique circumstances.

This material has been prepared by Lewis Roca Rothgerber Christie LLP for informational purposes only and is not legal advice. Specific issues dealing with COVID-19 are fluid and this alert is intended to provide information as it is currently available. Readers should not act upon any information without seeking professional legal advice. Any communication you may have with a Lewis Roca Rothgerber Christie LLP attorney, through this announcement or otherwise, should not be understood by you to be attorney-client communication unless and until you and the firm agree to enter into an attorney-client relationship