CARES ACT – New Law Helps Coronavirus-hit Employers, Workers – April 2020


THE $2 TRILLION Coronavirus Aid, Relief, and Economic Security (CARES) Act stimulus law has a number of provisions that employers and their workers need to know about and can take advantage of during this crisis.

The CARES Act aims to help workers and employers weather the outbreak by:
• Extending unemployment benefits.
• Requiring health plans to cover COVID-19-related costs.
• Providing Small Business Administration (SBA) emergency loans.
• Providing emergency loans for mid-sized and large companies.

Parts of the CARES Act will likely benefit your organization and employees in some way. Here’s what you need to know:

Extended unemployment

The CARES Act extends unemployment insurance benefits to workers, as long as they lost their jobs due to the outbreak.
Unemployment benefits under the CARES Act also apply to furloughed employees.
Workers in California will be able to collect both state unemployment and federal unemployment through the new law.
Under existing state law, workers who have lost their jobs can already receive regular unemployment benefits of between $40 and $450 per week, depending on their highest-earning quarter in a 12-month period beginning and ending before they apply for benefits with the state Employment Development Department. These benefits can last for up to 26 weeks.
The Pandemic Emergency Compensation program funded by the new law will provide an additional $600 per week on top of state unemployment benefits, through July 31.
The law extends state-level unemployment by an additional 13 weeks. For example, whereas most of California’s unemployment benefits last 26 weeks, the bill extends state benefits to 39 weeks.
The extended benefits will last through Dec. 31.

Health plan changes

Under the CARES Act, employer-sponsored group health plans must provide for covered workers – without cost-sharing or out-of-pocket expenses – the cost of COVID-19 testing, treatment and vaccinations when and if they become available.

SBA loans

In response to the Coronavirus (COVID-19) pandemic, small business owners are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.
This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. This loan advance will not have to be repaid.
This program is for any small business with fewer than 500 employees (including sole proprietorships, independent contractors and self-employed persons) as well as private non-profit organizations affected by COVID-19. You can find more information here.

And the law’s Paycheck Protection Program offers 1% interest loans to businesses with fewer than 500 workers. Borrowers who don’t lay off workers in the next eight weeks will have their loans forgiven, along with the interest. These loans are designed to provide a direct incentive for small businesses to keep their workers on the payroll. If small businesses maintain payroll through this economic crisis, some of the borrowed money via the PPP can be forgiven – the funds will be available through June 30. Act fast.

Mid-sized employers

Under the new law, the Secretary of the Treasury is authorized to implement financial assistance programs that specifically target mid-size employers with between 500 and 10,000 employees.
Loans would not have an annualized interest rate higher than 2% and principal and interest would not be due and payable for at least six months after the loan is made. But unlike loans under the PPP, these are not forgivable.