Consolidated Appropriations Act - What Employers need to know
On December 21, Congress passed the Consolidated Appropriations Act, which provides much-needed relief to American businesses and citizens who have been impacted by the ongoing COVID-19 pandemic. There are a few key provisions in the legislation that should be noted.
Reboot of PPP
This is good news for businesses struggling to cover payroll expenses as a result of the pandemic. Borrowers are required to spend a minimum of 60% of funds received on payroll to receive full forgiveness, as with the original PPP bill. But there are new rules based upon whether businesses are existing PPP recipients or not.
Existing PPP recipients may apply for another loan, as long as they have 300 or fewer employees. Business must also demonstrate they experienced a 25% reduction in revenue during a quarter in 2020 compared to the same quarter in 2019. These businesses will be eligible to borrow up to 2.5 times their average monthly payroll costs (with the exception of businesses in food service and hospitality, who are eligible for loans up to 3.5 times their average monthly payroll costs).
Businesses that are first-time PPP borrowers are not subject to these more restrictive requirements, and will be considered based upon the original eligibility rules.
FFCRA Extension
The Families First Coronavirus Response Act (FFCRA) was not formally extended, as anticipated. This means that, at the Federal level, businesses will not be required to provide paid leave to employees impacted by COVID-19 (note: there may be local requirements to provide paid leave, as is the case in the state of California). However, the tax credit for those businesses who do provide paid leave remains in place, with reimbursement through March 31, 2021.
The new bill does not change any of the qualifying reasons for which employees may take leave, the FFCRA documentation rules, or the amount of time employees are entitled to take.
Benefits for Individuals The new bill provides a number of benefits and payments aimed at supporting individual taxpayers, as well.
Federal unemployment benefits increased by a supplemental payment of $300 per week. All recipients will receive this additional amount through March 14, 2021. The bill also extends the Pandemic Unemployment Assistance program, which provides coverage for those in non-traditional employment including gig workers, contractors and those who are self-employed.
A round of direct payments to individuals making up to $75,000 per year. ($1200 for married couples making up to $150,000 per year, and an additional $600 for each dependent child.)
Up to $25B in rental assistance payments, as well and a moratorium on evictions through January 31, 2021.
An additional $13B for the Supplemental Nutrition Assistance Program (SNAP).
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