In response to the unprecedented health and economic impact of COVID-19, federal lawmakers in Washington, D.C., have enacted major policies intended to provide critical resource assistance for the healthcare system and financial support for American workers.
ACE recently hosted a webinar entitled “News from Washington, D.C., and What It Means to You – COVID-19 Emergency Relief Bill” that is essential viewing for any health and exercise professional. During the 45-minute webinar, Tom Richards, ACE’s Director of Stakeholder Engagement, walks you through the elements of the legislation that are most likely to impact exercise professionals and answers some frequently asked questions.
Please note that this information should not be considered legal advice. Instead, this is meant to be a summary of the COVID-19 Emergency Relief Bill, which is a complex piece of legislation. Be sure to do the appropriate research by visiting the websites mentioned below and discussing your options with your bank, credit union, accountant or lawyer, as needed.
Details are still emerging as systems are put in place to roll out the Relief Bill, so be sure to visit ACE’s COVID-19 resource page for the latest information.
Direct Cash Rebate
The direct cash rebate is great news for most Americans, as every adult with a social security number is eligible to receive a one-time cash payment via either direct deposit or a check in the mail in the coming weeks.
Individuals are eligible for up to $1,200; couples are eligible to receive up to $2,400. Individuals with children will receive an additional $500 per child. The amount of the rebate reduces on a sliding scale for individuals earning above $75,000 and couples earning above $150,000 and phases out completely at an annual salary of $99,000 for individuals and $198,000 for couples.
In most cases, there is no need to apply for the payment. The IRS will use information from your 2018 or 2019 tax return to determine the amount and process the payment. More information on the cash rebate is provided by the IRS here.
This new legislation includes three important and beneficial changes related to eligibility, the amount of payments, and the duration of unemployment benefits.
Previously, unemployment benefits were generally available to workers who lost their job through no fault of their own. Now, unemployment benefits will be available to self-employed individuals, independent contractors and part-time workers, which is an important change for many people working in the fitness industry.
Weekly unemployment benefits vary from state to state, but typically cap at approximately $400/week. The new law provides an additional $600/week for individuals through the end of July 2020.
The duration of unemployment benefits varies from state to state, but typically the maximum duration is 26 weeks. The new law will cover an additional 13 weeks of unemployment benefits. The expanded weekly coverage will expire on December 31, 2020. Importantly, individuals who lost their job or had their hours reduced due to coronavirus are eligible for unemployment benefits.
This legislation introduces three changes in terms of the categories of people who are eligible to receive this benefit and covers employees working for American businesses with fewer than 500 employees, including self-employed individuals.
The new law provides paid leave for up to 80 hours for individuals who are unable to work because they are:
- Experiencing COVID-19 symptoms, which may include being quarantined; these individuals are eligible for up 100% of their pay (maximum of $511/day)
- Caring for an individual who is quarantined; these individuals are eligible for up to two-thirds of their pay (maximum of $200/day)
- Caring for a child whose school or childcare provider has shut down due to COVID-19; these individuals are eligible for two-thirds of their pay (maximum of $200/day)
Note that these benefits may be extended for an additional 10 weeks at two-thirds pay under certain circumstances.
The benefits are paid by the employer. The employer is then granted a tax credit to reimburse for the full amount of the benefit. Small businesses with fewer than 50 employees may be exempt from providing paid leave benefits relating to school or childcare closings if doing so would threaten the viability of the business.
The IRS maintains a COVID-19-related webpage here, where you can find more information on the paid leave benefit. This benefit expires on December 31, 2020.
Small Business Loans
There are two types of small business loans available, Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL).
Paycheck Protection Program
The PPP provides federally guaranteed loans, which are available through June 30, 2020, to help small businesses, self-employed individuals and independent contractors to continue operations. The loans can be used for payroll expenses, rent, utilities and other expenses.
The maximum amount of a loan is the lesser of the following: two and a half times the average monthly payroll during the previous year or $10 million.
Importantly, eight weeks of expenses, including payroll costs, may be forgiven if the loan recipient maintains its workforce and salary payments during the eight-week period. However, expenses paid for salaries over $100,000 would need to be paid back through the terms of the loan.
The loans are available through Small Business Administration (SBA)–certified lenders (e.g., banks and credit unions). The SBA has a COVID-19 webpage with resources on this topic.
Economic Injury Disaster Loan
An EIDL is a loan available to small businesses, sole proprietors and independent contractors, among others, through the SBA to cover business expenses in the event of a disaster, such as the coronavirus. The loans are available for up to $2 million. Pursuant to recent legislation, all applicants will receive a $10,000 advance within three days of submitting an application, which does not need to be repaid, provided the advance is used for paid sick leave, maintaining payroll, rent and mortgage payments, debts and other similar expenses.
Employee Retention Tax Credit
The ERTC is a tax credit, available to organizations that do not apply for PPP loans, which amounts to 50% of employee wages (max of $5,000 credit for $10,000 of an employee’s salary) paid between March 13, 2020 and December 31, 2020.
To qualify for the ERTC, an organization must:
- Have been partially or fully shut down due to a coronavirus-related government order; or
- Have experienced a 50% decline in revenue in a particular quarter (year over year) due to the coronavirus
Social Security Tax Holiday
The social security tax holiday provision allows businesses and self-employed individuals to defer payment of the employer’s share of the social security payroll tax (or 50% of the self-employment tax for self-employed individuals) due between March 13, 2020 and December 31, 2020. The deferred balance would be due 50% on December 31, 2021, with the remaining 50% due on December 31, 2022.
The social security tax holiday is available to organizations and self-employed individuals who do not receive a loan through the PPP.
Watch the recorded webinar “News from Washington, D.C., and What It Means to You – COVID-19 Emergency Relief Bill,” check out ACE’s COVID-19 Webpage for the latest updates and reach out to us on social media to join the discussion and connect with other professionals: