March 27, 2020

The CARES Act Affects Emergency Paid Leave, Unemployment Insurance, and ERISA

On March 27, 2020, President Donald Trump signed the bipartisan Coronavirus Aid, Relief, and Economic Security Act, otherwise known as the CARES Act, (HR. 748) into law. Portions of the CARES Act intertwine with the Families First Coronavirus Response Act, Unemployment Insurance, and ERISA.  

Families First Coronavirus Response Act

Rehired Employees Eligible for Leave – Rehired employees who (1) were laid off not earlier than March 1, 2020, and (2) worked at least 30 of 60 days before they were laid off are now eligible for Emergency Family and Medical Leave Act benefits. 

Construction Employers Eligible for Reimbursement – Contractors will be reimbursed for paying their employees or subcontractors their minimum applicable contract billing rates, not to exceed an average of 40 hours per week any paid leave, while they are unable to work on site approved by the federal government, including a federally owned or leased facility or site, due to broad COVID-19 reasons until September 30, 2020. The reimbursement will be reduced by the amount of credit a contractor is allowed pursuant to division G of Public Law 116–127 and any applicable credits a contractor is allowed under the Families First Coronavirus Response Act. 

No Penalty on Late Taxes – Employers will not be penalized for not paying payroll taxes while waiting for “anticipated” COVID-19 tax credits.

Advance Tax Credit Eligibility – Employers may be eligible for advance payroll credit. The Secretary of the Treasury will later release forms and instructions to provide guidance on how businesses may receive advanced credit. 

Maintain All Records – The Secretary of Labor may now investigate and gather data to ensure compliance with this act, so remember to always keep proof that your staff received applicable paid leave (e.g., copies of cancelled checks, electronic payment proof, wage statement, etc.) to avoid needless conflict in the future. Your records will also allow you to best be able to receive applicable tax credits. 

Unemployment Insurance

Greater Accessibility – Applications for unemployment compensation, and assistance with the application process are accessible, to the extent practicable, in at least two of the following ways: in person, by phone, or online.


Department of Labor Additional Authority – The Department of Labor now has the authority to postpone deadlines due to a “public health emergency declared by the Secretary of Health and Human Services.”

Single-Employer Benefit Pension Plans – Contributions to minimum required funding standards for “single-employer defined benefit pension plans” that were to be due in the calendar year 2020 are now due on January 21, 2021. Interest will, however, continue to be accrued. In addition, plan sponsors can now use the plan’s “adjusted funding target attainment percentage” from the previous calendar year for calendar year 2020. 

Charity Pension Plans Expanded – Cooperative and small employer charity pension plans will now apply to employers who have been in existence since at least 1938, who conduct medical research directly or indirectly through grant making, and whose primary exempt purpose is to provide services with respect to mothers and children.   

Notice: Our prior alerts regarding COVID-19 have all been updated to take into account the CARES Act and other recently released Department of Labor guidance. You can find these articles in our COVID-19 Resource Center. The federal government may continue to enact legislation and release guidance based on the current conditions, and we will continue to update you accordingly.