March 15, 2020
COVID-19 Government-Sponsored Resources
UPDATED MARCH 27, 2020
As COVID-19 containment efforts expand, a growing number of employers are seeing major disruptions to their operations or reductions in services. Similarly, a growing number of employees are concerned about significant drops in wages caused by quarantines, reductions in work hours, school closures, or job eliminations. In an effort to mitigate the impact of COVID-19 containment efforts on employers and employees alike, several resources and programs have been set up to provide assistance. Below is a brief summary of some of those resources.
RESOURCES FOR EMPLOYERS
U.S. Small Business Administration Disaster Loan Assistance
Employers suffering economic injury caused by COVID-19 may be eligible to apply for disaster loan assistance through the federal Small Business Administration (“SBA”). SBA’s Disaster Loans offer up to $2 million in assistance for a small business to provide vital economic support to help overcome the temporary loss of revenue they are experiencing. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of COVID-19’s impact. The interest rate for these loans is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75% and the repayment periods can be up to a maximum of 30 years.
For more information on Disaster Loan Assistance, please contact the SBA, or click here.
U.S. Small Business Interruption Loans
Under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), also known as H.R. 748, qualified small businesses may be eligible to apply for loans equal to the lesser of: (1) two and one-half’s worth of the business’s average monthly costs, including payroll, overhead, and debt or loan payments; or (2) $10,000,000. Additionally, the CARES Act provides for partial loan forgiveness in an amount equal to the business’ payroll costs during the covered period.
For more information on the CARES Act, please see Coronavirus Aid, Relief, and Economic Security Act (The CARES Act).
California Unemployment Insurance Work Sharing Program
Employers impacted by COVID-19 through reductions in services or slowdowns in business may apply for the California Unemployment Insurance (“UI”) Work Sharing Program. The UI Work Sharing Program permits employers to avoid layoffs by reducing the work hours and wages of their current employees and partially offsetting those reductions with UI benefits to those employees. Workers of employers who are approved to participate in the UI Work Sharing Program receive a percentage of their weekly UI benefit amount based on the percentage of hours and wages reduced, not to exceed 60%.
For more information on the UI Work Sharing Program, please contact the EDD or click here.
America’s Job Center of California Rapid Response Services
Employers facing closures or major layoffs caused by COVID-19 may request the assistance of the Rapid Response Services program through America’s Job Center of California (“AJCC”). Among other resources, the Rapid Response Services program provides employees who are impacted by closures or layoffs with job training, career counseling, job search assistance, résumé preparation, and interview workshops, all of which may ultimately help lower employer UI costs by helping impacted employees find new employment more quickly.
For more information on the Rapid Response Services program, please contact your local AJCC.
Payroll Tax Deadline Extension
Pursuant to Governor Gavin Newsom’s Executive Order N-25-20 issued on March 12, 2020, employers experiencing financial hardship caused by COVID-19 may now request up to a 60-day extension of time to file their payroll reports and/or deposit state payroll taxes, all without penalty or interest. Such a request must be received by the California Employment Development Department (“EDD”) within 60 days of the original delinquency date.
For more information on EDD payroll tax extensions, please contact your local EDD Taxpayer Assistance Center, or click on the following link.
Payroll Tax Credit For Paid Leave Pursuant to the recently enacted federal Families First Coronavirus Response Act (“FFCRA”), also commonly referred to as H.R. 6201, covered employers who provide mandated emergency paid sick leave under the Emergency Paid Sick Leave Act or paid family and medical leave under the Emergency Family and Medical Leave Expansion Act are eligible to obtain a tax credit to offset the costs of providing paid leave under these provisions, subject to certain caps. Employers will not be penalized for not paying taxes while waiting for “anticipated” COVID-19 tax credits, and some 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.
For more information on the tax credits available under the FFCRA for providing paid leave, please review our article: President Trump Signs Into Law Families First Coronavirus Response Act and CARES Act; or click on this link.
RESOURCES FOR EMPLOYEES
California State Disability Insurance
Employees who are unable to work due to an exposure to or infection by COVID-19 are eligible to file for California State Disability Insurance (“SDI”) through the EDD. SDI provides short-term benefit payments to employees suffering a full or partial loss of wages due to illness or a quarantine caused by COVID-19. The benefit amounts are generally equal to 60% to 70% of an employee’s regular wages and can range between $50 to $1,300 per week. Although there is typically a one-week unpaid “waiting period” requirement before an employee becomes eligible for SDI benefits, Governor Newsom’s Executive Order N-25-20 waives the waiting period requirement for SDI claims, allowing employees to receive SDI benefits covering the first week that they are unable to work. Eligible employees can typically expect to receive SDI benefit payments within a few weeks of submitting their claim.
For more information on SDI, please contact the EDD.
California Paid Family Leave
Employees who must take time away from work to care for an ill or quarantined family member due to COVID-19 may file a claim for Paid Family Leave (“PFL”), which provides employees up to six weeks of benefit payments to offset wage losses caused by family leave. The benefit amounts are generally equal to 60% to 70% of an employee’s regular wages and can range between $50 to $1,300 per week. Eligible employees can typically expect to receive PFL benefit payments within a few weeks of submitting their claim.
For more information on PFL benefits, please contact the EDD or click here.
California Unemployment Insurance
Employees experiencing wage losses caused by COVID-19 because their work hours have been reduced, they have been laid off, or because they have taken time away from work to care for a child affected by a school closure may file a claim for UI benefits. UI provides partial wage replacement payments to employees who lose their job or have their hours reduced, through no fault of their own. Eligible employees may receive benefits that range from $40 to $450 per week. California has also waived the usual one-week waiting period, so employees who are unemployed or underemployed as a result of the coronavirus should be able to receive UI benefits right away. In addition. the federal government, in passing the CARES Act, requires applications for unemployment compensation and assistance with the application process to be accessible, to the extent practicable, in at least two of the following ways: in person, by phone, or online.
For more information on UI benefits, please contact the EDD or click the following link.
Relief Under Federal Laws
For information on the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Act, please visit our article: President Trump Signs Into Law Families First Coronavirus Response Act and CARES Act or click on this link.
Disclaimer: Laws, regulations, and guidance on matters related to COVID-19 change rapidly. Please contact your Payne & Fears attorney for current guidance.