After passing $8.3 billion in supplemental appropriations for federal agencies to respond to the coronavirus (COVID-19) outbreak earlier this month, Congress is moving forward with its second legislative response, the "Families First Coronavirus Response Act," which includes policies addressing free COVID-19 testing, nutrition assistance programs, unemployment insurance, and paid sick and family leave for certain employees. The House has passed the bill by unanimous consent, which will now be considered by the Senate. Treasury Secretary Steve Mnuchin announced Monday night that a bipartisan deal had been reached, and the Senate is expected to pass the measure in short order before it moves to the President's desk. This morning, Senate Majority Leader Mitch McConnell (R-Ky.) announced the Senate will stay in session until further measures are enacted.
Though this second round of legislation is not yet through the Senate, Congress has already begun consideration of policies to be included in a third round. Meanwhile, the Trump Administration continues to propose and take additional measures that do not require congressional approval. While the policy landscape related to COVID-19 continues to change by the hour, this update provides the current state of play and what we might expect in the coming days, weeks and months.
The House Bill
On Monday evening, the House of Representatives passed a technical correction to H.R. 6201, the "Families First Coronavirus Response Act." It now moves to the Senate. Two key provision that have attracted significant attention are the Emergency Family and Medical Leave Expansion Act, and Emergency Paid Sick Leave Act.
A. Emergency Family and Medical Leave Expansion Act
The bill provides for special leave provisions with respect to COVID-19 that applies only to employers with fewer than 500 employees and only to employees who have been employed for at least 30 days. These employees have the right to take up to 12 weeks of leave in the event the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed because of COVID-19.
The first 10 days of leave are unpaid, but an employee may elect to substitute any accrued vacation leave, personal leave, or medical/six leave, and employers are prohibited from requiring the substitution of paid leave. If leave continues beyond 10 days, it must be paid. The leave paid at a rate of two-thirds of employee's regular rate of pay as determined under the Fair Labor Standards Act and is based on the number of hours the employee normally would have been scheduled to work. In all cases, an employer need not pay an employee more than $200 per day and $10,000 in the aggregate. The U.S. Department of Labor is instructed to promulgate rules exempting employers of 50 or fewer employees whose business is jeopardized by these rules. These rules would go into effect no later than 15 days after enactment.
B. Emergency Paid Sick Leave Act
The bill also provides for paid emergency sick leave in the case of absences related to COVID-19. Again, this provision only applies to employers with fewer than 500 employees, but for a broader set of circumstances such as an employee's direct exposure to or exhibition of systems of COVID-19, care for a family member with the same, or to care for a child in the case of schools and child-care closed due to COVID-19.
In these cases, employees are entitled to up to 80 hours of paid sick leave, and part-time employees are entitled to a number of hours equal to the number of hours that such employee works, on average, over a two-week period. Employees taking paid sick leave are entitled be paid at their regular rate of pay (at least the applicable federal, state or local minimum wage) except if they are caring for a family member, they are entitled to two-thirds of their regular rate of pay. Like the Emergency Family and Medical Leave Act, the amount of wages that must be provided is capped. This leave must be offered in addition to any existing leave benefits and employers are not allowed to change their policies after enactment to avoid the new requirements. Like the Emergency Family and Medical Leave Act expansion, these rules would go into effect no later than 15 days after enactment.
C. Tax Credits For Paid Leave
To offset some of the costs of these two new mandates, the bill also created employer tax credits. These credits are dollar-for-dollar credits based on the wages paid, but are limited both daily and in the aggregate. For example, under the Emergency Paid Sick Leave Act, the credit is capped at $511 per day, or $200 if for employees who take leave to care for others or for childcare. The credit is refundable.
D. Other Provisions of the House Bill
Funds for Unemployment Insurance
- The bill provides $1 billion in emergency grants to states for the processing and payment of unemployment insurance benefits in certain circumstances.
Free COVID-19 Testing
- The bill provides $1.25 billion in funding to support nutrition-assistance programs for those affected
- The bill allocates $1.25 billion in funding to support nutrition-assistance programs for those affected by the COVID-19 outbreak, including $500 million for the Special Supplemental Nutrition Program for Women Infants and Children (WIC), $400 million for local food banks, $100 million to nutrition programs in U.S. territories, and $250 million for the Senior Nutrition program.
The Trump Administration has announced several measures it plans to take to respond to the COVID-19 outbreak, including efforts to aid employers and individuals. To date, the Administration has announced:
- The Treasury Department is considering efforts to assist small- and medium-sized employers in paying wages to employees under the new mandates being debated in Congress. The Treasury is also considering what interest and penalty free delays for tax filing and payment might be appropriate. Specific details have yet to be publicly announced.
- Declaration of National Emergency. The President declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988 and National Emergencies Act. Such a declaration under the Stafford Act allows the federal government, by coordination through Federal Emergency Management Agency, to provide assistance to state and local governments and provides funding for such assistance. The declaration under the National Emergencies Act authorizes the Secretary of Health and Human Services to waive or modify certain requirements enumerated in Medicare and Medicaid and during certain emergencies.
- The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans to small businesses suffering substantial economic injury as a result of the COVID-19 outbreak. Disaster relief loans of up to $2 million with interest of 3.75 percent is available for small businesses. According to the Administration there is $7 billion available for this program.
- The U.S. Department of Education is reportedly waiving interest that accrues on all federal student loans "until further notice." Specific details have yet to be publicly announced.
- There are also reports of discussions within the Administration over whether to lift tariffs on China and other countries as a way to provide economic relief, which is being supported by Senate Finance Committee Chairman Chuck Grassley (R-Iowa).
These are only some of the changes that have been announced or reportedly are under discussion, and the timing and substance of unilateral action by the Administration remains a moving target.
What's Next? Round 3
With Congress having already passed supplemental appropriations and currently working on the second round of legislation, it is important not to lose sight of future actions both Congress and the Administration will likely take.
Members of Congress and staff are already looking toward "round three," and having discussions on what policies it might include. Senate Majority Leader Mitch McConnell recently made clear that Senate Republicans intend to pursue legislation that: 1) directly helps Americans overcome financial hardship due to COVID-19, 2) secures the U.S. economy, and 3) takes additional steps to ready our healthcare system to slow the growth of the outbreak and combat the virus.
Specifically, Sen. McConnell has said, "Senate Republicans feel strongly that this bill [H.R. 6201] must only be the beginning of Congress's efforts to support our nation's economy and stand with American families." Speaker of the House Nancy Pelosi (D-Calif.) has made clear her desire to finalize a broader economic stimulus within a matter of weeks. Finally, Senate Minority Leader Chuck Schumer (D-N.Y.) is already working with Ranking Members to prepare a new proposal for round three and a reportedly $750 billion-plus package. Sen. McConnell has not put forth an estimate, but has commented "it's a big number."
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