President Biden Signs COVID-19 Relief Bill
President Joe Biden has signed the $1.9 trillion COVID relief bill passed by Congress last week. Most notably, the bill provides additional funding for the Paycheck Protection Program (PPP) and vaccine distribution, extends the employee retention tax credit, and maintains supplemental unemployment benefits at $300 per week through Sept. 6, 2021.While this bill does not include COVID-19 employer liability protections, BSCAI will continue to lobby Congress on these protections in the coming months.
Below you will find a summary of the major provisions included in the final legislation. BSCAI will be sure to provide members with any new guidance issued by the Biden administration following the enactment of this law.
American Rescue Plan Act Summary:
- Supplemental Unemployment Benefits: Maintains supplemental unemployment benefits at $300 per week through September 6. The first $10,200 in unemployment benefits received in 2020 by households earning $150,000 or less would be nontaxable. The House bill had originally provided $400 per week in supplemental unemployment benefits.
- Employee Retention Tax Credit: Extends the employee retention tax credit through December 31, 2021. Modifies the credit so that it can only be claimed against the hospital insurance tax beginning after June 30, 2021.
- Paid Sick and Medical Leave: Extends tax credits for employers who voluntarily offer their employees paid sick and medical leave benefits related to COVID-19 through September 30. Increases the amount of wages for which an employer may claim the paid family credit in a year from $10,000 to $12,000 per employee and increases the number of days for which self-employed individuals can claim the credit from 50 to 60. Expands eligible leave to include time taken to receive or recover from a COVID-19 vaccine.
- Small Business Relief: Adds $7.25 billion to the Paycheck Protection Program (PPP) and $15 billion to the Economic Injury Disaster Loan (EIDL) program.
- No Federal Minimum Wage Increase: Does not increase the federal minimum wage.
- COVID-19 Vaccines and Testing: Provides $75 billion for COVID-19 vaccines, testing and tracing.
- Direct Payments to Individuals: Includes $1,400 stimulus payments for individuals who earn up to $75,000 and married couples who earn up to $150,000. The payments phase out after $80,000 for individuals and $160,000 for couples.
- Child Tax Credit: Expands the Child Tax Credit for 2021 to $3,000 per child ($3,600 per child under age 6). Children age 17 are now eligible. The tax credit will be fully refundable.
- State and Local Government Aid: Provides $350 billion for state and local government aid.
A full summary of the bill can be found here.
DOL to Rescind Independent Contractor and Joint Employer Rules
Last week, the Department of Labor (DOL) announced two rulemakings to rescind the Trump administration’s independent contractor and joint employer rules. The first Notice of Proposed Rulemaking proposes the withdrawal of the Independent Contractor Final Rule issued by the department on issued on Jan. 7, 2021. DOL cited the following reasons for their decision:
- The rule adopted a new “economic reality” test to determine whether a worker is an employee or an independent contractor under the FLSA.
- Courts and the department have not used the new economic reality test, and FLSA text or longstanding case law does not support the test.
- The rule would narrow or minimize other factors considered by courts traditionally; making the economic test less likely to establish that a worker is an employee under the FLSA.
The second Notice of Proposed Rulemaking seeks to rescind a current regulation on joint employer relationships under the Fair Labor Standards Act, published in the Federal Register and which took effect on March 16, 2020. As justification, DOL cited a federal district court decision issued in September 2020 vacating part of the rule, which stated it was as contrary to the FLSA and was “arbitrary and capricious” due to its failure to explain why the department had deviated from all prior guidance or consider the effect of the rule on workers.
The department is accepting comments from the public on both proposed rules at www.regulations.gov. The comment periods end on April 12, 2021.
House of Representatives Passes PRO Act
The House of Representatives passed the Protecting the Right to Organize (PRO) Act by a vote of 225-206 last week. The PRO Act contains over 30 different proposals to change federal labor laws and would drastically alter the landscape of labor relations between employers and workers. The bill now moves to the Senate where it faces an uncertain future. Without any changes to the Senate filibuster, Democrats would need to secure 60 votes to ultimately pass the bill and they appear to be short of that number as of now.
A summary of the major provisions included in the PRO Act can be found below. BSCAI continues to track the bill closely and will keep members updated on its movement in the Senate.
Summary of the PRO Act:
- Institutes “card check” for union certification;
- Roll backs state “right-to-work” laws;
- Changes independent contractor classification;
- Expands “joint employer” definition;
- Limits the ability of employers to contest union election petitions;
- Mandates binding arbitration upon employers and unions for two years when negotiating a first contract; and
- Facilitates union organizing in micro-units.
To see how your House member voted on the PRO Act click here. The bill text can be found here, a short summary here, and a section-by-section summary here.
Congressional Democrats Introduce Comprehensive Immigration Reform
Democrats in the House and Senate recently introduced legislation backed by President Joe Biden to overhaul the nation’s immigration system. The U.S. Citizenship Act of 2021 would establish an 8-year path to citizenship for undocumented immigrants and raise the per-country caps on family and employment-based legal immigration numbers, among other provisions. A summary of the bill is below.
- Establishes an 8-year path to citizenship for undocumented immigrants who arrived in the U.S. by Jan. 1.
- Provides an expedited path to citizenship for farm workers and undocumented young people who arrived in the U.S. as children with temporary protected status under the Deferred Action for Childhood Arrivals (DACA) program.
- Raises the per-country caps on family and employment-based legal immigration numbers.
- Repeals the penalty that prohibits undocumented immigrants who leave the country from returning to the U.S. for between three and 10 years.
- Increases funding for technology at the southern border.
While passing immigration reform remains a top priority for President Biden, it remains unclear when Congress would take up a potential bill. BSCAI is tracking the legislation and will provide members with updates as they become available.
Congress Strikes Agreement on PPP Extension
Leaders in the House and Senate recently reached an agreement to extend the Paycheck Protection Program (PPP) for two months beyond the Mar. 31 application deadline. The agreement would extend the PPP's loan application deadline to May 31. It would also give the Small Business Administration authority to continue processing pending applications for 30 days after that date. The House is expected to vote on the extension this week and the Senate will take it up after that.
IRS Issues Guidance on Employer Retention Tax Credit
The Internal Revenue Service (IRS) has released guidance for taxpayers claiming the employee retention credit for calendar quarters in 2020. For 2020, the employee retention credit can be claimed by employers who paid qualified wages after March 12, 2020, and before January 1, 2021, and who experienced a full or partial suspension of their operations or a significant decline in gross receipts. The credit is equal to 50 percent of qualified wages paid, including qualified health plan expenses, for up to $10,000 per employee in 2020. The maximum credit available for each employee is $5,000 in 2020.
A significant change for 2020 made by the December COVID relief law permits eligible employers that received a Paycheck Protection Program (PPP) loan to claim the employee retention credit, although the same wages cannot be counted both for seeking forgiveness of the PPP loan and calculating the employee retention credit. The guidance explains when and how employers that received a PPP loan can claim the employee retention credit for 2020.
The guidance also provides answers to questions such as: who are eligible employers; what constitutes full or partial suspension of trade or business operations; what is a significant decline in gross receipts; how much is the maximum amount of an eligible employer's employee retention credit; what are qualified wages; how does an eligible employer claim the employee retention credit; and how does an eligible employer substantiate the claim for the credit.
While the December COVID relief law also extended and modified the employee retention credit for the first two calendar quarters in 2021, the guidance addresses only the rules applicable to 2020. The IRS plans to release additional guidance soon addressing the changes for 2021.