On Friday March 27, 2020, Congress passed and President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), a $2 trillion dollar stimulus package which includes financial assistance to individuals and businesses. Below is a summary of some of the provisions that may be of interest to our clients.
Payroll Protection Loans
One major portion of the CARES Act of interest to small businesses is the ability to obtain loans under Section 7(a) of the Small Business Act through what is being called the “Paycheck Protection Program”. These loans will be provided through SBA-approved lenders, who have been delegated authority to make loans without SBA review. This program provides an emergency loan that can be forgiven under certain circumstances. The purpose of this program is to provide an incentive for small businesses to keep workers on the payroll or rehire laid-off workers that lost jobs due to COVID-19. Small businesses, nonprofits and veterans organizations that generally have fewer than 500 employees (this is a head-count, not an FTE count) are eligible for the loans. Self-employed, sole proprietors, and some freelance works are also eligible to apply. Some accommodations will be made for businesses in the accommodation and food services industry. For a full analysis and recommendations regarding payroll protection loans, see our client alert: available at https://www.lashlybaer.com/paycheck-protection-program-may-provide-boost-to-small-businesses/.
Clarification of the Emergency and Family and Medical Leave Expansion Act
For the Emergency Family and Medical Leave Expansion Act, the CARES Act clarified that an employer shall not be required to pay more than $200 per day and $10,000 in the aggregate for each employee for paid leave under this section.
Also note, the Department of Labor has issued helpful guidance about the interpretation of the Emergency Family and Medical Leave Expansion Act and exemptions:
Clarification of the Paid Sick Leave Act
For emergency paid sick leave, the CARES Act clarifies that an employer shall not be required to pay more than either—
(1) $511 per day and $5,110 in the aggregate for each employee, when the employee is taking leave for a reason described in paragraph (1), (2), or (3) of section 5102(a):
- is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- has been advised by a health care provider to self-quarantine related to COVID-19;
- is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
(2) $200 per day and $2,000 in the aggregate for each employee, when the employee is taking leave for a reason described in paragraph (4), (5), or (6) of section 5102(a):
- is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
- is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19; or
- is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
Also note, the Department of Labor has issued helpful guidance about the interpretation of the paid sick leave requirements and exemptions: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
Emergency Increase in Unemployment Payments
The CARES ACT includes a Pandemic Unemployment Assistance (PUA), which provides federally-funded unemployment benefits to some workers who lose their jobs but are not normally eligible for unemployment. For example, employees with insufficient work history or those who have exhausted their regular unemployment benefits would be eligible for benefits. Workers can receive up to 39 weeks of PUA benefits through December 31, 2020.
In addition, the CARES Act provides an additional $600 in unemployment payment per month to individuals in addition to what an individual is normally paid in unemployment by the state. This amount will be paid for up to four months until July 31, 2020.
Assistance to K-12 Schools
The CARES ACT also has a number of provisions to assist K-12 education. The CARES Act provides $13.5 billion to assist public schools, and at least 90 percent of that amount must go to local educational agencies in proportion to the amount of funds those districts received under Title I in the most recent fiscal year.
A local educational agency that receives funds under program may use the funds for any of the following:
(1) Any activity authorized by the ESEA of 1965, the Individuals with Disabilities Education Act, the Adult Education and Family Literacy Act, the Carl D. Perkins Career and Technical Education Act of 2006, or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act.
(2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus.
(3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools.
(4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population.
(5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies.
(6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases.
(7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency.
(8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act, and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements.
(9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment.
(10) Providing mental health services and supports.
(11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care.
(12) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency.
In addition, there will be $3.5 billion reserved for governors to use and distribute based on local needs. Secretary DeVos will make grants through the governor’s emergency education relief fund to the governor of each state with an approved application. Grant funds awarded may be used to provide a number of needs for K-12 and higher education, including to provide emergency support through grants to local educational agencies that the State educational agency deems have been most significantly impacted by coronavirus to support the ability of such local educational agencies to continue to provide educational services to their students and to support the on-going functionality of the local educational agency.
The CARES Act also gives the Secretary of Education the power to grant certain waivers to federal program requirements under the Every Student Succeeds Act (ESSA). In addition, Secretary DeVos must report to Congress about recommendations she has to grant schools “limited flexibility” from federal education law, including the Individuals with Disabilities Education Act.