New Covid Related Stimulus Relief Package Signed Into Law
Last week, the COVID stimulus relief package was signed into law. It contains several provisions including the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CRRSAA) and extended many of the measures that were set to expire at the end of 2020. These acts include many provisions that continue and in some cases expands relief to businesses and employees, including those who are unemployed.
The important parts of the stimulus relief package employers should be aware of are:
Paycheck Protection Program (PPP) Has Reopened
- First-time borrowers must have 500 or fewer employees and meet other eligibility criteria.
- In addition, second PPP loans are available to businesses that received a PPP loan previously if they have 300 or fewer employees and meet other eligibility criteria including that they suffered a 25% or greater reduction in gross receipts in any quarter during 2020 when compared to the same quarter in 2019.
- The stimulus relief package adds the following as some of the additional eligible expenses:
- Expenses for software, cloud computing, and other human resources and accounting needs.
- Costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that were not covered by insurance.
- Costs for personal protective equipment (PPE) and expenses required to comply with federal, state, or local health and safety guidelines related to COVID-19 between March 1, 2020, and the end of the national emergency declaration.
- PPP loans are available until March 31, 2021, or until all allocated funds are disbursed.
Extension of Paid Leave Credits Under the Families First Coronavirus Response Act (FFCRA)
- Employers are not required to provide the paid leave or expanded family leave for their employees after December 31st, 2020.
- However, the stimulus package extends the tax credit portion of the FFCRA for employers who voluntarily offer these leaves through March 31, 2021.
Extension and Expansion of the Employee Retention Credit (ERC)
- The ERC is extended through June 30, 2021, and increases the credit to 70% from 50% of qualified wages.
- In addition, as of January 1, the credit rate is increased from 50% to 70% of qualified wages, the per-employee wage cap is increased from $10,000 per year to $10,000 per calendar quarter, the required decline in gross receipts decreases from 50% to 20%, and the threshold for treatment as a large employer increases from 100 employees to 500 employees.
Extension of COVID Pandemic Unemployment
- Provides an extension of benefits to March 14, 2021, for those currently receiving, but who have not exhausted unemployment benefits.
- Increases the maximum number of weeks that someone can draw unemployment from 39 to 50.
- Adds additional unemployment of $300 per week for unemployment payments beginning after December 26, 2020, and ending before March 14, 2021.
Extension of Repayment Period for Deferred Employee Social Security Taxes
- The current guidance issued by the IRS required that any employee portion of Social Security tax not withheld between September 1 and December 31, 2020, must be deducted from compensation paid to employees between January 1 and April 30, 2021, or penalties and interest would begin to accrue on May 1, 2021
- The repayment deadline is now extended from April 30, 2021, to December 31, 2021, and the date for penalty and interest to begin accruing is extended from May 1, 2021, to January 1, 2022.
The stimulus relief package has other miscellaneous provisions of interest to employers and employees such as:
- Temporarily increases the business meal deduction to 100% from the current 50%. The expense must be for food or beverages provided by a restaurant. This is effective for expenses incurred after January 2, 2021, through December 31, 2022.
- Allows employees to roll over unused funds in their health and dependent care flexible spending accounts (“FSAs”) from 2020 to 2021 and from 2021 to 2022. Employers are allowed to permit employees to make a mid-year change in the amount they wish to contribute to their FSA’s for 2021.
- Employers are able to provide student loan repayment benefits to employees on a tax-free basis. An employer may contribute up to $5,250 annually toward an employee’s student loans, and this payment would be excluded from the employee’s income. The $5,250 cap applies to both the new student loan repayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by the employer. This provision applies to any student loan payments made by an employer on behalf of an employee after December 31, 2020, and before January 1, 2026.
How SDHRC Can Help
At San Diego Human Resources Consulting, we are committed to helping you tackle the ever-changing regulations and laws caused by the COVID-19 pandemic. Be sure to stay informed through our blogs, newsletters and social media posts. If you are not already receiving our newsletters, you may subscribe here and may unsubscribe at any time. Our HR experts are here and ready to support you every step of the way as you transition alongside your business whether you are reopening for the first time since the start of the pandemic or focusing on complying with the current regulations and requirements.
About the Author
Traci Hagan, “Treasure Trove”
Traci is an HR Consultant who has been with SDHRC for over 2 years but has over 32 years of experience in employee relations, conflict resolution benefits administration, training and development, workers’ comp and staffing! Traci is also a Professor who enjoys traveling and spending time with her 16-year-old “puppy”.