How These New Measures Impact Businesses, Public Agencies and Employees

As of today, the United States government has taken two significant actions to provide resources to address the Novel Coronavirus COVID-19: On March 6, it enacted the $8.3 billion Coronavirus Preparedness and Response Supplemental Appropriations Act and, on March 13, President Donald Trump declared a nationwide emergency. The Administration and House of Representatives have agreed on a third action that awaits passage in the Senate in the coming days: the Families First Coronavirus Response Act, which provides a second round of supplemental appropriations and tax credits for new sick, family and medical leave requirements. Under the current proposed bill, state and local governments are subject to these paid sick, family and medical leave requirements, but are excluded from the corresponding payroll tax credits. Below is an overview of these three substantial steps and their effects.

Coronavirus Preparedness and Response Supplemental Appropriations Act
The Coronavirus Preparedness and Response Supplemental Appropriations Act provides $8.3 billion in supplemental appropriations to select agencies to aid in the development of therapies and vaccines for COVID-19.

The majority, $6.2 billion of the funding, went to the Department of Health and Human Services for the Food and Drug Administration, the Centers for Diseases Control and Prevention, the National Institutes of Health and the Public Health and Social Services Emergency Fund. The CDC funding includes $950 million in grants to state, local, territory, tribes or health service providers for “surveillance, epidemiology, laboratory capacity, infection control, mitigation, communications, and other preparedness and response activities.” The Public Health and Social Services Emergency Fund received appropriations for grants for the “construction, alteration, or renovation of non-federally owned facilities” to aid in the response to COVID-19.

The legislation also provided supplemental funds to administer the Small Business Administration’s Disaster Loan Program Account, which is currently authorized to provide up to $30 billion in economic injury disaster loans for small businesses.

Lastly, the supplemental appropriation provided $1.6 billion to the Department of State and the United States Agency for International Development for support of embassies and other diplomatic outposts and to provide humanitarian aid to other affected countries.

National Emergency Declaration
The President granted the Secretary of Health and Human Services emergency power to waive or modify certain requirements of the Medicare, Medicaid and State Children’s Health Insurance programs and the Health Insurance Portability and Accountability Act Privacy Rules that govern hospitals and healthcare providers.

The President also declared a national emergency under the Stafford Act, which allows the Federal Emergency Management Agency to deploy aid and assistance to overwhelmed state and local governments. He also directed that upcoming tax deadlines be adjusted for those affected by COVID-19.

Families First Coronavirus Response Act
This proposed legislation is currently focused on paid and unpaid leave, funds and tax credits for assisting individuals and employees who are affected by COVID-19 and the disruptions the virus has caused. The legislation was passed in the House of Representatives; it is expected to pass the Senate in the coming days.

The proposed legislation makes testing and related services for COVID-19 free regardless of whether someone has health care through an insurer, Medicare, Medicaid or other federally funded health care programs. Additionally, the Act increases states’ federal medical assistance percentages in providing for the testing of COVID-19. It also provides for tax credits to employers who grant emergency sick leave or emergency paid family and medical leave. State and local governments are not eligible for the tax credit.

The proposed legislation also provides emergency paid sick leave, which provides eligible full-time employees with emergency paid sick leave for 2 weeks (80 hours) of fully paid time off to self-quarantine, seek a diagnosis or preventive care, or receive treatment for COVID-19. Eligible part-time employees are entitled to fully paid time off on a pro rata basis. Additionally, eligible full-time employees are entitled to 2 weeks (80 hours) paid time off at 2/3 of their regular pay to care for a family member or a child whose school has closed, or if their child care provider is unavailable due to COVID-19. Eligible part-time employees are entitled to 2/3 pay on a pro rata basis.

The legislation also provides emergency paid family leave, which provides eligible full-time employees and part-time employees with 12 weeks of job-protected leave to take care of their children in the event of a school closure or if their child care provider is unavailable due to COVID-19. These 12 weeks of job-protected leave include 2 weeks of unpaid leave, followed by 10 weeks of paid leave at a rate no less than 2/3 of the employee’s usual pay. Eligible employees may elect (or be required) to substitute accrued paid leave (whether it be vacation time, PTO, sick leave) for the 2 weeks of unpaid leave.

Employees are eligible for emergency paid sick leave and emergency paid family leave if they work at companies with less than 500 employees, at a local, state or federal government, or work under a multi-employer collective agreement and whose employers pay into a multi-employer plan. Businesses with less than 50 workers may qualify for a narrow exemption if the Department of Labor determines that providing these benefits would jeopardize the viability of the business.

The Act also allows for 26 weeks of unemployment benefits (in most states), and potential extensions of benefits for an additional 13 or 20 weeks.

The situation regarding COVID-19 is changing hourly and it is expected that the three actions highlighted here will not be the last that the federal government takes to address the effects of COVID-19. As additional developments arise, Best Best & Krieger will provide additional updates.

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