Government Affairs Digest

To keep you updated, Melwood’s Director of Government Relations Kate Donaghey continues to author a digest update of our government affairs to help you rise above the noise and deliver what you need about government aid and actions that will impact your organization and industry.

Our team is constantly monitoring the fast-paced changes and will provide updates as needed on the latest actions on Beacon Hill, Capitol Hill and beyond. If you have any specific questions, please contact Dave Guarino or Kate Donaghey directly.

Things to know: State & federal response to COVID-19

Federal and Massachusetts government leaders are working independently to pass bills attempting to aid the quickly spiraling impacts of the COVID-19 virus, efforts which so far are particularly targeting unemployment assistance, paid sick time and paid family and medical leave.

This document aims to help you quickly identify what benefits you, your employees and your company on both a federal and state level.

We will be diligently monitoring all legislative activity in the days and weeks ahead, are on call for any needs and will gladly provide updates as quickly as we can.

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Let’s start with the actions here at home in Massachusetts

Helpful websites & social media accounts to follow for information on these programs:

• Commonwealth of Massachusetts Leadership twitter accounts: @MassGovernor @KarenSpilka @SpeakerDeLeo
• Executive Office of Labor & Workforce Development Twitter: @MassLWD
• Massachusetts Grow Captial Corporation (MGCC) Recovery Fund Loan Application

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Now let’s turn our attention to Washington’s response

H.R. 6201 Families First Corona Response Act offered by Rep. Nita Lowery (NY-17)

This law, signed by President Trump on March 18, 2020, responds to the coronavirus outbreak by providing paid sick leave and free coronavirus testing, expanding food assistance and unemployment benefits, and requiring employers to provide additional protections for health care workers.

Below, please find a summary of the most important sections of the new law. This is a very fluid situation and we will be updating you and your teams as more information becomes available.

Major provisions of the bill include sections on:

• establish a federal emergency paid leave benefits program to provide payments to employees taking unpaid leave due to the coronavirus outbreak,
• expand unemployment benefits and provide grants to states for processing and paying claims,
• require employers to provide paid sick leave to employees,
• establish requirements for providing coronavirus diagnostic testing at no cost to consumers,
• treat personal respiratory protective devices as covered countermeasures that are eligible for certain liability protections, and
• temporarily increase the Medicaid federal medical assistance percentage (FMAP).

Most importantly, this legislation provides free coronavirus testing for all Americans.

Unemployment Compensation:

• The bill gives state governments flexibility with respect to waiting periods and in interpreting the “able, available and actively looking” test for Unemployment Compensation (UC) eligibility.
• Provides an additional $1 billion for state unemployment programs.
• Authorizes extended unemployment benefits (beyond the usual 26 weeks), fully funded by the federal government, for states that experience a spike in unemployment.

Paid Sick Leave:

Requires private sector employers with fewer than 500 employees and government employers to provide employees with two-weeks of paid sick leave

• 80 hours for full-time employees and typical number of hours over two-weeks for part-time employees.

Eligibility: The paid sick leave is available to any employee without regard to duration of employment if:

• Subject to a Federal, State or local quarantine or isolation order related to COVID-19
• Employee has been advised by a health care professional to self-quarantine
• Experiencing symptoms of COVID-19 and seeking a medical diagnosis
• Caring for an individual with COVID-19
• Caring for a son or daughter if the school or place of care of child has been closed or if child care provider is unavailable
• Employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and Secretary of Labor

Rate of Pay: Employees are compensated at the higher of their regular rate, the federal minimum wage, or the local minimum wage. However, if the employee is absent to care for a sick family member or a child unable to attend school, they are compensated at 2/3 of the rate they would otherwise receive.

This paid sick leave is in addition to whatever sick leave is already offered by the employer (including subject to state or local requirements). Once this legislation is enacted an employer may not make changes to its sick leave policy.

Effective Dates: The provision takes effect not later than 15 days after enactment of the bill and sunsets on December 31, 2020.

Funding: Each quarter, private sector employers subject to the requirement are entitled to a fully refundable tax credit equal to 100% of the qualified sick leave wages paid by the employer.

• Qualified sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member) and 10 days.
• The tax credit is applied against employer Social Security taxes, but employers are reimbursed if their costs for qualified sick leave exceed the taxes they would owe.
• The Treasury Secretary is provided with regulatory authority intended to help with cash flow issues, for example by waiving penalties on failing to deposit payroll taxes in anticipation of the credit.

Self-Employed: There is a similar tax credit against self-employment taxes for individuals who are self- employed but would otherwise qualify for paid sick leave if they were an employee of an employer.

Emergency Family and Medical Leave Expansion Act:

Requires private sector employers with a workforce of 500 or less employees and government employers to provide employees with up to 12 weeks of paid family and medical leave.

Eligibility: The leave is available to any employee who has been employed for at least 30 days if they are out in order to:

1. • Care for children if schools are closed or their daycare is unavailable because of a public health emergency as defined in the law as “COVID-19.”

Rate of Pay: After 10 days, during which time the employee can take unpaid or paid leave (if available), employees are compensated at 2/3 of their regular rate.

Small Business and Other Exemptions:

1. • The Secretary of Labor is authorized to exempt health care providers and emergency responders and small businesses with fewer than 50 employees if the requirement would jeopardize the business as an ongoing concern.

• Requirements to restore the employee to their position after the paid leave is taken do not apply to businesses with fewer than 25 employees if the position no longer exists because of the public health emergency (provided the employer takes certain actions to try and assist the employee).
• Employers with less than 50 employees are exempt from civil actions brought by employees for violations of this section.

Effective Dates: The provision takes effect not later than 15 days after enactment of the bill and sunsets on December 31, 2020.

Funding: Each quarter, private sector employers subject to the requirement are entitled to a fully refundable tax credit equal to 100% of the qualified paid family leave wages paid by the employer.

• Qualified paid family leave wages are capped at $200 per day and $10,000 overall.
• The tax credit is applied against employer Social Security taxes, but employers are reimbursed if their costs for qualified paid family leave exceed the taxes they would owe.
• The Treasury Secretary is provided with regulatory authority intended to help with cash flow issues, for example by waiving penalties on failing to deposit payroll taxes in anticipation of the credit.

Self-Employed: There is a similar tax credit against self-employment taxes for individuals who are self-employed but would otherwise qualify for paid family leave if they were an employee of an employer, but leave would be capped at 50 days.

Discussion of Liquidity Impact for Small Businesses:

Concerns have been expressed about the liquidity problems the paid sick leave and paid family leave could create for some small businesses as they pay employees but wait for reimbursement from the federal government.

According to the U.S. Chamber of Commerce, it is expected by many, the technical corrections announced by Secretary Mnuchin will add to the provisions included right before the bill passed the House to help mitigate any problems.

The provisions the House passed bill include

• Regulatory flexibility to waive penalties for businesses not submitting their payroll taxes if they do so in anticipation of a refund under this bill.
• Regarding paid family leave, exempting businesses with fewer than 50 employees if it would jeopardize the business.