On March 27, 2020, President Trump signed The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) into law. The legislation contains numerous provisions to assist individuals, families, and businesses throughout the country during the COVID-19 pandemic. Our South Carolina business attorney has carefully reviewed the CARES Act to help our clients seek maximum benefit from the provisions included in the legislation.
Below are five ways that the CARES Act can impact employers in South Carolina.
1. Emergency Family Leave and Sick Leave
Employees who are rehired after being laid off on or after March 1, 2020, are entitled to the provisions provided in the Families First Coronavirus Response Act (FFCRA) for emergency family leave and sick leave, as well as paid leave under the Family and Medical Leave Act (FMLA). The FFCRA requires employers to provide COVID-19 related paid sick leave. It also expands family and medical leave.
2. Expansions to the Economic Injury Disaster Loan Program
Expansions to the EIDL Program were made under the CARES Act to include many small businesses and private non-profits who have no more than 500 employees. Small businesses and non-profits may now qualify for low-interest loans with loan terms up to 30 years. It is important to note that loans under the EIDL Program are not eligible for forgiveness.
3. Paycheck Protection Program
Loans are available to small businesses with 500 or fewer employees who need assistance funding payroll and necessary operating expenses. The loans are available to most small businesses, including businesses in the hospitality industry that do not employ more than 500 workers at each physical location and have a North American Industry Classification System code beginning with 72.
Loans under the Payroll Protection Program can be used to pay certain expenses between February 15, 2020, and June 30, 2020, including payroll costs, rent, utilities, interest on mortgages, costs related to group health care benefits, and interest on other loans incurred before February 15, 2020.
If an employer meets certain requirements, the amount of the loan used for eligible expenses during the eight weeks following the loan origination date may qualify for loan forgiveness. However, employers should carefully review the guidelines and requirements to ensure they do not violate the provisions. Violations could result in not receiving forgiveness of a portion of the loan balance.
4. Advances of Anticipated Tax Creditors and Refunds
The FFCRA requires employers to bear the costs of paid FMLA leave and paid sick time available under the FFCRA. A tax credit on the company’s tax return reimburses employers for these costs. However, this process could cause a financial hardship for some businesses. The CARES Act provides a process for companies to request an advance of anticipated refunds and tax credits to help reduce the financial hardship related to paid sick and family leave for employers.
5. Increase in Retirement Plan Loans
The CARES Act also increases the maximum amount a qualified individual may borrow from a qualified retirement plan. The limit on plan loans to qualified individuals increased to $100,000 or 100 percent of the vested account balance. The increase applies to loans granted on or before September 23, 2020.
Loan repayment terms may be extended for qualified plan loans outstanding on or after March 27, 2020. Loan payments scheduled between March 27, 2020, through December 31, 2020, may be delayed for up to one year, but interest will continue to accrue on the outstanding balance.
Contact a South Carolina Business Attorney for Help
The CARES Act contains provisions that can benefit your company and your employees. However, you must adhere to all requirements to receive relief.
The above blog is not a comprehensive discussion of all provisions in the CARES Act nor a detailed explanation of the specifics of each provision. The COVID-19 pandemic has severely impacted businesses and families throughout South Carolina. The CARES Act provides much-needed relief for South Carolinians and businesses in our state.
If you have questions about any of the provisions of the CARES Act or questions about how to implement those provisions as an employer, contact Willcox, Buyck & Williams, PA to discuss your concerns in detail.