What Does $2 Trillion Do?



Last Friday, President Trump signed the CARES Act into law. This new legislation is aimed at providing $2.2 trillion of relief for individuals and businesses that have been negatively impacted by the coronavirus. This is the third aid package from Congress and is the biggest federal bailout in history. We highlight what it means for all businesses – big and small – and state governments.


Employers of all sizes that face closure orders or suffer economic hardship due to the coronavirus crisis that continue to pay employees that are furloughed may be eligible for a 50% credit (up to $10,000 per worker) of wages paid to those employees. This is to help workers keep their jobs, help local businesses during this time, and ensure furloughed workers have jobs to return to. Employers also have the option to delay the payment of their 2020 payroll taxes until 2021 and 2022, leading to approximately $300 billion in extra cash flow for businesses.


The CARES Act creates a paycheck protection program for small businesses, self-employed individuals, and gig workers with $350 billion in SBA loans. The program would provide 8 weeks of cash flow assistance through 100% federally guaranteed loans to small businesses who maintain their payroll through the end of June. If the employer maintains payroll, the portion of the loans used for covered payroll, rent, interest on mortgage obligations, and utilities would be forgiven. This program is retroactive to February 15, 2020 to help bring workers who may have already been laid off back onto payrolls. The bill also provides $10 billion for grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs.


The bill sets aside $500 billion in loans for big corporations. These companies will have to pay these back and will be subject to public disclosures and other requirements. The bill creates a special inspector general to oversee the pandemic recovery. That person, along with a special committee, would provide oversight of all loans and other uses of taxpayer dollars. NB: Any company receiving a loan under the program is barred from making stock buybacks for the term of the loan plus one year.


The legislation designates almost $340 billion for programs that will go to state and local governments. It includes $150 billion in direct aid for those states and local governments running out of cash because of the number of COVID-19 cases and also gives them $274 billion toward specific COVID-19 response efforts. The bill also provides funding for K-12 schools, higher education, Community Development Block Grants, and programs for children and families. Stay healthy everyone. 



At least 32 states, the District of Columbia and numerous counties and cities have now issued stay-at-home” orders that affect at least 265 million people - that’s about 8 in 10 people. Stocks fell this week as the Dow and the S&P 500 had their worst first-quarter performances ever. A new report by Goldman Sachs expects the economy to go through an unprecedented plunge in the second quarter, but that the recovery would then be the fastest in history.


More states are following New Jersey’s lead and introducing bills to require insurers cover business interruption claims from COVID-19. New York joined Massachusetts and Ohio by introducing business interruption legislation last week. The New York bill would require “certain perils be covered under business interruption during the coronavirus” pandemic. This bill would require every property policy providing business interruption and loss of use coverage to include among the policy’s covered perils coverage for business interruption during the COVID-19 declared state emergency. The property/casualty industry estimates that business interruption losses would cost insurers up to $383 billion per month. 

Making Our Way Around the Country


The Dept. of Labor (DOL) published guidance explaining paid sick leave and expanded family and medical leave under the Families First Coronavirus Response Act (FFCRA), which took effect April 1. The Emergency Family and Medical Leave Act (EFMLEA) is included in the FFCRA and provides paid leave when parents can’t work because their children’s school or child care services are closed due to the pandemic. The guidance notes that employees must submit documentation that their school or child care provider is closed so the employer can use it to claim a tax credit for EFMLEA leave. The guidance also explains whether paid sick leave and EFMLEA leave are available when offices close, workers are furloughed or hours are cut.  The DOL expects to publish more guidance in the future. 


The statutes of limitations governing the filing of civil suits have been extended under H.B. 197 and signed into law by Gov. Mike DeWine last Friday. The tolling of the statute of limitations is for any claim set to expire between March 9 and July 30, 2020. On the same day, the Ohio Supreme Court tolled most time requirements during the state of emergency, which began March 9 through July 30 (or when the emergency period ends). The Court provided additional guidance with its Tolling Order/Frequently Asked Questions document. 


As everyone navigates working and socializing from home, more and more people are turning to apps that will enable video conferences – including my 7-year-old! A word of caution to guard passwords/meeting IDs and make sure your privacy setting are up-to-date as trolls are taking advantage of the situation. Stay safe and stay healthy.

Courtesy of Gallagher Bassett's The Way

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