COVID-19 Update 12/22/2020

Congress Passes $900 Billion Coronavirus Relief Bill

Yesterday, a months-long stalemate came to an end when Congress passed the “Consolidated Appropriations Act, 2021.”  5,593 pages in length, the package includes another round of direct stimulus checks to individuals, extended and enhanced unemployment benefits and approximately $300 billion for the popular Paycheck Protection Program (PPP).  The measure has been sent to the Oval Office, where it is expected to be signed. 

Here is a sampling of highlights that are likely to be of most interest to Alliance members:

Additional expenses are allowable and forgivable uses for Paycheck Protection Program funds, including business software, property damage (not covered by insurance) due to public disturbances, and PPE and other adaptive investments to comply with federal and state health and safety guidelines related to COVID-19.

Clarifies that other employer-provided group insurance benefits are included in payroll costs. This includes group life, disability, vision, or dental insurance. COVID-19.

Extends the covered period for all first draw PPP loans through March 31, 2021.

Allows loans made under PPP before, on, or after the enactment of the act to be eligible to utilize the expanded forgivable expenses except for borrowers who have already had their loans forgiven.

Creates a second loan from the Paycheck Protection Program, called a “PPP second draw” loan for smaller and harder-hit businesses, with a maximum amount of $2 million.  Eligible entities must:

• Employ not more than 300 employees;
• Have used or will use the full amount of their first PPP; and
• Demonstrate at least a 25 percent reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter.

Borrowers of a PPP second draw loan would be eligible for loan forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period. The 60/40 cost allocation between payroll and nonpayroll costs in order to receive full forgiveness will continue to apply.

Simplified loan forgiveness process for loans under $150,000, automatically forgiving the loan if the borrower submits a one-page certification attesting that they’ve complied with Paycheck Protection Program loan requirements.  This does apply to loans made before, on, or after the date of enactment.

$150,000-and-under borrowers must still keep employment records for four years and other relevant records for three years.

Repeals the EIDL Advance Deduction, which required PPP borrowers to deduct the amount of their EIDL advance from their PPP forgiveness amount.

Clarification of Tax Treatment of Forgiveness of Covered Loans.  Clarifies that gross income does not include any amount that would otherwise arise from the forgiveness of a Paycheck Protection Program loan. This provision also clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness.

This provision is effective as of the date of enactment of the original CARES Act. The provision provides similar treatment for Second Draw PPP loans, effective for tax years ending after the date of enactment of the provision.

Again, consult your accountant and/or legal counsel for advice specific to your business situation.

Additional Assistance in Minnesota

On December 14th, the Minnesota Legislature passed bipartisan legislation providing $216 million in grants to businesses impacted by COVID-19.  

The aid is targeted to businesses that provide on-site food and beverage that have seen a 30% drop in revenue this year – bars, restaurants, bowling alleys and the like.

However, there was another piece of the package that sent $114.8 million to Counties to make grants to struggling businesses and non-profits. The counties have some leeway in how they allocate those funds, so there may be some opportunities for individual shops to apply for grants through their counties, akin to the process with the CARES Act dollars.

If you’re interested, contact your county offices to learn more. 

Employer Guidance on Vaccines

Last week, the Equal Employment Opportunity Commission (EEOC) released guidance for employers and the COVID-19 vaccine.  Here are some highlights of the guidance, published on December 16th.  (Lots of info here – scroll down to section “K” for info specific to vaccines.)

• Employers can mandate the COVID-19 vaccine—with some exceptions. The EEOC essentially says employers can require that employees get vaccinated as a condition of going to work. However, they must be prepared to exempt employees with disabilities and religious objections. In those cases, an employer must offer a reasonable accommodation to the employee—such as working remotely or being reassigned—as long as the accommodation doesn’t cause “undue hardship” for the employer.
• Employers can exclude unvaccinated employees from the workplace. If no reasonable accommodation is possible and the employee is unable to be vaccinated, the EEOC states that the employer may “exclude the employee from the workplace.” The EEOC notes “this does not mean the employer may automatically terminate the worker. Employers will need to determine if any other rights apply under the EEO laws or other federal, state and local authorities.”
• Employers can ask employees to show proof of receipt of a COVID-19 vaccination. However, employers must be cautious about pre-screening vaccination questions, which may violate the ADA’s provision on disability-related inquiries, “which are inquiries likely to elicit information about a disability,” the EEOC said in its guidance.
• Asking about vaccines doesn’t trigger GINA. The EEOC says that employers that administer a COVID-19 vaccine or ask employees to show they’ve been vaccinated aren’t triggering the Genetic Information Nondiscrimination Act, which shields people from workplace bias based on their genetic information.

Note:  This is a high-level overview and doesn’t include the many caveats and nuances that may apply.  Read the guidance directly or consult with an attorney to determine the appropriate action for your specific situation.

Note: This content and analysis is for informational purposes only and should not be construed as legal advice. Please consult your legal and financial advisors for detailed information before taking any action.