COVID-19 Weekly Digest - May 27, 2020
Pulitzer Prize winning author Jared Diamond takes a look back at how pandemics of the past impacted politics, trade, migration, colonization, and conquest. For example, it is possible that the reason languages from India to Ireland are all related is because the cultures who spoke other unrelated languages were wiped out when nomads brought the plague as well as Indo-European languages with them.
Beyond grand cultural transformations, we are already seeing that the future of work will change. Some changes, such as increased remote work and more video calls, may be permanent, while other changes, such as social distancing in offices, may last only until an effective vaccine is developed. In the meantime, here is information to help you stay safe and financially stable while the world finds a safe way forward!
CARES ACT UPDATES
Economic Impact Payments (aka Stimulus Checks)
Even though the House passed legislation on May 22 that would have added another round of stimulus checks, nothing happened in the Senate before Congress left town for the Memorial Day holiday. Another round may be in the works, but until the Senate reconvenes on June 1, this first round is all that Americans can count on.
According to the original IRS timetable, paper checks will go out this week to people with income between $40,001 and $50,000. The IRS is mailing out paper checks based on income, with $10,000 increments each week. However, it appears the IRS may have accelerated that original timetable. To see when you will be receiving your stimulus payment, go to the IRS Get My Payment web app. A free USPS program will let you track the delivery status of your stimulus payment.
The latest FAQs by the IRS include information about an option for some taxpayers to receive their stimulus check on a prepaid debit card. About four million of these debit cards have already been or will be sent out, starting in mid-May. Unfortunately, there is no option to request a prepaid debit card rather than a check.
Paycheck Protection Program (PPP)
After weeks of waiting, late on Friday, May 22, the SBA finally issued Interim Final Rules regarding the forgiveness provisions of the PPP, and just in the nick of time. Businesses that were fortunate enough to receive funding during the first round of funding are approaching the sixth week of the eight-week period for determining forgiveness. On Forbes, Alan Gassman has a great overview of the rules. His article includes access instructions for a 30-minute on-demand webinar. If you want a more detailed analysis of the rules, check out what Ed Zollars wrote for Kaplan.
The new rules clarify that businesses have the option to use an “alternative payroll covered period” to align the period for tracking costs to be forgiven with the beginning of the first payroll period following funding. Otherwise, the eight-week clock starts ticking as soon as the funds are received.
Forgiveness depends on the lender and the SBA both approving the application. Any portions not forgiven will be payable at 1% interest within two years of receiving the funds.
Congress is working on changes to the PPP, but unfortunately, did not reach any agreements prior to recessing for the Memorial Day holiday. The Senate may not be back in session until June 1, so in the meantime, business owners should be prepared.
Employee Retention Credit
Businesses that did not receive a loan under the PPP are eligible for the Employee Retention Credit, which provides a refundable credit of 50% of wages up to $10,000 per employee for eligible businesses. Qualified wages for this credit can also include health insurance benefits. According to the FAQs for the Employee Retention Credit, employers who continue to provide their employees with a health plan may use those expenses as qualified wages for this credit, even if those employees are not currently receiving any other wages.
Deferral of Certain Payroll Taxes
Another benefit available to businesses that did not receive a PPP loan is the ability to defer some payroll taxes until the end of 2020. Employers can defer the employer portion of Social Security taxes for the period beginning on March 27 and ending on December 31. Check the IRS FAQs for this program for more details.
Economic Injury Disaster Loans (EIDL)
The SBA is still working through its backlog of loan requests and is still only accepting new applications from agricultural businesses.
REOPENING AFTER LOCKDOWN
The CDC released guidance for reopening to help organizations make informed decisions on when and how to reopen. The guidance includes specific pointers for summer camps, schools, restaurants, and bars to keep employees and the public healthy. Some parts of the country have a much higher infection rate, so being aware of what is happening in your city and state can guide your decisions.
Being present at one “super-spread event” with just one infected person can lead to many others getting sick. A compilation by the Salt Lake Tribune looks at places and events that have proven especially risky and the lessons that can be learned. Self-serve buffets will likely vanish while the pandemic continues, but some places, such as offices, can be made safer. Outdoor activities appear to be safer than staying indoors.
Companies that are reopening are learning new norms of behavior to keep everyone safe. However, as an article in the Harvard Business Review reminds us, “those measures won’t succeed unless they become norms.” A five-pronged approach, which includes teaching the new behaviors in a bootcamp-type of a setting and keeping public scores can help.
Companies are finding that the costs of doing business are higher than before the pandemic. Reduced demand plus reductions in capacity are shrinking the top line. Combine that with additional expenses for protective equipment and additional cleaning, and many small businesses find that it is almost more expensive to reopen than to stay closed. Some are compensating by adding pandemic surcharges, to mixed feedback.
Summer Options for Parents as the Country Reopens
As parents prepare for a possible return to work in June, their options for childcare are uncertain. Having a spot does not always guarantee that a child will be able to use that spot. In many states, availability is prioritized for the children of essential workers. Summer camps are dependent on state and local approvals to start up. Most are planning fewer field trips and outings. A few are even experimenting with going virtual, but parents are skeptical about adding more screen time for their kids after months of Zoom classes.
Colleges and Universities Forging Their Own Paths
In the absence of cohesive guidance from the federal government, colleges and universities are on their own. The schools that plan to reopen for the Fall will not look the same. Masks and strict social distancing will be the norm. Some schools, such as the California State University system, are planning on holding most classes online. Students at some schools may have the option to attend classes either online or in person.
