The COVID-19 crisis presents constantly changing challenges to employers, from disrupted supply chains to emergency orders that restrict the ability of employees to get to work.

Here are updated facts for Massachusetts employers.

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Protective Measures

Unemployment Insurance

Massachusetts enacted legislation to make state unemployment insurance (UI) more accessible to individuals affected by COVID-19. The law waives the typical one-week waiting period between the submittal of an application and the commencement of weekly benefits for Massachusetts employees who are separated from work due to the outbreak of COVID-19, or as a result of the state of emergency declared by Governor Baker on March 10. Such individuals will now be able to access their benefits more quickly.

The federal CARES Act provides the following Unemployment Insurance provisions:

  • Unemployment Insurance Highlights – $260 billion for increased unemployment assistance, including up to four months of full replacement wages up to certain limits for individuals who lose a job or are furloughed.
  • Pandemic Unemployment Assistance (PUA) provision would create a new program modeled on Disaster Unemployment Assistance that would provide unemployment benefits to individuals who do not qualify for regular unemployment compensation and are unable to work because of the COVID-19 public health emergency. Qualified individuals may include self-employed workers (including gig workers and independent contractors), part-time workers, and those with limited work histories. The changes to increase the size of regular unemployment benefits and make them available for additional weeks will also apply to benefits received through the PUA program. PUA will be state administered but fully federally funded. The program is effective through December 31, 2020.
  • Pandemic Emergency Unemployment Compensation would make an additional 13 weeks of federally funded unemployment compensation for individuals who have exhausted their state unemployment benefits available immediately through December 31, 2020.
  • Emergency Unemployment Relief for Governmental Entities and Nonprofit Organizations would reduce the amount by which nonprofits, Indian Tribes, and governmental entities are required to reimburse states for benefits paid to their workers who claim unemployment insurance by 50 percent through December 31, 2020.
  • Emergency Increase in Unemployment Compensation would add $600 in Federal Pandemic Unemployment Compensation to every weekly unemployment benefit, effective until July 31, 2020. This $600 benefit will be taxable (like regular unemployment benefits), but it will be disregarded in determining Medicaid or CHIP eligibility.
  • Temporary Full Federal Funding of the First Week of Compensable Regular Unemployment for States with No Waiting Week would allow states to enter into an agreement with the federal government to receive full reimbursement for the total amount of unemployment compensation paid to individuals for their first week of unemployment, provided that the state does not have a waiting week between applying for and receiving benefits, effective until December 31, 2020.
  • Temporary Financing of Short-Time Compensation in States with Programs in Law would provide 100 percent federal reimbursement to states for payments made under qualifying short-time compensation programs (also known as work sharing programs) through December 31, 2020.

Disaster Financing

Listen to the AIM Webinar on business lending programs with SBA Regional Director Robert Nelson. (April 2, 2020)

The Small Business Administration offers multiple loan programs to assist small businesses impacted by the COVID-19 pandemic.

  1. (SBA) Economic Injury Disaster Loan program is now open in Massachusetts. Small businesses can now access and apply for Economic Impact Disaster Loans at sba.gov/disaster. SBA issued a “declaration of economic injury” for the commonwealth.

2. Paycheck Protection Program (Available to employers choosing to keep employees on their payroll)

    • Maximum loan amount up to $10 million
    • Interest rate of 0.5%
    • Loan Maturity of 2 years
    • First payment deferred for six months
    • Loans are funded through a SBA participating lender
    • All loans backed with 100% guarantee by SBA
    • No collateral required for all amounts
    • No personal guarantees
    • No borrower or lender fees payable to SBA
    • Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the 8 weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs)

3. Express Bridge Loan Pilot Program

    • Maximum amount of an EBL loan is $25,000.
    • Relaxed Underwriting to match lender’s policy requirement.
    • No Collateral is required for EBL Pilot.
    • Maximum application fee of 2% of the loan amount not to exceed $250.
    • May only be made by SBA Express Lenders with a valid SBA Express agreement in effect as of the date of the applicable disaster – March 13, 2020.
    • Loans may be approved through March 12, 2021.
    • The Lender must have an existing banking relationship with the applicant as of the date of the applicable disaster.
    • The minimum acceptable SBSS Score for an EBL loan applicant is 130.
    • The EBL loan must be structured as term loans not to exceed 7 years.

Massachusetts has established a separate $10 million small-business loan fun (similar to the one created in the wake of recent gas explosions in the Merrimack Valley). The fund, which will also include non-profits, is set up through the Massachusetts Capital Growth Corporation. www.empoweringsmallbusiness.org.

As of 12:30 pm on March 19, 2020, however, the state is no longer accepting applications for this program.

Paid Family and Medical Leave

The U.S. Department of Labor’s Wage and Hour Division (WHD) announced its first round of published guidance to provide information to employees and employers about how each will be able to take advantage of the protections and relief offered by the Families First Coronavirus Response Act (FFCRA) when it takes effect on April 1, 2020.

FFCRA applies to businesses with fewer than 500 employees to provide employees with paid leave, either for the employee’s own health needs or to care for family members.  Documents provide guidance such as how an employer must count the number of employees to determine coverage; how small businesses can obtain an exemption; how to count hours for part-time employees; and how to calculate the wages employees are entitled to under this law.

The guidance is just the first round of information and compliance assistance to come from WHD. A workplace poster required for most employers will be published later this week, along with additional fact sheets and more Q&A.

AIM is also currently tracking federal negotiations that may further amend these new federal laws.  Click here for additional background on those negotiations.  AIM will continue to provide you with updates should changes to the FFCRA arise.

AIM member audit and law firms have produced great summaries of this legislation.

Taxes

State

Massachusetts extended the state income tax filing deadline from April 15 to July 15.

The Baker Administration announced administrative tax relief measures for small local businesses that have been impacted by the ongoing COVID-19 outbreak, especially in the restaurant and hospitality sectors. The tax relief includes postponing the collection of regular sales tax, meals tax, and room occupancy taxes that would be due in March, April and May. They will instead be due on June 20. Additionally, all penalties and interest that would otherwise apply will be waived.

  • Businesses that paid less than $150,000 in regular sales plus meals taxes in the year ending February 29, 2020 will be eligible for relief for sales and meals taxes, and business that paid less than $150,000 in room occupancy taxes in the year ending February 29, 2020 will be eligible for relief with respect to room occupancy taxes.

Federal

The tax filing deadline has been pushed out to July 15. Taxes owed for 2019 and the first quarter of 2020 are due then, too.

Under the federal CARES Act:

  • Employee retention credit- a new temporary refundable 50 percent employee retention credit for employers subject to full or partial business suspension due to the COVID-19 emergency, or for employers whose gross receipts have significantly declined due to COVID-19, to be applied against the employer’s share of payroll taxes. The amount of qualified compensation (including health benefits) eligible for the credit with respect to any individual employee is limited to $10,000.
  • Payroll taxes- Delays in payment of certain applicable 2020 employer payroll taxes from date of enactment through December 31, 2020. Half of the deferred tax is to be paid by December 31, 2021, and the remainder by December 31, 2022.
  • Corporate AMT credit refunds- Accelerates the ability of companies to receive refunds of AMT credits in tax years beginning in 2019. Alternatively, companies could elect to claim the entire refundable AMT credit in tax years beginning in 2018.
  • Section 163(j) changes increase the 30 percent adjusted taxable income limitation to 50 percent for tax years beginning in 2019 and 2020. For 2019, this provision does not apply to partnerships – partners may deduct 50 percent of their distributive share of the partnership’s excess business interest in 2020 without regard to Section 163(j). The provision also allows a taxpayer to elect to use its 2019 adjusted taxable income for its 2020 limitation.

More information: PWC and The Tax Foundation

Massachusetts Workshare Program

WorkShare is a program that offers a smart alternative to layoffs. Employees work reduced hours while collecting unemployment benefits to supplement their lower wages.

Federal Economic Relief Measures

Phase One: The first relief measure passed by Congress and signed by the president includes paid sick days, family leave and other employer related provisions.

Phase Two:  Valued at $104 billion, the package grants paid sick leave to hourly employees and expands unemployment insurance (UI).

Phase Three: The CARE Act, Valued at $2 trillion.

Philanthropy

Massachusetts COVID-19 Relief Fund – Chaired by First Lady Lauren Baker, the fund works in concert with regional non-profit leaders, community foundations, leaders on the ground and at the state level to understand the response and relief landscape to fill in where gaps are pronounced.

Additional Resources for Employers