First COVID-19 legislation passed federally, changes to state unemployment insurance
Baton Rouge, La. (March 19, 2020) – The Baton Rouge Area Chamber (BRAC) today released the following analysis of new federal legislation and updates to existing federal and local resources for businesses as a result of the COVID-19 pandemic. Resource information will be updated daily at brac.org/recovery.
The federal government is currently working on several pieces of legislation related to COVID-19. The Families First Coronavirus Response Act has passed and has been signed into law. The two most relevant provisions are the Emergency Family and Medical Leave Act (EFMLEA) and the Emergency Paid Sick Leave Act (EPSLA).
The EFMLEA expands the existing federal medical leave program. The program now provides for 12 weeks of job-protected leave without pay. The bill will require companies under 500 employees to provide 12 weeks of leave with the first two weeks unpaid, and the final 10 weeks paid at two-thirds of regular pay for both part-time and full-time employees for COVID-19-related school closure issues. Pay for the employee is capped at $200/day and no more than $10,000 per employee. Employers will be able to receive a tax credit on the employer’s portion of Social Security taxes; credits are capped at $200/day per employee and $10,000 per quarter. Employers with under 50 employees can request a waiver from the Secretary of Labor under certain circumstances.
The EPSLA also applies for only companies with under 500 employees; this new mandate requires companies to pay full wages for employees up to two weeks because of COVID-19-related reasons. The legislation lays out the reason for leave and, based on those reasons, determines if the employee receives full pay or two-thirds pay. EPSLA will also apply for part-time workers based on an average of hours worked over six months.
National media outlets are reporting that another significant bill in response to COVID-19 is in the works, but nothing is public or official yet.
BRAC published a blog post with more detailed information on this topic.
SBA Economic Injury Disaster Loan
As a result of the Coronavirus Preparedness and Response Supplemental Appropriations Act signed by the President, the U.S. Small Business Administration (SBA) will issue, under its own authority, an Economic Injury Disaster Loan declaration. Through this declaration, SBA is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of COVID-19.
In Louisiana, as in all states, SBA’s Office of Disaster Assistance will coordinate with the Governor to submit the request for Economic Injury Disaster Loan assistance. To qualify for the loan assistance program, the Governor must prove that five small businesses in the region have been impacted by COVID-19. BRAC, the Louisiana SBDC, regional parish economic development partners, and many others have worked to gather this proof from Baton Rouge Area small businesses and have submitted it for processing. As of March 19th, 2020, the SBA has issued an Economic Injury Disaster Loan declaration in Louisiana. Information on the application process will be made available to all affected communities and updated on the SBA website.
Some important details regarding the Economic Injury Disaster Loans:
- The loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing;
- These loans may be used to pay fixed debts, payroll, accounts payable, and other bills that cannot be repaid due to the economic impact of the virus;
- The interest rate for the loans is 3.75% for small businesses and 2.75% for nonprofits; and,
- SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. The repayments terms are determined on a case-by-case basis based upon the borrower’s ability to repay.
The SBA’s Economic Injury Disaster Loans are part of an expanded focus of the federal government’s coordinated response to COVID-19. Additionally, payment on loans distributed through SBA prior to COVID-19 may be deferred up to six months at the discretion of the lender. Additional information regarding the application process and contact information for SBA can be found here.
Changes to Louisiana Unemployment Insurance
Because of the closure of restaurants, bars, gyms, and casinos, a high number of non-salaried workers – including more than 32,000 in the Capital Region – have potentially been displaced from their service industry jobs, eliminating their ability to earn income. This puts service employees – who tend to be younger and less financially established – at risk of being unable to pay rents, mortgages, and other bills.
In response to this risk, the Louisiana Workforce Commission (LWC) has released new guidelines regarding COVID-19 and the availability of unemployment benefits. If individuals meet any of the following criteria, they may be eligible immediately:
- Work hours have been reduced due to a lack of work because of COVID-19;
- A workplace is temporarily closed, and the employee is not being compensated; or
- The employee has been instructed not to go to work, and they are not being compensated.
For more information, workers and employers should read the LWC statement and follow instructions given.
About the Baton Rouge Area Chamber
The Baton Rouge Area Chamber (BRAC) leads economic development in the nine-parish Baton Rouge Area, working to grow jobs and wealth and to improve the business climate and competitiveness in the region. Today, BRAC investors include more than 1,500 small businesses, mid-sized firms, large industry and entrepreneurial startups, as well as individuals and organizations that support business and economic development. In this capacity, BRAC serves as the voice of the business community, providing knowledge, access, services and advocacy. More information is available at brac.org.