The Unprecedented Employer Subsidies This Week To Avoid Layoffs: The Coronavirus Workplace Series

Panorama of Armour & Co’s General Office at the Union Stock Yards, Chicago, 1900. Library of Congress (This is the third in a series on the impacts of the coronavirus on employment and the workplace. The first two are here and here). The federal Stimulus, approved last Friday, includes unprecedented financial incentives for employers to…

The Unprecedented Employer Subsidies This Week To Avoid Layoffs: The Coronavirus Workplace Series

Panorama of Armour & Co’s General Office at the Union Stock Yards, Chicago, 1900.
Library of Congress
(This is the third in a series on the impacts of the coronavirus on employment and the workplace. The first two are here and here).
The federal Stimulus, approved last Friday, includes unprecedented financial incentives for employers to retain employees or bring back employees laid off after March 1, 2020. Whether they succeed or not remains to be seen. However, these incentives go well beyond the layoff aversion strategies of previous Stimulus efforts dating back to World War II. 
The Stimulus overall might be described as a jobs strategy. But the incentives that are at the heart of layoff aversion are contained in Title I—Keeping American Workers Paid and Employed Act. Title I, the Paycheck Protection Program (PPP), provides for loans to small businesses (defined as businesses with fewer than 500 employees) that can be up to $10 million, used to defer the costs of keeping employees on the payroll or adding employees and other expenses, and are eligible to be forgiven up to 100% of the loan.
Title I is not easily understood, and includes a good number of limitations on eligibility, time period and range of expenses covered, and conditions for 100% forgiveness. To understand some of the main guidelines, let’s bring in two experienced attorneys who have closely studied the Act and its interpretations: Ms. Nanette C. Heide, partner in the Corporate Practice Group of Duane Morris LLP, and co-chair of its Private Equity Division, and Ms. Meagan E. Garland, a Duane Morris LLP employment attorney, specializing in the Act’s employee retention opportunities. Below are four main guidelines they put forward.
·        Borrowers are eligible for loan forgiveness for the amount equal to the total amount paid over the 8 weeks commencing from the origination date of the loan for a range of eligible costs, including payroll costs, rent payments, utility payments and mortgage interest payments. Eligible payroll costs do not include annual compensation in excess of $100,000 for individual employees. Basically,a company’s expenses for the eight-week period after the origination of the loan wi
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