Coronavirus Aid, Relief, and Economic Security (“CARES”) Act Enacted into Law

Category: Special Bulletins
Date: Mar 27, 2020 07:36 PM

On March 27, President Trump signed into law HR 748, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which provides for $2 trillion in relief assistance to businesses, non-profits, state and local governments, public agencies and special districts, public elementary and secondary schools, institutions of higher education, and individuals.

The Act includes numerous provisions of interest to public agencies and their employees, including the creation of the following: (1) the Coronavirus Relief Fund; (2) the Disaster Relief Fund; (3) the Education Stabilization Fund; and (4) emergency relief lending for public agencies under the Coronavirus Economic Stabilization Act. Additionally, the CARES Act provides for the expansion of unemployment insurance for unemployed workers as well as clarifying and technical amendments to the leave provisions under Families First Coronavirus Response Act (“FFCRA”) that we addressed in our March 23 bulletin.

Coronavirus Relief Fund

The CARES Act amends the Social Security Act (42 USC § 301, et seq.) to create the $150 billion Coronavirus Relief Fund (the “Relief Fund”) (42 USC §601). The Relief Fund will provide the State of California approximately $15 billion in relief funds for “necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19)” that “were not accounted for in the budget most recently approved” and which “were incurred during the period that begins March 1, 2020, and ends on December 30, 2020.”

Of the $15 billion in relief funds available to the State of California, the minimum share for the State, which is set at 55% of the total funds, amounts to at least $8.4 billion. The remaining portion, for which local governments may apply, will be capped at $6.6 billion.

In order to qualify for receipt of direct payments of relief funds, local governments must submit to the Treasury Department a certification signed by the government’s Chief Executive stating that the government’s proposed uses of the relief funds are consistent with the purposes of the Fund as described above. 

Local government may receive an amount as determined by the population of the city or county relative to other cities and counties in the State.  

Disaster Relief Fund

The CARES Act also creates a $45 billion Disaster Relief Fund (the “Disaster Relief Fund”) which allocates $25 billion to disasters declared pursuant to the Stafford Disaster Relief and Emergency Assistance Act (the “Stafford Act”) (42 USC 5121, et seq.), and additional $15 billion that may be used for other disaster relief purposes provided for under the CARES ACT (Sec. 251(b)(2)(D) of the Balanced Budget and Emergency Deficit Control Act of 1985).

Education Stabilization Fund

The CARES Act also creates a $30 billion Education Stabilization Fund (the “Stabilization Fund”) that requires the states to allocate $13.5 billion to local education agencies which provide funding for elementary and secondary (i.e., K-12) public schools.

Coronavirus Economic Stabilization Act Emergence Relief

The CARES Act authorizes the Secretary of Treasury to make up to $500 billion loans, loan guarantees, and other investments to eligible businesses, states, and political subdivisions of states related to losses incurred as a result of COVID-19. These subsidies will be provided in accordance with the Federal Credit Reform Act of 1990 (2 USC 661, et seq.).

Unemployment Insurance Expansion

The CARES Act includes the Relief for Workers Affected by Coronavirus Act, which expands unemployment insurance from three to four months, and provides temporary Federal Pandemic Unemployment Compensation of up to $600 per week in addition to the regular unemployment insurance compensation. The Act also provides for as many as 13 more weeks of unemployment compensation to workers who remain unemployed after state benefits expire.

Amendments to the Families First Coronavirus Response Act (“FFCRA”)

Finally, the CARES Act makes several clarifying and technical amendments to the Families First Coronavirus Response Act (“FFCRA”). These amendments are consistent with the interpretation that we previously provided in our bulletin concerning employees’ rights and employers’ obligations under FFCRA. 

The CARES Act clarifies the pay limits for leave under the Emergency Family and Medical Leave Expansion Act. That act expanded the scope of leave permissible under the FMLA and provided for compensation to qualified individuals who utilize such leave. The CARES Act expressly provides that the limits of $200 per day and $10,000 in the aggregate, apply to each employee. The FFCRA did not provide sufficient clarity on that point. 

The CARES Act also adds clarifying language concerning the pay limits for leave under the Emergency Paid Sick Leave Act. That act entitled qualified individuals to up to 80 hours of compensation at either their full regular rate of pay or two-thirds their regular rate of pay, subject to certain limitations. The CARES Act expressly provides that an employer is not required to provide an individual employee, who is otherwise entitled to their full regular rate of pay, more than $511 per day and $5,110 in the aggregate during such leave. The CARES Act also expressly provides that an employer is not required to provide an individual employee, who is otherwise entitled to two-thirds their regular rate of pay, more than $200 per day and $2,000 in the aggregate during such leave. This is consistent with our interpretation of the FFCRA.

The CARES Act also amends the definition of an “eligible employee” under Emergency Family and Medical Leave Expansion Act (29 USC § 2611(2)) in order to provide the Public Health Emergency FMLA Leave to certain qualified employees who are rehired by their prior employer following a layoff. The CARES Act provides that, in order to be eligible, the employee must have worked for the employer for not less than 30 of the last 60 calendar days prior to the being laid and that the layoff was subsequent to March 1, 2020. For example, if a public agency rehired a former employee it laid off on March 15 after the employee worked for the agency for one year, the employee would be entitled to the use Public Health Emergency FMLA Leave so long as the employee worked for the agency for at least 30 of the last 60 days prior to the employee’s layoff. 

Liebert Cassidy Whitmore is monitoring the changing information and laws regarding the coronavirus closely. Please check https://www.lcwlegal.com/responding-to-COVID-19 for updates on this and other evolving matters related to COVID-19.

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