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For fleets struggling to make payroll or other monthly obligations like debt payments or rent, the massive $2 trillion coronavirus relief act passed by Congress last week could offer some help, at least in the near term. Companies with fewer than 500 employees can take short-term loans from lenders that are required by the new federal law to be forgiven — if the money is used to pay employees or maintain other monthly payments over the next eight weeks.
Likewise, the series of coronavirus laws out of Washington in recent weeks institute new requirements for businesses regarding employees who contract the COVID-19 coronavirus or have to take off work to care for a relative.
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“The idea is that you honor your commitments, with a priority being on payroll,” said Lesley Sachs, an attorney at Taylor & Associates, a national law firm that specializes in transportation. She recommends that fleets keep detailed records of how they spend any money obtained via a loan. “It’s imperative,” she said, “if you want to have the loan forgiven.”
What’s more, to have the loans fully forgiven, fleets must maintain their number of full-time employees. Otherwise, any bridge loans will only be partially forgiven or not forgiven at all, based on the statutes within the coronavirus laws. Loans not forgiven, however, will be capped at a 4% interest rate. “If you lay off folks, forgiveness will be reduced on a prorated basis, based on the reduction in the number of full-time employees,” said Spencer Skeen, a partner at the national law firm Ogletree Deakins. The period that carriers must maintain that number of employees is from Feb. 15 through June 30, he said.
Sachs suggests that, should carrier wish to explore loans as an option to make ends meet in the coming months, they go to a lender with payroll numbers from the past year in hand.
With the 880-page CARES Act landing late last week, interpretation is ongoing, said Skeen. Likewise, the Small Business Association, the agency tasked with implementing many of the act’s objectives, has obviously not yet issued formal regulations to codify the statutes. To that end, carriers should work with legal counsel to determine proper course of action, if necessary, he said.
The CARES Act is the same law that provides one-time payments to U.S. workers straight from the U.S. Treasury — a $1,200 check or direct deposit to those who made less than $75,000 in 2019, with prorated amounts being sent to those who made less than $99,000.
The bill also beefs up unemployment, with the federal government providing $600 a week, in addition to state unemployment benefits, to those who file for unemployment during the COVID-19 crisis. It also, in a significant change, allows independent contractors and self-employed individuals to draw that weekly $600 in unemployment, as well as 50% of what their state benefits would be. That means, in trucking terms, any leased or independent owner-operators who loses work can draw the new federal unemployment benefits through the end of July.
Lastly, a bill passed prior to the CARES Act – the Families First Coronavirus Response Act – requires employers, including trucking companies, to provide two weeks of paid sick leave to employees who contract the COVID-19 coronavirus. They don’t have to test positive for the virus, said Skeen. Rather, if they experience symptoms and are seeking a medical diagnosis, employers are required by the law to provide two weeks of paid sick leave, up to $511 a day, or $5,110 for a two-week period.
The two weeks of paid leave are also required for those advised by a healthcare professional to self-quarantine or, obviously, for those who test positive for COVID-19. The FFCRA also requires prorated paid sick leave for employees who can’t work because they are caring for a family member who has contracted the virus.