The $900 billion pandemic aid bill passed by Congress at the end of 2020 aims to drive more money to small and minority-owned businesses, which makes it particularly relevant for Hawai‘i.
Emily Marr, assistant general counsel at the Hawaii Employers Council, explains how the legislation affects Hawai‘i employers and the local economy.
Why do Hawai‘i employers need to be aware of this legislation?
The act extends the Paycheck Protection Program through March 31, 2021, allowing employers to apply for forgivable loans to help pay operating expenses and payroll. The new PPP funding favors Hawai‘i employers in two important ways. First, the majority of businesses in Hawai‘i are small businesses and only employers with 300 employees or fewer are eligible for the PPP. And the bill earmarks $12 billion for minority-owned businesses, which creates a special opportunity for many local businesses.
What else should employers know?
While the Families First Coronavirus Response Act officially expired on Dec. 31, 2020, the new bill allows covered employers to continue to voluntarily provide paid emergency family and sick leave through March 31, 2021, for employees who have not already exhausted their original FFCRA entitlement. In exchange, employers receive a payroll tax credit. This can apply to leave until March 31, 2021.
What are the benefits to employers using the payroll tax credit?
Voluntarily providing FFCRA paid leave in exchange for a payroll tax credit can be a goodwill investment in your employees and the community. The pandemic has caused immeasurable hardship, people are still getting sick and the economy remains fragile. This is an optional program, and each employer needs to evaluate whether it makes sense for them.
Employers need to understand the rules and restrictions on the paid leave program and keep accurate records. It is best to consult with legal counsel to form or amend your policy, as employee circumstances may need to be evaluated case by case.
What other opportunities are there for employers?
Employers that can afford to buy food from restaurants for their employees can take advantage of a win-win-win opportunity with the new bill: Companies can boost employee morale by providing food, support local restaurants and earn a full tax credit for their purchases in 2021 and 2022. Also, the legislation allows more flexibility in how employees use money in their flexible spending accounts to pay for qualifying medical and dependent care expenses, at least through 2022.