Summary of CARES Act and Key Takeaways for Employers

Last Updated: 4.24.2020 @ 10:50 am

DISCLAIMER:  The following information is a guide, not intended to be used as legal advice, and no attorney client relationship is established by any communication through this website.  Because every situation and every workplace is different we ask that you contact us with specific questions. 

HR 748, Coronavirus Aid Relief and Economic Security Act (CARES Act) was signed into law on March 27, 2020. Under the act, the IRS will send $1,200.00 to individuals and $2,400.00 to couples filing joint returns, so long as they meet the salary requirements.

Small Business Disaster Loans

Any business in existence prior to January 31, 2020, with 500 or fewer employees may be eligible for a small business disaster loan under the CARES Act. However, certain businesses such as food services can still qualify if they have no more than 500 employees at each physical location. Sole proprietorships and independent contractors may also be eligible. The amount of the loan is capped at the lesser of $10 million or 2.5 times the average monthly payroll costs incurred in the one-year period before the date of the loan. Loan terms are not to exceed 10 years with an interest rate of no more than 4%. The advance can be used for:

  • Payroll costs
  • Costs related to continuation of group health care benefits during periods of paid sick leave, medical or family leave and insurance premiums
  • Employee salaries, commissions, or similar compensations
  • Mortgage interest payments (but not any prepayment of or payment of principal on a mortgage obligation)
  • Rent
  • Utilities
  • Interest on any other debt obligations that were incurred before the Covered Period

The small business loans will be forgiven in an amount equal to the amount of qualifying costs during an 8-week period after the origination of the loan, including:

  • payroll costs up to $100,000.00,
  • interest on secured debt obligations, and
  • rent and utilities in place prior to February 2020.

The amount forgiven is reduced if the employer reduces its workforce during the 8-week period compared to prior periods or reduces the salary or wages paid to employees by more than 25% during the 8-week period compared to the most recent quarter. Reduction in loan forgiveness can be completely avoided if the employer rehires all employees laid off going back to February 15, 2020, or increases their previously-reduced wages no later than June 30, 2020. Employers are encouraged to not lay off workers but instead use the loan to pay workers.


Employer PPP Loan Forgiveness

The Paycheck Protection Program (“PPP”) is an integral portion of the Coronavirus Aid, Relief and Economic Security (CARES) Act. Initially funded in the amount of $349 billion, the PPP provided forgivable loans to small businesses to pay their employees during the COVID-19 crisis. The purpose of the PPP loans is to cover payroll costs and most mortgage interest, rent and utility costs over the 8 week period after the loan is made. In order for the loan to be forgiven, the loan must have been utilized for the above stated purposes, and the employer must maintain employee and compensation levels.

To request loan forgiveness, an employer must submit a request to the lender servicing the loan. This request must include documentation that:

  • verifies the number of full-time equivalent employees and pay rates, as well as
  • payments on eligible mortgages, lease and utility obligations
  • Employers must also certify the documents are true and they used the forgiveness amount to keep employees and make the eligible mortgage interest, rent and utility payments.

Lenders must make a decision on forgiveness within 60 days.


Mid-Size Business Relief

Mid-size businesses, or those with 500-10,000 employees are eligible for direct loans under the emergency relief and taxpayer protections portion of the CARES Act. To be eligible, the business has to:

  • certify it intends to restore at least 90% of the workforce that existed as of February 1, 2020 no more than 4 months after the Health and Human Services department declares an end to the health emergency related to COVID-19,
  • promise it will not outsource jobs over the term of the loan which cannot exceed 5 years, and for 2 years after repaying the loan, and
  • will not abrogate an existing collective bargaining agreement for the term of the loan and for 2 years after completing repayment of the loan.
  • Businesses must also remain neutral in any union organizing activities during the term of the loan.

The CARES Act also contains many provisions designed to provide relief to individuals and businesses through tax relief.


Pandemic Unemployment Assistance Program

CARES also expands unemployment assistance by providing covered individuals additional unemployment compensation. Generally, individuals will receive the amount of unemployment determined under state law, plus an additional $600.00 per week until July 31, 2020. The additional $600.00 per week is only available for the next four months but the maximum entitlement was expanded to 39 weeks rather than the 26 weeks typical of most states. CARES allows states to waive their one week waiting period. Covered individuals include:

  • Individuals diagnosed with COVID-19 or experiencing COVID-19 symptoms and seeking a medical diagnosis,
  • Someone who has a member of the household diagnosed with COVID-19,
  • Someone caring for a member of their family or household with COVID-19,
  • Someone caring for a child or person for which the individual has primary caregiving responsibilities unable to attend school,
  • Individuals unable to reach work because of a quarantine imposed as a direct result of COVID-19,
  • Individuals unable to reach work because a health care provider advised them to self-quarantine due to COVID-19 concerns,
  • An individual unable to reach work because the individual was scheduled to commence employment and does not have a job or unable to reach the job as a direct result of COVID-19 public health emergency,
  • An individual became the bread-winner or major support because the head of household died from COVID-19,
  • Individual quit as a direct result of COVID-19,
  • Individual’s place of employment is closed as a direct result of COVID-19 public health emergency, or
  • Individual meets additional criteria which can be established by the Secretary of Labor.

*Self-employed people seeking part-time employment who do not have sufficient work history, or otherwise would not qualify for unemployment or extended benefits, may qualify if they meet a qualifying reason.

The act also requires states to consider the effects of COVID-19 when considering the whether an individual has fulfilled his or her obligation to actively seek work.


Additional Highlights

The CARES act also expands the EFMLEA to address leave entitlement under the provision for re-hired employees. The term employed for at least 30 days includes an employee who was laid off on or after March 1, 2020, had worked for the employer for not less than 30 of the last 60 calendar days prior to the layoff, and was re-hired.


  • The Supreme Court of the United States Blocks OSHA’S ETS Regarding Vaccines but Enforces CMS MandateRead more


  • Bugbee & Conkle Proudly Welcomes The 2021 Solheim Cup to ToledoRead more

Newsletter Signup

Signup here to be added to receive our quarterly publications Safety Sense, The Employer, and Comp Connection, as well as webinar and event invitations.