Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On July 27, 2020, Republican leadership in the U.S. Senate unveiled its latest legislative response to the COVID-19 pandemic, the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act. The bill represents the most recent effort to target relief to workers, employers, and others as the COVID-19 pandemic continues to wreak public health and economic havoc.
With an estimated cost of $1 trillion, key provisions of the HEALS Act include:
Unemployment Insurance (UI). The bill continues an expanded unemployment benefit for millions who have lost their jobs during the pandemic. The current expanded benefit of an additional $600 per week expires on July 31, 2020. In its place, the Senate bill continues extended UI benefits, but at the rate of $200 per week in the short term. Longer term, the bill directs states to phase in a new system over the next two to four months in which workers would receive up to 70% of their lost wages, whereupon the $200 flat “plus-up” will end. To date, state UI offices have been overwhelmed with claims, with many reports that antiquated computer systems are unable to handle this onslaught; it is not clear how quickly states would be able to adapt their UI systems to this new proposal, were it to become law.
Liability Shields. The bill includes provisions limiting employers from liability from employees, customers, and vendors relating to COVID-19 exposure. The HEALS Act creates a federal cause of action for coronavirus exposure claims as the exclusive remedy for all claims against a defendant for personal injury caused by an actual, alleged, feared or potential exposure to the coronavirus. This cause of action covers all alleged injuries that arise from conduct taking place between December 1, 2019 and the later of either the end of the coronavirus emergency declaration or October 1, 2024, and covers all claims, including those that are pending on the date of enactment. State and common law are preempted insofar as they provide broader liability. Under the bill, a defendant would not be liable for coronavirus exposure so long as it undertook reasonable efforts in light of all the circumstances to comply with applicable mandatory coronavirus standards and regulations in effect at the time of the alleged exposure. If plaintiffs show that the business did not take these reasonable steps, they must further show by clear and convincing evidence that the defendant’s gross negligence or willful misconduct caused the plaintiffs’ coronavirus injuries.
Employer Liability. Employers are already facing a spiraling number of lawsuits relating to COVID-19 under labor and employment laws, with over 400 suits filed to date (Littler is tracking these filings here). Recognizing this, the HEALS Act protects employers from liability under federal labor and employment laws, including the Occupational Safety and Health (OSH) Act, the Fair Labor Standards Act (FLSA), the Age Discrimination in Employment Act (ADEA), the Worker Adjustment and Retraining Notification (WARN) Act, Title VII of the Civil Rights Act of 1964, Title II of the Genetic Information Nondiscrimination Act (GINA), and Title I of the Americans with Disabilities Act (ADA), for actions taken to comply with coronavirus-related public-health guidance and regulations. It further protects from liability under the ADA and Civil Rights Act of 1964 businesses and employers that cannot offer requested accommodations because doing so would pose a serious risk to public health, and forecloses lawsuits for injuries caused by workplace coronavirus testing unless the injuries were caused by gross negligence or intentional misconduct.
Other Employment Provisions. The bill clarifies that providing coronavirus-related assistance to an independent contractor or to the employee of another employer does not create an employment relationship between the person or entity providing the assistance and the person who received it. With respect to required WARN Act notices, the bill provides an exception to employer notification laws that normally require a notice period for employment decisions made due to the coronavirus emergency.
Paycheck Protection Program. The bill makes a number of changes to the Small Business Administration Paycheck Protection Program (PPP). It provides for additional allowable expenses for PPP to include operations costs, certain supplier costs, personal protective equipment (PPE), and certain property damage. The bill provides additional flexibility for borrowers to determine what their eight-week “covered period” is (through December 31, 2020), provides simplified application processes for loans of less than $2 million, and allows certain small businesses with 300 or fewer employees and a 50 percent reduction in gross revenues to access a second PPP loan, up to $2 million.
Tax Credits. The HEALS Act increases the employee retention tax credit (ERTC) which provides a refundable payroll tax credit on certain wages paid by employers from 50 percent to 65 percent, and increases the amount of wages for which the ERTC can be claimed from $10,000 per year to $30,000 per year, limited to $10,000 per quarter. It further allows firms with up to 500 employees to claim the ERTC. The bill also temporarily expands the work opportunity tax credit (WOTC) to employers that hire certain targeted groups of workers, and creates a new refundable payroll tax credit equal to 50 percent of an employer’s costs for coronavirus testing, cleaning and sanitizing, and PPE.
Other Relief. The bill includes a second round of stimulus payments of up to $1,200 per taxpayer (and $500 per dependent), on a sliding scale based on income. It also provides $100 billion in loans to businesses in the “recovery sector” which includes seasonal businesses and businesses in certain low-income census tracts (subject to size and revenue restrictions). Finally, the bill includes monies for schools (some tied to the reopening of in-class teaching), as well as expanded funds for PPE and virus testing and tracing.
The HEALS Act represents the “opening bid” in what are certain to be contentious negotiations over the fifth major coronavirus response package. It is likely that some of these items will be negotiated and amended to gain sufficient support to pass the Senate (where 60 votes are generally required to pass legislation). More to the point, in May of this year, the U.S. House of Representatives passed its own version of an additional relief bill, which included significant extensions of unemployment insurance, sick leave and family leave mandates, federally funded hazard pay, and billions of dollars for cash-strapped states and localities. The two chambers are miles apart, and it will likely be days if not weeks before a viable compromise emerges that has a chance at passage and enactment.
Littler’s Workplace Policy Institute (WPI) will continue to keep readers apprised of significant developments as legislative negotiations continue.