On Saturday, August 8, President Trump issued a series of executive actions in response to the continuing COVID-19 pandemic, including one executive order and three executive memoranda. One memorandum seeks to extend unemployment benefits at a reduced rate of $400 weekly and a separate memorandum seeks to defer certain payroll taxes. As the legality of the executive memoranda is expected to be challenged, Carmody will continue to monitor and provide updates on any developments.
Extension of Unemployment Benefits
The memorandum extending unemployment benefits provides a $400 weekly benefit to qualifying claimants, $300 coming from FEMA (75% of the new benefit) and $100 coming from the individual state (25% of the new benefit). The memorandum allows individual states to use the funds received from the Coronavirus Relief Fund (CRF) to fund the state’s 25% share. To access this new funding source, states must (1) request funding from FEMA, (2) agree to administer and oversee the distribution, and (3) agree to the above described 25% contribution.
The memorandum also restricts the benefits to claimants who are already receiving at least $100 in unemployment compensation, including PUA and PEUC benefits. This new benefit is retroactive to the week ending August 1, 2020 and will terminate when the Dept. of Homeland Security’s Disaster Relief Fund balance reaches $25 million or December 6, 2020 whichever occurs first, unless prior to either of those dates, Congress enacts legislation providing supplemental Federal unemployment compensation.
Deferral of Employee Payroll Tax Contribution
A separate memorandum authorizes Secretary Mnuchin to defer the employee portion of OASDI (6.2%) payroll contributions from September 1, 2020 through December 31, 2020. The memorandum states that the purpose of the deferral is to “put money directly in the pockets of American workers and generate incentives for work and employment….” The deferral will be available for employees generally making less than $4,000, pre-tax, in a bi-weekly pay period. The deferred amounts will not accrue interest, penalties, or additional tax. Under the memorandum, Secretary Mnuchin is further directed to issue guidance for the implementation of this deferral. As many questions surround the implementation of this policy, including whether the deferral is optional or mandatory, employers may consider taking a wait and see approach until such guidance by the Treasury is issued.
The CARES Act already allows an employer to defer its share of certain payroll taxes from March 27, 2020 through December 31, 2020.
Should you have any questions on how these new policies impact your business please contact your Carmody attorney or any member of the Carmody team below. We will continue to monitor and report on these and related developments.
Giovanna T. Weller
(203) 575-2651; firstname.lastname@example.org
Domenico Zaino, Jr.
(203) 578-4270; email@example.com
Stephanie E. Cummings
(203) 575-2649; firstname.lastname@example.org
Maureen Danehy Cox
(203) 575-2642; email@example.com
(203) 578-4284; firstname.lastname@example.org
Sarah S. Healey
(203) 578-4225; email@example.com
Lauren M. Hopwood
(203) 784-3104; firstname.lastname@example.org
Timothy S. Klimpl
(203) 252-2683; email@example.com
Howard K. Levine
(203) 784-3102; firstname.lastname@example.org
Mark F. Williams
(203) 575-2618; email@example.com
Sherwin M. Yoder
(203) 784-3107; firstname.lastname@example.org