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BPAA Federal Policy Update - February 26, 2021

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COVID-19 Relief Updates

  • The House is Set to Pass COVID-19 Relief Bill as Minimum-Wage Hike Dealt Blow The House is poised to pass President Joe Biden’s $1.9 trillion Covid-19 stimulus tonight, but a ruling by late Thursday by a Senate official, the Senate Parliamentarian, dealt a major blow to prospects that the final legislation will include a hike in the U.S. minimum wage to $15 per hour. Friday’s vote in the House will bring most Americans one step closer to receiving $1,400 relief payments and move action to the Senate, where disagreements among Democrats over the minimum wage had been the biggest obstacle to turning the pandemic relief plan into law. Here are the Quick Facts:
    • Senate parliamentarian Elizabeth MacDonough found that the wage provision did not qualify for action under budget reconciliation, a fast-track procedure that would let Democrats pass the stimulus with only 50 votes in the evenly divided Senate.
    • Democrats don’t yet have a unified approach for dealing with the minimum wage decision. While Biden called on Congress to “quickly” pass the relief bill, progressives are urging Democrats to overrule the parliamentarian or wage a battle over tax penalties to force higher wages. That raises the potential for disputes that delay Senate passage of the broader stimulus package.
    • The $15 minimum wage had been a rallying point for progressive Democrats, and Senate Budget Chair Bernie Sanders immediately proposed a work-around to raise pay for low-level workers.
    • Senate Majority Leader Chuck Schumer is considering whether to include a provision that would penalize large corporations that don’t pay workers at least a $15 an hour wage, said a senior Democratic aide. Senate Finance Chair Ron Wyden also endorsed the idea of a tax penalty for large corporations “that refuse to pay a living wage.”
    • There may be prospects for bipartisan talks on a standalone measure. On Friday, Republican Senator Josh Hawley of Missouri proposed requiring companies with at least $1 billion in revenue to pay employees $15 an hour.
    • Using tax incentives may address a main complaint from opponents of raising the minimum wage to $15 an hour: That it would be onerous for small businesses. It also may be a way to appeal to two Senate Democrats, West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema, who’ve expressed opposition to elevating the wage floor that high nationally and whose votes are needed to pass the legislation in the face of unified Republican opposition.
    • Congressional leaders have pledged to get President Joe Biden an aid package by March 14, when unemployment benefits end. Read more at Bloomberg Government.
  • House COVID Relief Bill – Small Business Aid
    • Paycheck Protection Program: The measure would increase funding and expand eligibility for the Paycheck Protection Program, and would allow forgiveness for additional expenses.
      • Program Funding: The measure would increase the program’s lending authority by $7.25 billion, to $813.7 billion, and appropriate the same amount for the Small Business Administration (SBA) to guarantee additional loans.
      • Tax-Exempt Groups: Certain types of tax-exempt groups, such as 501(c)(3) charitable organizations, 501(c)(6) business associations, and 501(c)(19) veterans organizations, already qualify for PPP loans.
      • The measure would expand the eligibility rules to cover most other types of tax-exempt groups, including 501(c)(5) labor organizations, 501(c)(7) social and recreation clubs, and 501(c)(8) fraternal benefit societies. Religious educational groups that might otherwise be barred under SBA rules would be permitted. 501(c)(4) social welfare groups, such as AARP, the ACLU, Americans for Prosperity, and the National Rifle Association, would still be prohibited.
      • Loan Forgiveness: The measure would expand PPP loan forgiveness to include payments made for premiums on behalf of individuals who qualify for COBRA health insurance continuation coverage. The change would apply to loan forgiveness applications received following the measure’s enactment.


  • Restaurant Grants: The measure would provide $25 billion for a Restaurant Revitalization Fund to be administered by the SBA.
    • Eligible recipients would include restaurants, bars, food trucks, and caterers, including businesses in airport terminals and tribally owned entities.
    • Disqualified businesses would include those run by state or local governments, companies that manage more than 20 locations including affiliates, live venues seeking grants under the year-end Covid-19 relief package, and publicly traded companies.
    • For 60 days following the measure’s enactment, $5 billion would be set aside for eligible entities with gross revenue of $500,000 or less in 2019. The SBA would also have to prioritize awards for small businesses owned by women, veterans, and socially or economically disadvantaged individuals during an initial 21-day award period.
    • Other grant funds would be awarded on a first-come, first-served basis.
    • Grant amounts would cover the difference between an entity’s revenue in 2020 compared with 2019. Awards would be reduced by amounts received through the Paycheck Protection Program. Aggregate awards made to an entity and its affiliates couldn’t exceed $10 million and would be limited to $5 million per location.
    • Eligible expenses generally would include payroll costs, mortgage and rent payments, supplies, normal food and beverage costs, and paid sick leave.
    • Funds could be used through Dec. 31, or a date set by the SBA that’s no later than two years after the measure’s enactment.


  • Economic Injury Disaster Loan (EIDL) program: Additional funding also would be made available for advance payments to eligible entities under the SBA’s Economic Injury Disaster Loan (EIDL) program.
    • The reconciliation measure would provide $15 billion for additional advance payments on a staggered schedule, as follows:
      • Within 14 days of enactment, the SBA would have to start processing applications for covered entities that didn’t receive their full eligible advance payments under the year-end relief package. Those entities include recipients with 300 or fewer employees and economic losses of at least 30% over eight weeks compared with a similar period before the pandemic.
      • Starting 28 days after enactment, the agency would begin processing applications for new supplemental payments of $5,000 to covered entities with 10 or fewer employees that had economic losses of more than 50% during the covered period.
      • Starting 42 days after enactment, the SBA would begin processing applications for supplemental payments to entities with 10 or fewer employees that didn’t previously qualify.


Labor & Minimum Wage Updates

  • Tax Code Emerges as Plan B for Minimum Wage Democratic senators suggested possible tax penalties as a backup option if a minimum wage hike can’t be included in the Covid-19 relief package moving through Congress. Senate Parliamentarian Elizabeth MacDonough ruled last night that a proposal to increase the minimum wage to $15 per hour doesn’t qualify for budget reconciliation—the floor maneuver Democrats are using to avoid a filibuster on the relief bill. The House plans to vote today on the package, but Democrats aren’t unified on how to deal with the ruling.
    • Following the decision, Senate Budget Chairman Bernie Sanders (I-Vt.) and Senate Finance Chairman Ron Wyden (D-Ore.) announced they are considering ways to raise taxes on companies paying workers less than $15 an hour.
    • “In the coming days, I will be working with my colleagues in the Senate to move forward with an amendment to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages,” Sanders said in statement. “That amendment must be included in this reconciliation bill.”
    • Congressional leaders have pledged to get President Joe Biden an aid package by March 14.
    • Senate Majority Leader Chuck Schumer (D-N.Y.) said that yesterday’s jobless-claims data, which showed 730,000 Americans filed for unemployment insurance in the latest week, highlighted the need for the relief plan.


  • Republican $10 Minimum Wage Proposal: Republican Sens. Rob Portman (Ohio), Mitt Romney (Utah), Tom Cotton (Ark.), Shelley Moore Capito (W. Va.), and Susan Collins (Maine) offered a minimum wage hike proposal yesterday that would gradually raise the minimum wage to $10. The proposal would mandate a verification process to ensure wages only go to legal workers. “Unlike the Democrats’ proposal, this bill would protect tipped workers by ensuring they are still able to work in a capacity that ensures they have larger take-home pay,” Portman said in a statement." Read the proposal here.


  • DOL Seeks Extension to Review Independent Contracting, Tip Rules The U.S. Labor Department has proposed extending the effective date of the independent contracting and tip-pooling rules the Trump administration advanced in its final days to allow the agency more time for review. The Wage and Hour Division issued two proposals Wednesday that would extend the effective date of both rules by 60 days in accordance with President Joe Biden’s regulatory freeze memo, which puts on hold regulations that have been announced but not yet published in the Federal Register and allows agencies to extend effective dates for rules that were finalized but hadn’t yet taken effect. Both rules would have taken effect in early March.
    • The subagency must seek comment on the proposed extensions as a technical formality as it reviews the rules.
    • The landmark independent contractoring rule would establish a simpler legal standard for when employers can classify workers as independent contractors rather than as employees, who are covered by federal minimum wage and overtime law. 
    • The tip pooling rule would allow restaurants to pay more of their tipped employees below the federal minimum wage, but also included less controversial language prohibiting employers from participating in tip pooling arrangements.
    • The Wage and Hour Division last month revoked three opinion letters that referenced the rules allowing select businesses to continue classifying manufacturing distributors and truck drivers as independent contractors and restating the department’s position on tip pooling. Story by Bloomberg Government.


  • Eliminating The Tip Credit Doesn’t Force Restaurants To Close, According To A Harvard Survey As states across the country are cautiously easing restrictions on indoor dining and federal lawmakers are debating whether to raise the minimum wage in the upcoming COVID-19 stimulus package, a Harvard University think tank has found that paying tipped hospitality workers the same as non-tipped hourly workers has not led to more hospitality business closures during the pandemic.
    • Using data from Harvard’s Opportunity Insights Economic Tracker, the One Fair Wage (OFW) advocacy organization reports that hospitality businesses in the seven states that have abandoned the subminimum wage for tipped workers closed at the same rate between January 2020 and January 2021 as those in states with a subminimum wage.
    • OFW also reports that the five states that suffered the highest number of closures during that time all pay their tipped workers less than the standard minimum wage. Read more at Forbes.


Tax Updates

  • Top Senator Floats 5% Payroll Tax on Big Firms Senate Finance Committee Chairman Ron Wyden floated a 5% tax on big companies’ payroll costs as a means of enabling a minimum-wage hike to be included in the $1.9 trillion Covid-19 relief bill moving through Congress.
    • Wyden’s proposal followed a ruling by the Senate parliamentarian Thursday that Democrats’ minimum-wage proposal, as previously drafted, fell afoul of rules for the legislative process that congressional leaders are using for President Joe Biden’s aid bill. Requirements dictate that measures be primarily fiscal in nature; taxes are a component of fiscal policy.
    • The House is scheduled to take up the bill on the floor of the chamber Friday -- including a phased-in hike in the minimum wage to $15 an hour -- with passage expected late in the evening or potentially Saturday.
    • Action then shifts to the Senate, where the changes to the legislation are certain given the minimum-wage debate and a separate requirement to trim some spending after the Congressional Budget Office said the House legislation weighs in at greater than the limit set by the House and Senate earlier this month.
    • Congressional leaders aim to pass the final package by March 14. Read more at Bloomberg Government.
  • Pass-Through Tax Break Sen. Steve Daines (R-Mont.) and Rep. Jason Smith (R-Mo.) reintroduced a bill Thursday that would make a 20% deduction for pass-through businesses permanent. The provision, which was part of the 2017 Republican tax bill, is scheduled to expire after 2025.
    • “Making this main street tax relief permanent will provide the certainty needed to help Montana small businesses stay afloat, create more jobs, and expand their operations,” Daines said in a statement.
    • Republicans want to make the expiring provision permanent, but doing so would require negotiating with Democrats who want to roll back some parts of the 2017 tax law and increase the corporate tax rate to 28%.
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