March 27, 2020
At 11:30 a.m. MT, it was announced that Congress completed its approval of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a $2 trillion deal to provide economic relief to those most affected by COVID-19. The President has committed to signing the bill. Congress had been working feverishly for more than a week to develop the eventual 880-page bill.
Your ABMP staff has been fully engaged, educating Congress about the nature of your work, the structure of your profession, and how relief needed to be tailored to be effective for you. We prepared the following analysis for you just hours after the legislation emerged from the US Senate Thursday morning.
The full text of the bill will be further analyzed by experts over the next days and weeks. The CARES Act marks the third and largest piece of COVID-19 relief legislation developed by Congress in the past two weeks. Even more COVID-related legislation may be on the horizon.
Early Cash Transfers to Individuals
A core element of the CARES Act is payments in the next few weeks of $1,200 for many adults and additional $500 payments per child. Because each adult’s/family’s income and situation varies, we suggest you continue reading to the bottom of this letter, where you will find a link to The Washington Post’s calculator to determine if you are eligible and, if so, how large a check you can anticipate.
Expanded Eligibility for Unemployment Benefits
The United States has an unemployment insurance compensation system with responsibilities split between the federal and state governments. Individuals relate to the system at the state level. While the federal government dictates general parameters and contributes part of the system costs, states have flexibility as to payment amounts and day-to-day administration of the program.
A massage therapist, esthetician, hair stylist, or nail professional who works full-time for an employer, such as La Costa Spa or Hand & Stone, and is laid off has been eligible to file with their state for unemployment compensation. The amount of such compensation typically is some fraction of that individual’s recent compensation, no unemployment compensation is paid for the initial week after filing, and each state has limits on the duration of payments. Part-time employees and self-employed individuals in the above four professions have not historically been eligible for unemployment compensation.
However, in response to the devastating elimination of people’s ability to work at these professions because of coronavirus restrictions, the CARES Act has temporarily loosened some of those restrictions. The enhanced benefits run through June 30, 2020. The CARES Act appears a bit inconsistent as to the start of expanded eligibility: at one place it says February 15, 2020; elsewhere, it is when each individual state enters into a contract with the US Department of Labor (which likely will be within days of this posting).
As is always the case with unemployment benefits, they cease when an individual finds new employment or is able to return to previous work. The new act is vague about what constitutes a return to work (A full client load? Seeing two clients?). Each state may have perspective on this matter.
Under the CARES Act, unemployment insurance benefits will temporarily be available to “an eligible self-employed individual” . . . “an individual who regularly carries on any trade or business” within the meaning of a specified section of the Internal Revenue Code of 1986. It appears that this expanded eligibility applies to individuals who work “part-time,” a government definition that would cover a large proportion of massage therapists, estheticians, hair stylists, and nail professionals.
You have to take the initiative to apply for unemployment insurance. If your state unemployment insurance agency determines you are eligible, you will receive weekly two amounts:
- the amount the state calculates under existing rules, which will be some fraction of your recent earned income from your trade or profession; and
- an additional $600 per week, constituting special coronavirus relief, courtesy of the federal government.
States have a choice whether to lump these two amounts together in a single check or to issue two checks.
In addition, under the current unemployment system, approved applicants receive no payment for the first week of eligibility. The CARES Act waives this provision. The federal government will be reimbursing states to enable them to begin unemployment payments right away.
The unemployment system requires recipients to be “actively seeking work.” One has to register with the state, actively search for employment commensurate with one’s particular skills and capabilities, and keep a record of such job search efforts. However, the CARES Act commands the states to “provide flexibility in meeting such requirements in case of individuals unable to search for work because of COVID-19, including because of illness, quarantine, or movement restriction.”
To learn how to apply for benefits in your state and to learn how your state is addressing COVID-19 closures and layoffs, go to www.careeronestop.org/LocalHelp/UnemploymentBenefits/Find-Unemployment-Benefits.aspx?newsearch=true.
Small Business Administration (SBA) Disaster Loans
As of March 26, 2020, small businesses are allowed to apply for a long-term, low-interest Economic Injury Disaster Loan. As these are loans, they will need to be paid back.
If you are operating as a sole proprietor, you are eligible for a small business loan “during the covered period,” which is now through June 30, 2020. You may apply for an SBA loan here.
If you are set up as a partnership, limited partnership, limited liability entity, or a corporation, you may apply for an SBA loan here.
To learn more about SBA Disaster Loans, visit https://disasterloan.sba.gov/ela.
More Helpful Resources
Stay tuned for updates and potential future legislative action alerts via email and at www.abmp.com/covid-updates. Below you will find targeted information and recommended resources for determining how this legislation affects you and proactive steps you can take for financial relief.
Use this calculator to determine how much you will receive in early cash transfer payments.
The Washington Post: “Calculate How Much You’ll Get from the $1,200 (or More) Coronavirus Checks”
Read this article for information on financial strategies and relief, including unemployment insurance, paid leave, federal student loans, federal tax requirements, mortgage and rent deferment, and working with utility providers.
The New York Times: “Your Money: A Hub for Help During the Coronavirus Crisis”
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