Paycheck Protection Program Expansion Signed into Law. Is Hazard Pay Next?

Obermayer Rebmann Maxwell & Hippel LLP
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Obermayer Rebmann Maxwell & Hippel LLP

On Friday, April 24, 2020, President Trump signed the latest Coronavirus relief package into law. Included in this round of relief legislation—which was passed by the house on April 23rd – is an expansion of the Paycheck Protection Program which will make an additional $310 billion available through the small business association loan programs. Although the expansion of the Paycheck Protection Program is welcome news for many struggling business owners, several reports suggest that the additional funds may be quickly depleted when made available to the numerous outstanding loan applications submitted during the initial rollout of the Paycheck Protection Program.

In the meantime, prior to Congress departing the Capital this week, its members resumed debates over additional phases of Coronavirus relief packages. A significant labor and employment proposal, spearheaded by Senate Democrats, is a “Heroes Fund” to provided hazard pay for essential workers. The current proposal contemplates providing various medical professionals (as well as other essential workers) a flat rate hazard pay increase of $13.00 per hour on top of their existing pay rate. The proposal caps hazard pay at $25,000 (for workers earning less than $200,000 per year) and a cap of $5,000 (for workers earning over $200,000 per year). As currently proposed, the Heroes Fund would make hazard pay available retroactively to January 27th and through December 31, 2020.

The current Heroes Fund proposal lacks specific guidance delineating which essential employees would be eligible for hazard pay. However, the general guidance suggests that essential employees would, at a minimum, include nurses, doctors, front line medical personnel, janitorial and building maintenance staff, grocery store clerks, pharmacists, and truck drivers.

There is also a recruitment and retention incentive of $15,000 linked to the Heroes Fund premium pay proposal. The proposal includes a one-time signing bonus (PAID FOR BY THE FUND?) for health care, home care and first responders, available if those employers are experiencing severe staffing shortages that hinder their ability to provide care during the COVID-19 pandemic.

Currently, there is no federal law requiring employers to pay essential employees hazard pay. Traditionally, the decision to implement a hazard pay policy remains up to each individual employer. Moreover, it is traditionally the decision of the individual employer as to the appropriate amount of hazard pay and what conditions will result in hazard pay.

As proposed, the Fund would be fully funded by the federal government, and would require eligible employers to submit an application and provide premium pay to employees if approved. All employers providing essential services, such as health care providers, first responders, and grocery stores, should closely monitor this proposal.

As governments and employers begin to consider the best ways to resume operations in a safe manner in the coming months, the Obermayer team will continue to monitor and provide updates to assist our clients navigate these uncharted waters.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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