On August 3, 2020 President Trump signed the Protecting Nonprofits from Catastrophic Cash Flow Strain Act of 2020 (S 4209) into law.
The Act was previously passed by unanimous consent in the US House or Representatives. The new law provides a much-needed fix to help reimbursing employers manage the required payments in lieu of contributions charged to their accounts for unemployment compensation. The passage came after the US Senate had also passed the bill by unanimous consent.
This remarkable bi-partisan action by both houses was the product of significant work by reimbursing employer groups, UWC, and the Republican and Democrat congressional staffs who recognized the problem and worked together to provide a legislative solution.
The CARES Act provided relief for reimbursing employers to help offset the costs of unemployment benefits by 50%. The U.S. Department of Labor guidance interpreted the CARES Act to require that states collect 100% of the amount owed by reimbursing employers up front before providing the 50% credit. S 4209 clarifies that states may simply apply the 50% credit on the front end in charging reimbursing employer accounts.
This reduces administrative cost for employers and states and provides relief for reimbursing employers that may not have the resources to immediately pay the full 100% payment because of the unprecedented increase in benefits from COVID-19 related claims.
The US Department of Labor is finalizing guidance to states for the administration of the new Act.
