This afternoon, Governor Pritzker issued an Executive Order ordering all “non-essential businesses” to close from 5:00pm on Saturday, March 21 through April 7th.
The Governor’s shelter-in-place order also directs all residents to stay at home except for “essential activities,” which include trips to healthcare providers, shopping for essential items, and outdoor activities like walking and jogging. Individuals with jobs at “essential businesses” will be allowed to work on site at their place of employment.
Essential vs. Non-Essential Businesses
Non-essential businesses must close to in-person work while “essential businesses” can remain open. Essential businesses are defined to include:
Exemptions. All first responders, emergency management personnel, emergency dispatchers, court personnel, law enforcement and corrections personnel, hazardous materials responders, child protection and child welfare personnel, housing and shelter personnel, military, and other governmental employees working for or to support essential businesses and operations are categorically exempt from the Order.
Minimum Basic Operations Allowed for Non-Essential Businesses. All other business operations are deemed nonessential. Nonessential businesses can continue to operate with employees working from home and are allowed to have on-site employees to the extent necessary to maintain minimum basic operations. Minimum basic operations include “the minimum necessary activities to maintain the value of inventory, preserve plant and equipment condition, ensure security, process payroll and employee benefits and facilitate employees working remotely.”
Non-Essential Travel Restricted. The Order similarly prohibits all non-essential travel. Essential travel includes traveling to perform essential governmental functions, duties at essential businesses and minimum basic operations at nonessential businesses. Individuals may also travel to obtain essential items, return to residences from outside the jurisdiction or in another jurisdiction, and care for elderly, minors, dependents, persons with disabilities or other vulnerable persons.
Child Care and Housing. While the Order closes day cares serving more than six children, the state government is making it a priority to provide child care for employees of essential businesses. A new Emergency Child Care Center license is being created with more flexibility but much smaller group sizes to ensure social distancing for children in care. Additionally, the Governor is halting evictions statewide to help ease the financial burden felt by millions of Illinoisans.
Phase III Economic Stimulus Package
On Thursday night, Senate GOP leaders unveiled their proposal for Phase III of the economic stimulus package to combat the impact of COVID-19, totaling over $1 trillion in financial relief. The bill is entitled The Coronavirus Aid, Relief, and Economic Security Act or the CARES Act. It provides direct cash payments for eligible households, loans for impacted businesses and more resources for testing and development of vaccines.
Now, the bill is being negotiated with Senate Democrats; some have criticized it for not including enough relief to first responders and other front-line health care workers. We understand that Senate Republicans are also pushing for changes. We highlight key provisions below, and will update you as developments unfold next week.
Household Payments and Support
The bill includes cash payments of as much as $1,200 per person and $2,400 per married couple. Individuals with an adjusted gross income of less than $75,000, and $150,000 for joint filers, would receive the full payment. People earning over that amount would see their payments reduced by $5 for each $100 in income over that amount. The benefit completely phases out for individuals earning over $99,000 and married couples making more than $198,000. People with incomes under $2,500 would be eligible for $600, or $1,200 for a married couple.
The bill also extends income tax deadlines from April 15, 2020 to July 15, 2020, and provides additional tax relief to those who have been infected by the virus.
Small Business Loans
Businesses with fewer than 500 employees may apply for fee-free loans of up to $10 million that could help cover expenses incurred between March 1, 2020 and December 31, 2020, including payroll, employee salaries, paid sick leave, mortgages, rent and some other debt obligations. Businesses that retain their employees and payroll levels between March 1, 2020, and June 30, 2020, would have any of that money used for payments on preexisting debt and payroll forgiven.
The U.S. Treasury Secretary is reported to have indicated that these loans should be used by businesses for hiring and maintaining payroll and could be forgiven down the line.
Relief for Severely Distressed Sectors
The GOP proposal would provide $208 billion for loans or loan guarantees to air carriers and other distressed industries, but no more than $50 billion for passenger air carriers and $8 billion for cargo air carriers. The rest, around $150 billion, would be for other eligible businesses. “Other eligible business” is loosely defined as “a U.S. business that has covered losses such that the continued operations of the business are jeopardized, as determined by the Secretary, and that has not otherwise applied for or received” loans or loan guarantees under the CARES Act.
The Senate proposal also provides little guidance on what other industries would qualify as distressed sectors. The text– which likely will be fleshed out in future versions of the bill or regulations – simply requires that the Treasury Secretary determine, in his or her discretion, that “credit is not reasonably available” to the eligible business applying for credit and that other general borrowing requirements (including security) are met.
The bill also requires businesses receiving economic relief under the CARES Act to limit executive compensation for a 2-year period beginning March 1, 2020, for executives whose total compensation exceeded $425,000 in 2019.
Follow-Up: Families First Coronavirus Response Act
On Wednesday, the President signed the Families First Coronavirus Response Act (the “Act”), which will become effective 15 days from enactment (April 2, 2020). Our note earlier this week highlighted the key provisions for employers with fewer than 500 employees relating to emergency paid sick leave, emergency family medical leave, and unemployment insurance.
There are exceptions to these leave policies for health care providers and emergency providers and, in certain instances, for employers with fewer than 50 employees. The Secretary of Labor is expected to issue further guidance on these matters in the coming week.
The Act also requires impacted employers to “post and keep posted, in conspicuous places on the premises of the employer where notices to employees are customarily posted, a notice” that meets the Act’s requirements. The Secretary of Labor is required to make publicly available a model form of notice within 7 days of the law’s enactment (i.e. mid-next week).