March 27, 2020

CARES Act helps restaurant employees

The $2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES) Act is designed primarily to help keep businesses like restaurants running during and after the crisis. Restaurants have been among the hardest hit businesses as a result of the pandemic, and so, too, the more than 15 million people who work in the industry.

The package contains a number of indirect benefits to your employees through you, as their employer. They’re mostly designed to encourage you to rehire those you had to lay off and/or raise wages of those whose pay you had to cut.

These include rehiring and payroll incentives such as

  • the Paycheck Protection Program and SBA Loan Forgiveness
  • tax breaks, including an Employee Retention Tax Credit
  • extended tax filing deadlines and payment deadlines
  • a fix for the Quality Improvement Property write-off schedule glitch
  • a tipped-employee wage reporting adjustment
  • beneficial modifications to how net operating losses are treated 
  • the potential to get local block grant money to help you through the crisis

The bill also contains direct relief for individuals, your employees:

  • Direct rebate check to individuals: All individuals earning less than $75,000 annually, whether still on payroll or not, will receive a $1,200 tax rebate. The rebate amount reduces for those who make between $75,000 and $99,999.

    These rebates are structured as tax credits automatically advanced to households in 2020 if you filed a 2019 income tax return. They would be received as a direct deposit or check by mail. If your 2019 return has not been filed, the rebate would be advanced based on your 2018 tax return information.

    The value decreases and then phases out completely for those making more than the full payment income cap (see below). The rebate amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the phase-out threshold.

    Complete phase-out occurs with incomes exceeding $99,000 for single filers and $146,500 for head of household filers with one child, and $198,000 for joint filers with no children.
  • Higher unemployment insurance: All those employees you’re not able to keep on payroll or re-hire who qualify for unemployment can receive an additional $600 per week in unemployment benefits for four months.
  • Student loan waiver extended: Payments and interest on federal student loans, already waived for two months, now will be automatically suspended until Sept. 30, another piece of good news for any of your staffers if they owe on a student loan held by the federal government.