Late on Friday, May 15, the House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions (“HEROES”) Act. Adding another $3 trillion to the $2.2 trillion relief package passed under the CARES Act in March, the HEROES Act aims to provide an ambitious level of additional support for small businesses, frontline workers, homeowners, and others. The HEROES Act also includes proposed revisions to aspects of the CARES Act that have raised questions since its implementation, including the Paycheck Protection Program and relief measures for government contractors. Although both the Senate and the President have vocally opposed the HEROES Act, making it unlikely that the bill will become law, it does include measures that are likely to survive in some form. Here is what to keep in mind as the negotiations progress.
Clarity on Section 3610
One of the critiques of the CARES Act has been the seemingly inconsistent approach to Section 3610, providing payroll relief for government contractors. The HEROES Act directs the Office of Management and Budget (“OMB”) to issue implementation guidance, which must limit the basic requirements for reimbursement to those included in the CARES Act. OMB is also directed to clarify the meaning of “minimum applicable contract billing rates.” Under the HEROES Act, the definition would include the financial impact incurred as a consequence of keeping the employees or subcontractors of the contractor in a “ready state,” not just base hourly wage rates. Should this measure, or at least some version of it, pass through the final law, it could provide some much needed clarity on this section of the CARES Act.
Help for Small Businesses
If passed, the HEROES Act would also amend the CARES Act to create additional low-cost loan options for small businesses and small non-profits. The bill would allocate additional funding to the Small Business Administration in support of Emergency Economic Injury Disaster Loan Grants. These measures also include an expansion of the Paycheck Protection Program (“PPP”), extending the life of the program through the end of 2020, increasing the loan use period, and guaranteeing access for micro-enterprises (with 10 employees or less). Given the popularity of some of these measures (especially PPP), it is likely that some version of these measures will survive through to the final legislation.
Increased Oversight
The HEROES Act also includes funding specifically for immediate and long-term oversight of programs and money allocated as part of the Covid-19 relief measures. Given the massive scope of the relief measures, there is likely to be bipartisan support for continued monitoring and enforcement against misuse of benefits, to include increased enforcement of violations.
Questions?
The above details are meant to serve only as information on the proposed HEROES Act, and it is not legal advice or comprehensive of all situations. We encourage readers to see the full bill and/or reach out to your attorney with any questions or concerns. Follow our blog for updates as our team continues to analyze new legislation and monitor developments.
