 Congress:
The House of Representatives will be back in session today and will vote on a bipartisan proposal to overhaul the Paycheck Protection Program (PPP). The bill is very friendly to businesses who have received PPP funds and gives businesses increased flexibility with regard to how funds can be spent. The House bill, H.R. 7010, gives businesses 24 weeks in which to spend PPP funds -- a dramatic increase from the current requirement that businesses spend PPP funds within 8 weeks. Also, the bill was revised last night to allow a borrower to receive forgiveness so long as at least 60 percent of the loan covers payroll costs. The other 40 percent can subsequently be used on mortgage interest, rent, or utility payments. Before last night’s change, the bill entirely eliminated the payroll threshold percentage. However, the current version of the bill still gives those who have received PPP loans greater flexibility. U.S. Senator Rob Portman (R-OH) recently proposed the idea of providing unemployed workers a $450 weekly bonus if they return to work. This proposal is an alternative to Democrats’ efforts to continue paying $600 in weekly unemployment benefits in addition to state benefits. The White House appeared to support Senator Portman’s proposal on Tuesday when Larry Kudlow, Director of the United States National Economic Council, expressed support for the idea of a return to work bonus. Economy: Last week, 2.1 million workers filed jobless claims. While this reflects a downward trend from the last several weeks, these are still record numbers. Since March, more than 40 million people have sought unemployment assistance. As states begin to reopen, there is a new problem that those on unemployment assistance can earn more than they would if they returned to work. According to a study by the University of Wisconsin, approximately 40 percent of all workers could earn more money while unemployed than by returning to their previous job. This undoubtedly has the potential to slow any economic recovery and the issue is being debated on Capitol Hill. America’s Recovery Fund Coalition, a group representing trade associations and businesses through the COVID-19 recovery, found that more than two million small businesses could be broke and at risk of closure next month. The group is urging Congress to dispense grants to the business community as opposed to forgivable loans to assist with cash flow problems. FOR MORE IMPORTANT INFORMATION, VISIT ARA's COVID-19 DASHBOARD
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Congress:
Right before the Memorial Day Congressional recess, a bipartisan group of Senators released a bill that would modify the Paycheck Protection Program’s (PPP) forgiveness requirements. The piece of legislation would give businesses 16 weeks to spend PPP funds (instead of the current requirement of eight weeks) while remaining eligible for forgiveness. The bill would also allow PPP borrowers to use loan proceeds to purchase protective equipment and fixtures to protect their workers and employees from COVID-19. However, the House is still considering their own measure that would extend the time borrowers could use PPP funds while still remaining eligible for forgiveness at 24 weeks. Automotive: Last Friday, car rental company Hertz filed for bankruptcy. In April, global revenue for the company dropped 73 percent from the same month last year. Industry experts worry that the company may flood the used car market with its 570,000-vehicle fleet, which would lower used car values across the board. General Motors is delaying the start of a second production shift at two pickup truck plants. The reason for the delay is that suppliers in Mexico need more time to meet the demand of the U.S. automaker. The Alliance for Automotive Innovation has come out and supported federal greenhouse gas emission regulations for the model years of 2021-2026. In a recent court filing, the Alliance stated that they preferred the current regulations that call for a steady increase in emission standards during the 2021-2026 period. FOR MORE IMPORTANT INFORMATION, VISIT ARA's COVID-19 DASHBOARD Congress:
Over the past nine weeks, over 38 million Americans have filed for unemployment benefits due to the economic fallout from COVID-19. As part of Congress’s early efforts to assist those that lost their jobs due to the virus, the federal government temporarily expanded state unemployment benefits by providing eligible applicants an additional $600 per week. However, on a phone call with House GOP members, Senate Majority leader Mitch McConnell said that the $600 boost to unemployment benefits would not continue. McConnell stated that it did not make sense to pay “people more to remain unemployed than they would earn if they went back to work.” On the other hand, House Democrats want the expanded unemployment benefits to continue. This issue will prove to be a hot-button issue during the next few weeks during the next round of COVID-19 relief legislation negotiations. Trump Administration: On Thursday, Treasury Secretary Steve Mnuchin expressed that there was a “strong likelihood” that another COVID-19 relief bill would be necessary as the economy struggles to stabilize. However, Mnuchin also explained that the administration would step back over the next few weeks to best analyze how a new relief bill should be structured. State Reopenings: One of the biggest concerns amongst the business community is the growing threat of COVID-19-related lawsuits from employees and customers. As of today, 1,300 COVID-19-related lawsuits have been filed and some legal experts believe that COVID-19 could be “the new asbestos.” While Senate Republicans have expressed the need for federal legislation protecting businesses from liability, some states are not waiting for federal legislation. States such as North Carolina and Utah have already passed laws that make businesses and individuals immune from litigation based on others’ exposure to COVID-19 on their property with the exception for situations involving willful misconduct. Additionally, six other states are considering legislation providing immunity to businesses. Automotive: As vehicle manufacturers reopened manufacturing facilities this past Monday, Ford Motor Company has already been forced to shut two plants after workers tested positive for COVID-19. The company was forced to shut down its Chicago assembly plant and its Dearborn Truck plant. However, both manufacturing sites have since reopened. UAW spokesman Brian Rothenberg told CNBC, “The UAW is aggressively looking at and monitoring the process and the protocols and how they’re being implemented across the country… Our first priority is the health and safety of our members, their families and their communities.” FOR MORE IMPORTANT INFORMATION, VISIT ARA's COVID-19 DASHBOARD  Congress:
House Speaker Nancy Pelosi plans to overhaul the Paycheck Protection Program (PPP) by proposing a bipartisan piece of legislation next week. The bill currently being drafted will give businesses who have received PPP funds more flexibility in how they use the funds while remaining eligible for loan forgiveness. The proposed fixes to the PPP program address some of the stringent requirements that were adopted by the Trump Administration through regulation. For example, the House bill to fix the program is reported to give businesses 24 weeks to spend their PPP money instead of 8. The bill is also reported to eliminate the requirement that businesses spend at least 75% of PPP funds on payroll to receive forgiveness. On Monday, President Trump was asked to overhaul the PPP forgiveness requirements by the restaurant industry. President Trump responded by stating, “That’s like one of the easiest requests I’ve ever heard.” ARA: ARA recently polled members on the Paycheck Protection Program (PPP) and found that of those that participated in the survey many respondents applied for and received PPP funds. The most interesting findings in the survey were that over 80% of respondents applied for the PPP with smaller lenders such as regional and local banks and that 94% of respondents received about what they asked for. Another positive finding was that 61% of respondents received PPP funds in 2 weeks or less. Also, it appears that most of the people who applied for PPP loans declined to apply for an Economic Injury Disaster Loan with the Small Business Administration. Finally, the average time to take the survey was under 2 minutes – showing that the survey was quick and easy to answer! Automotive: A group of 50 members of Congress from car-producing states put Congress on notice that the auto industry will need economic help as part of any future pandemic relief packages. The next few weeks will be crucial in determining if auto manufacturers will ask for help from Congress due to their manufacturing plants having only just reopened Monday. To highlight the extent COVID-19 has impacted the auto industry, the Federal Reserve found that the output of vehicles and parts declined by more than 70% in April alone. Julie Fream, CEO and president of the Original Equipment Supplier Association said that her industry needs an influx of $20 to $25 billion to prevent the closure of businesses. Mexico, which is also a crucial player in the automotive supply chain for manufacturers, plans to allow the auto industry to reopen on June 1st. The two questions are: (1) whether manufacturing in Mexico will begin as planned; and (2) whether consumer demand for new vehicles remains high enough to allow the auto manufacturers to be financially viable. Reopening the Economy: The Centers for Disease Control (CDC) just published a 60-page document providing guidelines for reopening the economy. The document provides information and specific guidance for reopening childcare centers, schools, businesses, restaurants and public transit. For more information on CDC guidance and businesses please see Interim Guidance for Businesses and Employers Responding to COVID-19.  Congress:
On Friday evening, House Democrats passed their fifth COVID-19 relief bill, which totaled $3 trillion in federal spending. Both the Senate and White House have expressed disapproval for the House’s proposal and the Senate is not expected to take up the legislation until June. While the Senate is taking a wait-and-see approach with regards to a new COVID-19 relief bill, the Senate could introduce a proposal on business liability protection as soon as this week. State Reopenings: As of today, most states are in the process of reopening with only five states and the District of Columbia still being under stay-at-home orders. For more details see the New York Times State Reopening Map. COVID-19 Relief Programs: On May 15th, the Small Business Administration released the application borrowers of a Paycheck Protection Program (PPP) loan must use to determine the amount of the loan that may be forgiven by their lender. The application in its current form has four components: (1) the PPP Loan Forgiveness Calculation Form; (2) PPP Schedule A; (3) the PPP Schedule A Worksheet; and (4) an (optional) PPP Borrower Demographic Information Form. Borrowers are required to submit items (1) and (2) to their lender. While it is worth noting that businesses should be ready to comply with the loan forgiveness application as it is currently written, there is a very real possibility that Congress will make sweeping changes to the PPP that will change compliance requirements. Automotive: National Automobile Dealers Association President and CEO Peter Welch will retire at the end of the year. FOR MORE IMPORTANT INFORMATION, VISIT ARA's COVID-19 DASHBOARD Congress COVID-19 Relief Bill
The US House of Representatives is expected to vote on their $3 trillion COVID-19 relief bill Friday evening. While there is some opposition to the bill amongst liberal and moderate Democrats, the bill is expected to pass. Despite likely passing in the House, the bill will only serve as an initial negotiating position for Democrats. Republicans have expressed strong opposition to the House’s proposed bill with Senate Majority Leader Mitch McConnell having described the bill as a “totally unserious effort.” The White House has also expressed opposition to the House bill calling it “more concerned with delivering on longstanding partisan and ideological wishlists than with enhancing the ability of our Nation to deal with the public health and economic challenges.” Despite only being the first step in negotiations between the House and Senate, this next relief bill should provide more clarity on issues such as the Paycheck Protection Program and business liability. After the next COVID-19 relief bill passes there should be a clearer picture as to what kind of liability businesses are subjecting themselves to on the issue of employees and COVID-19. Businesses should receive a better idea as to what to expect once the Republicans put forth their relief proposal. Senate Majority Leader McConnell has stressed for weeks that liability protection for business must be included within the next relief bill. Senator McConnell stated about liability protection, “Our legislation is going to create a legal safe harbor for businesses, nonprofits, governments and workers and schools who are following public health guidelines to the best of their ability.” COVID-19 Relief Programs On Wednesday, the Small Business Administration (SBA) released a Paycheck Protection Program (PPP) FAQ, which declared that borrowers who received less than $2 million will be presumed to have applied for the loan in good faith. When an individual or business applies for a PPP loan, the applicant must certify that they are applying for the loan because the funds are necessary to support the ongoing operations of the applicant. This ruling should provide comfort to businesses that are still trying to figure out how to ensure that their PPP loan is forgiven. State Reopening The Wisconsin Supreme Court overturned Governor Tony Evers’ stay-at-home order. In a 4-3 decision, the Court found the stay-at-home order to be “unlawful” and “unenforceable.” It will be interesting to see whether other state stay-at-home orders will survive similar legal challenges. ARA in the News This week, ARA issued a press release opposing modifications to workers’ compensation laws by states such as California. California recently issued an executive order that creates a presumption that an employee working for an essential business who contracts COVID-19 contracted the virus at their place of work. Industry news site CollisionWeek published an article yesterday about ARA’s position on this issue. May 13, 2020 ARA Update to Recyclers
Congress House Democrats unveiled a $3 trillion dollar COVID-19 relief bill opening up a new round of negotiations between House Democrats and Senate Republicans. The House bill includes $1 trillion in relief for state and local governments, direct payments to individuals up to $1,200 per person, and $175 billion in rent, mortgage, and utility assistance. A vote on the House bill is scheduled to take place by Friday. Recovery and Relief After originally resisting calls to ease restrictions on the use of Paycheck Protection Program (PPP) funds, Treasury Secretary Mnuchin has expressed willingness to make changes to the program to give employers greater flexibility in how PPP funds can be spent. However, Secretary Mnuchin himself does not appear to be willing to ease restrictions and that any changes to the program must come from Congress. Therefore, it will be interesting to see whether House Democrats and Senate Republicans can reach a consensus on this issue in the coming weeks. Both Democrats and Republicans have expressed a desire to ease restrictions on how much money can be used by a business on overhead. Automotive Last week, LKQ Corporation (LKQ) filed a lawsuit in federal court against General Motors Company. The lawsuit involves a licensing and patent dispute. LKQ is claiming that during negotiations with GM regarding a Design Patent License Agreement, which would provide LKQ a license to many of GM’s design patents, GM claimed that LKQ had been infringing on already existing GM design patents (for which there was a prior licensing agreement). LKQ is asking the federal court in the Northern District of Illinois to determine that they did not infringe on GM’s design patents. For more information, see LKQ’s complaint. Contact ARA Staff with any questions or concerns. You can reach us at 571-208-0428 extension 2 or 3 or Sandy directly at 505-228-0401. In order to comply with the Virginia Governor's Directive to close all non-essential businesses, the ARA Office is closed and the staff continues to work remote from home. Joining ARA today to continue to strengthen the voice of the industry! We need your help now more than ever! Click HERE to join ARA! For resources, go to ARA's COVID-19 Resource Page For resource links, go to ARA's COVID-19 Links For Essential Business and Stay at Home Orders, go to ARA's State & Provincial COVID-19 Orders Congress
House Speaker Nancy Pelosi is currently working to build consensus surrounding a new coronavirus relief bill amongst House Democrats. Politico reports the House’s bill could cost upwards of $2 trillion dollars with a vote taking place later this week. Democratic senators have proposed paying Americans $2,000 each month until the economic crisis subsides. While this proposal has a small likelihood of being included in the Senate’s coronavirus relief bill, Josh Hawley (R-Mo.) has expressed a desire to have the government subsidize employers’ payrolls. Therefore, it will be worth watching whether additional relief to individuals will be included in the next relief bill. COVID-19 Relief The IRS revised guidance related to the employee retention credit. The IRS will now permit businesses to benefit from the tax break if they are only paying health benefits but not wages for employees. The IRS states in its FAQ, “Eligible Employers may treat health plan expenses allocable to the applicable periods as qualified wages even if the employees are not working and the Eligible Employer does not pay the employees any wages for the time they are not working.” Automotive U.S. automakers General Motors Co., Ford Motor Co., and Fiat Chrysler Automobiles N.V., are planning to resume production starting on May 18th. The Detroit based automakers had shut their factories in late March due to fears of the coronavirus. To help its dealer network and jumpstart new car sales, Ford is offering its dealers free, custom commercials. Additionally, both Ford and GM have developed manufacturing “playbooks” to help create safe workplaces for their employees. On Saturday, Tesla filed a lawsuit against California’s Alameda County after health officials in the area prohibited Tesla from restarting manufacturing last Friday. CEO Elon Musk also threatened to move the company out of California if he could not restart manufacturing. Surprisingly, on Monday, Treasury Secretary Steve Mnuchin weighed in and agreed with Musk. Mnuchin stated, “I agree with Elon Musk. He’s one of the biggest employers and manufacturers in California, and California should prioritize doing whatever they need to do to solve those health issues so that he can open quickly and safely.” Economy
The U.S. Bureau of Labor Statistics reported that the unemployment rate climbed to 14.7 percent and that the US economy lost 20.5 million jobs in April. The unemployment rate increased by 10.3 percent this last month -- the highest rate and largest one month increase in history. Workforce Some states are debating whether employees vulnerable to COVID-19 can refuse to return to work out of fear of contracting the virus and still receive unemployment benefits. Colorado Governor Jared Polis “told state regulators in April to make sure that people over age 65, people who have certain chronic diseases and other vulnerable people won’t be forced off unemployment if they turn down a job that’s likely to put their health at risk.” The Colorado Department of Labor and Employment issued emergency rules that would allow regulators to consider a person’s vulnerability to the coronavirus and their risk in returning to work. California’s Governor, Gavin Newsome, just signed an executive order that creates a rebuttable presumption that any COVID-19-related illness of an employee shall be presumed to arise out of and in the course of employment for purposes of awarding workers’ compensation benefits. An employee can access workers’ compensation benefits so long as they test positive for COVID-19 within 14 days of performing labor or services at their place of work. This executive order will remain in force for 60 days. Meanwhile, other states such New Jersey are weighing similar policies. In contrast to expectations, funds still exist in the second round of the Paycheck Protection Program. As of Wednesday, over $124 billion dollars remained in the fund to be distributed. It may be possible to still apply. Find an Eligible PPP Lender. Automotive As vehicle manufacturers like Ford Motor Co. and Fiat Chrysler report billions in losses to start the year, Michigan’s congressional delegation is considering a relief package for US automakers. It is unknown how a potential relief package for automakers might look but there is concern within the industry that another Cash for Clunkers style program may be in the works. However, Debbie Dingell (D-MI) has stated, “In response to any sort of federal program that might coax customers to make new-vehicle purchases, Dingell said “Cash for Clunkers is gone.” It will be worth monitoring developments to see whether Congress has the appetite for a new bailout for the automotive industry and what form relief may look like. Treasury
The U.S. Department of the Treasury announced that it will borrow $3 trillion dollars this quarter to make up for the four separate COVID-19 relief bills that authorized $3 trillion in new spending. Since March 1, the national debt has grown by $1.5 trillion. Recovery and Relief During Fox News’s town hall, President Trump doubled down and said that a payroll tax cut would be necessary in Congress’s next COVID-19 relief package. However, Senator Chuck Grassley (R-Iowa), who chairs the Senate Finance Committee, has expressed hesitation about moving legislation containing payroll tax cuts. Additionally, the Senate’s second highest ranking Republican, Senator John Thune (R-SD), stated he was not particularly eager to pass a payroll tax cut and instead was focusing on liability litigation and providing aid to small businesses. Senate Majority Leader Mitch McConnell (R-KY) stated that in the next round of COVID-19 relief legislation that liability protections for employers was his red line. Senator McConnell has explained that the bill to protect employers from litigation surrounding COVID-19 and the workplace would be “narrowly crafted” and that the bill would “not protect somebody from gross negligence.” House Democrats are working on putting together a bill proposal for the next COVID-19 relief package. House Speaker Nancy Pelosi (D-CA) and her colleagues have created an outline for a package that would cost over $1 trillion. This package is expected to include funding to assist state and local governments. Speaker Pelosi has also stated that they would be “strengthening PPP, expanding support beyond the PPP as it has been originally presented, and then having more resources.” Automotive According to connected vehicle data, vehicle traffic volume has continued to increase. This is a consequence of states loosening stay at home restrictions. The state of California has sued ridesharing companies Uber and Lyft. The lawsuit alleges that both companies have been misclassifying their workers as independent contractors. The law used as a basis for the lawsuit was passed this past January. |
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