Special Webinar for Nonprofits with Employees
Thursday, September 24 at 3:00 pm Eastern
New Law on COVID-19 Paid Leave & Back to School | What Nonprofit Employers Need to Know to Comply
In one of its earliest COVID-related acts, Congress mandated that most employers must provide paid leave to employees who need time off for their own health or to care for a family member. The U.S. Department of Labor (DOL) issued regulations in a matter of weeks, but the economy-wide shutdown, subsequent legislation, and a federal court decision generated confusion and many questions. DOL recently released new clarifying regulations for employers, including nonprofits.
To help nonprofits with employees gain a better understanding of paid leave requirements, the National Council of Nonprofits is offering a free webinar next Thursday, September 24 at 3 p.m. On the webinar, speakers from DOL will walk participants through the requirements of the laws; explain which employees and employers are covered and which are exempt; discuss the concept of intermittent family leave in the context of schools reopening; and address the recent federal court decision and changes to DOL regulations.
Congressional Action: A Numbers Game?
Congress begins the week with only nine days to pass a spending bill to avert a federal-government shutdown and just six weeks before the November 3 election. Having spent the 25 weeks since passage of the CARES Act arguing over the need for and details of additional COVID stimulus, the parties remain as far apart as they can be on how to provide relief to millions of residents, businesses, nonprofits, and communities.
The Short-Term Spending Bill: The House is scheduled to vote this week on a Continuing Resolution to keep federal funds flowing beyond the 2020 fiscal year that ends on September 30. It is likely the stopgap spending bill will run through December 11. While leaders have said they want a ”clean CR,” meaning without extraneous policy matters, numerous issues have been the subject of intense negotiations. These include extending the Census deadlines proposed in legislation introduced last week (see census article, below), $3.6 billion in election security grants, funding of relief for farmers affected by trade actions of the Administration, and additional food aid. Many other disputes persist but no one is predicting a federal government shutdown at the end of the month. Notably, over the weekend, Speaker Pelosi made clear that House Democrats will not hold up passage of the CR or use it as leverage to block Senate action on a replacement for Associate Justice Ginsburg, who passed away on Friday.
COVID Relief Legislation: Within the past two weeks, the Senate considered a narrow (“skinny”) relief package valued at about $300 billion in new spending and a bipartisan group of 50 House Members proposed a relief package costing between $1.3 trillion and $1.9 trillion. President Trump tweeted his support for the House bipartisan package. Speaker Pelosi stood firm at insisting on a $2.2 trillion proposal she had offered in August before negotiations with the White House broke down. In short, a giant gap of trillions or hundreds of millions of dollars separates the parties, and each side is accusing the other of being unreasonable and insensitive to the needs of the American people.
Nonprofit Advocacy Needed: Without a strong push from the public, Congress could leave Washington to return to the campaign trail without enacting the needed COVID relief. Earlier this month, the nonprofit coalition issued a statement calling on Congress to get serious about COVID relief and to include the bipartisan nonprofit policy priorities. As highlighted in quotes and articles in the sidebar and in the Advocacy in Action article, below, nonprofits are telling the media and others why relief is desperately needed and demanding action by Congress. Here are specific actions everyone who cares about the work of nonprofits – family, friends, and other nonprofit staff members, board members, volunteers, and donors – can take right now:
2020 Census Running Out of Time
Time is running out for a fair, accurate, and compete 2020 census count, but the Administration, Members of Congress, and litigants continue to battle over whether to shorten or extend key deadlines and even which people get counted. Earlier this month, a federal court struck down President Trump's July 21 order to exclude undocumented immigrants from census numbers for apportioning congressional districts. It ruled that the President’s action violates the executive branch's "constitutional responsibility to count the whole number of persons in each State and to apportion members of the House of Representatives among the States according to their respective numbers." The ruling by a three-judge panel is expected to be appealed to the Supreme Court. Early in the pandemic, the Census Bureau asked Congress for more time to complete the census because shutdown orders made it unlikely the count could be completed on original timelines. In August, the Administration reversed its position and announced a “Rush Plan” to stop sending census enumerators door-to-door on September 30, a month earlier than previously requested. That shortened schedule was blocked temporarily by a federal judge and will be decided later this week. Congress is also stepping in with bipartisan bills introduced last week (S. 4571/H.R. 8250) that seek to extend two key statutory deadlines for the 2020 Census by four months and require the Census Bureau to continue field operations through October 31, 2020. More than 200 organizations, including the National Council of Nonprofits, state associations of nonprofits, and many charitable organizations, endorsed the bills and called for immediate congressional action before it is too late.
Clarifying Employer Paid Leave Obligations
This month, the U.S. Labor Department issued updated regulations clarifying the rules on when employees are entitled to paid leave under the Families First Coronavirus Response Act. The revised rules were issued in response to a federal district court ruling last month that blocked several of the Department’s interpretations in regulations issued in April. In the new regulations, the Department reaffirms that no leave is mandated if the employer’s operations (and the worker’s job) are closed due to COVID; clarifies that employees must get employer approval as soon as practicable when taking intermittent leave; and narrows the definition of which employees may be exempted from the paid leave mandate under the classification of “health care providers.” For parents with children in schools operating on a hybrid in-person/remote learning system, the new regulations clarify that taking leave only on days when their children are learning remotely is not considered intermittent (and therefore does not require employer consent). The revised regulations also give employees more time to provide their employers with documentation about the need for taking paid leave.
The Families First Coronavirus Response Act (FFCRA) requires nonprofits and other employers to provide two weeks of paid sick leave and 10 weeks of paid family and medical leave (FMLA) for employees who are unable to work for reasons related to COVID-19. FFCRA also provides refundable payroll tax credits to nonprofits and other employers to cover all or some of the costs of the emergency paid sick leave and emergency FMLA that their employees take during the pandemic. See also DOL answers to frequently asked questions, updated Sept. 11, 2020. Register now for a free webinar, Thur. Sept. 24 at 3:00 pm Eastern, during which Labor Department officials will discuss the rules for paid leave and answer questions from nonprofits.
- Disaster Tax Relief Legislation: In response to numerous recent and ongoing natural disasters, Senators introduced disaster tax legislation last week designed to provide tax relief. Both bills, the Disaster Tax Relief Act of 2020 (S. 4596) and the 2020 Disasters Tax Relief Act (S. 4621), would provide an income tax credit for 40 percent of wages (up to $6,000 per employee) paid by a disaster-affected employer to an employee from a qualified disaster zone. However, tax-exempt organizations do not pay income taxes and are not eligible to utilize the tax credits. The challenge, and solution, is explained in recommendations submitted last year to a Senate Finance Committee taskforce.
- Discharging PPP Legislation: Republicans in the House plan to file a discharge petition on a bill to grant a second round of PPP loans. If 218 Representatives sign the petition, the House must vote on allowing floor consideration of H.R. 8265, a bill introduced last week by Representative Chabot (R-OH), the Ranking Member of the House Small Business Committee. The bill appears to be based on the PPP text in the Senate Republican “skinny” bill that includes unworkable provisions related to nonprofits, but has a lower threshold for participation in a second round of PPP loans (gross receipts loss lowered from 35% to 25%). See Chabot news release.
- Taxing Higher Education Investment Income: The IRS and Treasury Department released final regulations Friday that interpret the 1.4 percent tax on colleges and universities with at least 500 full-time, tuition-paying students, and assets worth at least $500,000 per student. The regulations exclude from the calculation of net investment revenues derived from institutional student loans, housing for student, faculty, and staff, and royalties derived from patents and copyrights resulting from the work of students or faculty members, among other things. See analysis by NACUBO. The tax on endowment and other investment income applies to only a few dozen institutions, but it is considered “unsound policy objectionable to all charitable organizations that have the foresight and ability to build reserves that are dedicated to advancing their missions,” according to a letter from the National Council of Nonprofits.
Nonpartisanship Protections at Risk
It is election season, so it should be no surprise that attacks on integrity, decency, and nonpartisanship are back. The latest instance is deeply troubling because it comes from a lawyer and public official who should know better. This past week, the Chairman of the Federal Election Commission, James E. "Trey" Trainor III, expressed opposition to the decision of religious leaders to refrain from endorsing candidates for public office, something over which the FEC has no jurisdiction and, more importantly, is expressly prohibited by the longstanding Johnson Amendment to Section 501(c)(3) of the Internal Revenue Code. According to Newsweek, Trainor “claimed that Trump had nullified the Johnson Amendment,” the provision in a statute Congress passed in 1954 that prohibits charitable nonprofits from "participating in or intervening in any political campaign on behalf of (or in opposition to) any candidate for public office" or risk losing their tax exempt status. Another FEC Commissioner countered Trainor's claim, saying “My colleague is not correct.” She continued, “Though the president’s executive order directs law enforcement authorities to not enforce the Johnson Amendment, that statute remains the law of the land and cannot be undone with an executive order.” She further said, “Anyone tempted to violate the statute should keep in mind that a future administration could well decide to enforce the law as Congress wrote it.” The bottom line for charitable, religious, and philanthropic organizations is that the law protecting them from demands from political operatives for endorsements and campaign cash is still on the books. This protection should be wielded vigorously to defend missions dedicated to the public good from the selfish demands of partisan politicians.
National Voter Registration Day is September 22!
Get out your pens and register to vote! Tomorrow is National Voter Registration Day, when tens of thousands of people join together to register and commit to vote to elect their government officials. It’s a great opportunity for nonprofits to ensure their staff, volunteers, board members, and community members are registered to vote. It’s easy -- Sign up today to ensure that your nonprofit’s voter registration work is included in this worthy nationwide effort!
More States Consider, Expand COVID Funding
At least 18 states to date have allocated Coronavirus Relief Fund (CRF) monies for grant and loan programs benefiting nonprofits. Lawmakers in South Carolina are currently considering their own proposals, debating how much of the state’s share of CRF should be allocated for relief for nonprofits. Montana Governor Bullock recently announced additional funds for the ongoing Montana Department of Commerce coronavirus relief programs, allowing nonprofits to apply or reapply for applicable grants. Local governments are also seeing a bump in funds as the Governors of New Mexico and Washington have issued additional funding for localities, which may allow for further partnerships with nonprofits in those communities. Unless Congress extends the deadline, states have until the Dec. 30 to spend their CRF or return any unspent funds.
States Debate Expanding Charitable Giving Incentives
With federal stimulus talks seemingly stalled in DC, nonprofits are looking to state lawmakers to provide some relief through charitable giving incentives. Three bills in New Jersey would establish a charitable deduction of up to $10,000 for individuals and $20,000 for couples for contributions to NJ-based charitable organizations. The state deduction would be available whether or not a taxpayer itemizes on their federal return. Two of the bills (A. 4546/S. 2360) would limit the giving incentive to donations made during the COVID-19 pandemic. The charitable giving incentives “would provide a much-needed lifeline to help charities to fill growing demands for services and to weather the emergency,” according to the Center for Non-Profits, the state association of nonprofits in New Jersey. Legislation in four other states (Arizona, Maryland, Minnesota, and West Virginia) that would have created tax deductions for charitable contributions failed to pass this year.
Challenges Growing for Contributing Employers in State Unemployment Trust Funds
As the pandemic and economic crises have dragged on, state unemployment systems have started to run dry, forcing some states to take out loans from the Federal Unemployment Account. The Labor Department reports that Trust Fund Loans currently total about $30 billion, with the largest borrowers being California ($12.5 billion), New York ($7.5 billion), Texas ($4.5 billion), Illinois ($1.9 billion), and Massachusetts ($1.4 billion). The CARES Act made sure that the states weren’t charged interest on these loans and no repayments are due this year. That will change in January, however, when the law expires, and states will have to start repaying the federal government for the amounts they borrowed. States pass on the costs of the loan repayments to contributing employers, those that typically make quarterly payments into their state trust funds. Many employers could see rate hikes in their UI bills by early spring of 50 percent or greater unless Congress extends the repayment moratorium.
Telling Truth Through Experiences and Data
Last Friday, Yahoo! Money posted an article, Poverty groups brace for influx of need as extra unemployment benefits expire, exploring the harmful consequences of the failure by Congress to extend COVID relief and the negative impact on charitable organizations in several states working to serve populations in need. The article demonstrates the power of nonprofit networks (1) gathering and sharing information of what they are seeing and doing in local communities so more nonprofits can make real-time adjustments to their actions and (2) lifting the stories of their experiences nationwide so policymakers and the public can make better informed decisions.
The writers first interviewed Mary Hamlett with Metropolitan Inter-Faith Association in Memphis, Tennessee to discuss the coronavirus' impact on unemployed Americans and how community organizations are attempting to help. The nonprofit human services provider saw a tripling of requests for services per week between March and August, with another doubling by the end of August. Mary Hamlett with Inter-Faith said that “as this thing drags on and benefits run out, you can see how much the need has increased.”
Next, the story moves to Phoenix, Arizona where Cynthia Zwick, head of the anti-poverty group Wildfire said, “I have a fear about the end of the year,” because she sees a “huge gap that's building.” Her organization has seen “an uptick in the number of people seeking assistance of all kinds,” and predicts that in the coming weeks and months “we're going to see many more people on the streets.”
The article demonstrates the toll of the pandemic and expiration of support programs by citing with brand-new data from South Carolina estimating that 29 percent of nonprofits in the state could not survive until the end of the year without additional financial support. See Together SC survey results.
Finally, the article turns to solutions, providing a link to the new Nonprofit Community Letter, outlining “a series of priorities for the next round of stimulus, including both a continuation of unemployment benefits and changes to the Paycheck Protection Program.”
Read more examples of Advocacy in Action,
a regular feature of Nonprofit Advocacy Matters.