Relief for Mid-sized Health Clubs (500 - 10,000 Employees)
We are currently looking into more information on what resources and relief are available to fitness industry businesses with more than 500 employees. We will also continue to lobby on behalf of and fight to get the fitness industry included in future relief.
This provision of the stimulus package creates a loan program for "a United States business that has not otherwise received economic relief in the form of loans or loan guarantees provided under the CARES Act."
There are four conditions recipients of these loans must follow.
- The funds received must be used to retain at least 90% of the recipient's workforce, with full compensation and benefits, through September 30, 2020.
- The recipient will not outsource or offshore jobs for the term of the loan plus an additional two years.
- The recipient will not revoke existing collective bargaining agreements for the term of the loan plus an additional two years.
- The recipient must remain neutral in any union organizing effort for the term of the loan.
It is not clear at this point how this will work. Unlike small business loans, this loan program is not directed through an existing program. Therefore, a process will have to be created for administering this portion of the relief bill. We are seeking additional information on this provision.
How Health Clubs Can Use the Payroll Tax Relief
The payroll tax relief in the stimulus package can be broken down into three categories.
- Employee retention credit for employers subject to closure due to COVID-19
- Delay of payment of employer payroll taxes
- Unemployment provisions
Employee Retention Credit for Employers Subject to Closure Due to COVID-19
The provision provides a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis. This credit is available to health clubs whose:
- operations were fully or partially suspended, due to a COVID-19-related shutdown order, or
- gross receipts declined by more than 50% when compared to the same quarter in the prior year.
This credit is based on qualified wages paid to the employee and covers the first $10,000 of compensation, including health benefits. Eligible wages include:
- For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances.
- For employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shutdown order.
The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.
Delay of Payment of Employer Payroll Taxes
Employers are generally responsible for paying a 6.2% Social Security tax on employee wages. The provision allows employers and self-employed individuals to:
- Defer payment of the employer share of the Social Security tax, and
- Pay the deferred employment tax over the following two years, with half of the amount required to be paid by December 31, 2021, and the other half by December 31, 2022.
The three most significant provisions for unemployment are:
- Most individuals will receive an emergency increase in traditional unemployment insurance (UI) benefits of $600 per week through July 31, 2020;
- The Pandemic Unemployment Assistance program, which provides up to 39 weeks of UI to people not otherwise eligible for regular unemployment compensation—including the self-employed and those who have exhausted their regular and extended benefits; and
- The Pandemic Emergency Unemployment Compensation program, providing 13 weeks of emergency UI for people who remain unemployed after they have exhausted their benefits or are not otherwise eligible.
For more information about how the revised unemployment provisions will work, please see your state’s unemployment office website.
Direct Payments of $1,200 to every adult earning up to $75,000—or $2,400 for joint filers earning up to $150,000—plus $500 for every child.
Changes to the New Paid Leave Mandates
Changes to the new paid leave mandates lower the amounts that employers must pay for paid sick and family leave under the Families First Coronavirus Response Act (enacted March 19) to the amounts covered by the refundable payroll tax credit—i.e., $511 per day for employee sick leave or $200 per day for family leave.
So, What’s Next?
While the CARES Act does not address all of the challenges or needs of the fitness industry, it does provide a variety of support for fitness businesses.
We will continue to work to learn more about how the government will implement the CARES Act and where you can go to take advantage of these programs.
Finally, IHRSA will continue to lobby for relief for the fitness industry now and in all future economic stimulus packages.