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On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which is a $2 trillion relief package aimed to help diminish the economic impact of the COVID-19 pandemic. The Act includes certain provisions particularly relevant to employers.
Among many other things, the Act creates a loan program for mid-size companies, including non-profit organizations, that employ between 500 and 10,000 employees. Loans authorized through this provision are subject to an annualized interest rate no higher than 2%, and provide for no interest or principal payment for at least the first six months after the loan is made. However, this loan also comes with extensive strings attached.
Under this provision, eligible businesses would have to remain neutral in any union organizing effort for the term of the loan. For unionized employers, the loan is conditioned on agreeing not to “abrogate” existing collective bargaining agreements for the term of the loan and two years following loan repayment. In addition, an eligible borrower must make a good-faith certification that:
As such, affected
employers should analyze these requirements as they may have significant
consequences regarding their ability to obtain a loan and eventually have an
economic impact on their company during this unprecedented time.