In the early hours of Wednesday (3.25) morning, the Senate reached a compromise on a two trillion dollar economic stimulus package, a historically gargantuan injection of direct payments, loans, and bailout money into the economy. The legislation promises to put money in the hands of every American (as well as some big corporations).
However, when it comes to payroll matters, the service industry often feels a little different. Factors like the sub minimum wage and tipping eve make taxes a bit more complicated. So, what does this stimulus package mean for workers in the industry?
We turned to our favorite HR expert, Dr. Mathew Zingoni, Associate Professor of Management at the University of New Orleans, for some answers.
Keeping in mind that Congress has not released most recent draft of the legislation to public, here’s what we know now.
The legislation promises a direct payment of $1200 to each worker reporting less than $75k annually; the checks getting progressively smaller for individuals earning above that threshold until $99k a year is hit at which point there is no compensation. An additional $500 per child is included in the plan.
When Do I Get My Check?
Treasury Secretary Steven Mnuchin promised to get checks out within two week’s of the bill’s passage. Unfortunately, several IRS officials have publicly refuted that claim. While an exact timeframe is still unknown, we do have some hints available.
Checks to Americans are not completely unprecedented. In 2001, President George W. Bush issued ‘refund’ checks to most taxpayers; the IRS took about six weeks to get these out. After 2008 economic collapse, Bush once again ordered the IRS to issue refunds to citizens; this time, it took about three months for these to reach mailboxes.
In the latter cases, taxpayers who paid taxes online receive their money much quicker and through direct deposit, but those who paid taxes by mail were forced to wait several weeks longer for snail mail refund checks.
File Your Taxes
Elected officials noted provisions to help those who did not make enough to file taxes. However, this section of the bill is fairly grey. The expert suggested not banking (literally!) on it. Instead, file your taxes now if you have not already.
“The big thing is make sure you have filed your back taxes. There is going to be connection to income and you want to be in the IRS’ system for at least this year and probably last year also,” advised Zingoni.
Senate Minority Leader Chuck Schumer lobbied hard to ensure the inclusion of enhanced unemployment benefits in the legislation.
According to Schumer, the bill calls for a federal payment of $600 a week on top of the state issued payments collected by anyone filing unemployment claims. In addition, the package extends unemployment eligibility four months.
Zingoni noted that one should remember that base unemployment payments vary from state to state. More significantly, most hospitality industry employees do not qualify for the maximum payments from their states; it’s currently unclear how/if that scale will factor into the federal bill as well.
If you’re a ‘gig worker’ or self employed, like a bar consultant or many catering employees, you are normally not eligible for unemployment benefits. However, according to Schumer, the stimulus package contains a clause also extending benefits to these groups. No additional details have been released as to how this will work.