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Staffing Firm Headcount Issues Under the CARES Act

Many ASA members have inquired as to how employee headcount will be determined under the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act. The question is related to two primary business assistance components of the law: one for small businesses (not more than 500 employees), the other for midsized businesses (500 to 10,000 employees).

The small business provisions broadly define “employee” to include “individuals employed on a full time, part time, or other basis” and later state that employees consist of the “average number of full-time equivalent employees (FTEs) for each pay period falling within a month”—a method similar to how employees are counted under the Affordable Care Act, which of course includes temporary employees. The relief provisions for midsized companies (500 to 10,000 employees) do not specifically state how headcount is determined, but it is reasonable to assume that, for consistency, the government will use the same FTE formula used in the small business provisions.

An important point for staffing firms to remember is that, whatever their headcount, large sums of money will be available whether they are small or midsized. Midsized borrowers must certify that they will use the funds to retain at least 90% of their workforce at full compensation and benefits until Sept. 20, 2020, and to restore—no later than four months after the end of the emergency—not less than 90% of the workforce that existed as of Feb. 1, 2020. In a letter, ASA pointed out that the retention requirement should not be construed to deny relief to employers, like staffing firms, whose employee headcount is wholly dependent on their clients’ demand for services.

The issue will be on the agenda of the ASA webinar “The CARES Act—Overview and Ramifications for Staffing Firms,” which takes place tomorrow from 1:30 to 3 p.m. Eastern time. Register now at americanstaffing.net.