WASHINGTON—In order to help compensate essential workers who are necessarily subject to greater risk of COVID-19, U.S. Senator Mitt Romney (R-UT) has proposed that they receive Patriot Pay, a temporary bonus of up to $12 per hour in May, June and July. One-quarter of this bonus would be paid by their employer and three-quarters would be paid by the federal government, funded by a refundable payroll tax credit. With Patriot Pay, a grocery store clerk earning $10 per hour would receive an hourly bonus of $12 for a total of $22 per hour. Romney’s announcement comes as Congress and the Administration continue to discuss the outlines of a potential Phase 4 relief package. A one pager of the proposal can be found here.
Patriot Pay would help ensure that essential workers in critical industries, designated by the Department of Labor and Congress, receive greater compensation than the unemployment insurance rate. One of the inadvertent anomalies of the CARES Act was to create numerous circumstances in which this was not the case.
“Health care professionals, grocery store workers, food processors and many others—the unsung patriots on the frontline of this pandemic—every day risk their safety for the health and well-being of our country, and they deserve our unwavering support,” Senator Romney said. “Patriot Pay is a way for us to reward our essential workers as they continue to keep Americans safe, healthy and fed.”
Romney’s Patriot Pay Proposal
How Would Patriot Pay Work?
- For essential employees that make less than $50,000 annualized, employers would receive a 75% refundable payroll tax credit for a bonus up to $12 an hour.
- For essential employees making over $50,000 annualized, the tax credit phases out by $24 for every additional $500 in income until annualized incomes hit $90,000.
- The maximum tax credit is $1,440 per month, per employee, meaning a full-time worker would receive up to a $1,920 monthly bonus.
Who Would Qualify for the Tax Credit?
- Congress and the Department of Labor would designate critical industries including, but not limited to, hospitals, food distributors and processors, and health manufacturers.
- Eligible employers will certify that an employee worked in conditions that increased their potential COVID-19 exposure.
- Eligible employers would qualify for tax credits for employee bonuses provided between May 1 and July 31, 2020. Employees must work at least 100 hours each month they receive the bonus for their wages to be eligible for the tax credit.
How Would Employers Claim the Credit?
- Employers would submit a streamlined claim to the IRS, using the recently created system that already advances the paid leave tax credit.
- Congress should also provide the IRS the authority to partner with payroll companies who may be able to more quickly advance the credit.
- A grocery store in Provo, UT could opt into Patriot Pay to give their workers a $12/hour bonus. The employer would contribute $3, while the federal benefit would add $9, meaning a $10/hour worker would receive a $5,760 bonus from May 1 through the end of July. The grocery store worker’s weekly paycheck would include an extra $480.