President Trump’s Four Executive Actions Extend Certain Coronavirus Relief Programs, but Create Legal Uncertainty

By Jennifer R. Yee, Joseph A. Kroeger, Christy D. Joseph, Swen Prior, John F. Lomax and Elizabeth S. Wylie

On August 8, 2020, President Trump issued four executive actions–one executive order and three Presidential Memoranda¹–aimed at extending various coronavirus relief programs that have already expired, or are set to expire, in the absence of congressional action. These executive actions may be subject to legal challenges, including that the President exceeded his authority by taking actions normally reserved for Congress.

Enhanced Unemployment Benefits

The first presidential action was a memorandum that directs additional funds towards the pandemic unemployment assistance, retroactively starting August 1, 2020, and possibly in effect until the end of 2020, depending on the availability of funds. The federal government is to contribute $300 of the $400 weekly unemployment benefit payment. Individual states–which may or may not have the funding–are responsible for the remaining $100 per person per week benefit.

This unemployment benefit amount is less than the extra $600 per week provided by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that expired at the end of July, which many, including President Trump, criticized as providing a disincentive for employees to return to work.

This memorandum could be challenged on the grounds that the Constitution gives Congress control over federal spending, which limits the President’s legal authority to issue binding executive orders about how money should be spent during the coronavirus pandemic.

Payroll Tax Suspended Through December 31, 2020

The next executive action was a memorandum that suspends the collection of the mandatory payroll tax–used to fund programs such as Social Security and Medicare–for those employees earning less than $100,000 annually. This suspension will be in effect from September 1, 2020, through December 31, 2020.

According to President Trump, “This will mean bigger paychecks for working families as we race to produce a vaccine...” The memorandum specifically directs Treasury Secretary Steven Mnuchin to issue guidance to implement the Memorandum. This memorandum could similarly be challenged as infringing on Congress’s spending power.  

Promise of Assistance to Renters and Homeowners

The President issued an executive order directing the Secretary of Health and Human Services and the Director of the Centers for Disease Control and Prevention to “consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of COVID-19 from one State or possession into any other State or possession.”

Further, the Treasury Secretary and the Secretary of Housing and Urban Development (HUD) were directed to “identify any and all available federal funds to provide temporary financial assistance to renters and homeowners who, as a result of the financial hardships caused by COVID-19, are struggling to meet their monthly rental or mortgage obligations.”

This executive order, which is light on the details, does not specify whether or how financial assistance may be made available to renters or in what amounts, leaving most of the details of implementation to Treasury Secretary Steven Mnuchin and HUD Secretary Benjamin Carson, Sr.

Notably, the CARES Act specifically banned late fees and eviction filings until July 25, 2020, on properties backed by federal mortgage programs–like Fannie Mae–or those that receive federal funds like HUD.

Publicly Held Student Loan Payments and Interest Suspended Until December 31, 2020

The President’s fourth directive was a memorandum suspending required payments and waiving student loan interest until December 31, 2020, thus extending the current relief under the CARES Act that is set to expire September 30, 2020, by three months. Payments and interest are scheduled to restart on January 1, 2021. This relief only applies to student loans “held by the Department of Education,” which does not include privately held student loans.

Further Congressional Action Could Be Forthcoming

In spite of these four executive actions, congressional leaders continue to repeat their call for bipartisan negotiations on legislation that provides a more comprehensive stimulus solution. For now, businesses should proceed with caution when approaching the issues affected by these executive actions, as they are subject to possible legal challenges and further guidance from executive agencies, such as Treasury and HUD. In particular, employers should consider seeking legal counsel regarding how to handle unemployment claims filed by employees who may be incentivized to continue to collect unemployment benefits and whether to continue to collect and pay mandatory payroll taxes during the period of suspension. Businesses should consider working closely with counsel to monitor forthcoming regulations and agency guidance in these rapidly changing areas.