Everything to Know About How the $2 Trillion Stimulus Helps (and Fails) Restaurants

President Donald Trump signed into law on Friday a $2 trillion novel coronavirus relief bill, an action that’s as necessary for the larger economy — over three million workers applied for jobless benefits last week — as it is for a hospitality industry decimated by mandatory shutdowns. It will be the largest measure of its kind in modern U.S. history, far surpassing the $700 billion Wall Street bailout in the wake of the 2008 financial crisis.

The bill should begin to help the New York culinary community weather this once-in-a-generation disruption, though bars and restaurants will certainly need more support. The TL;DR is that the measure will put money in the pockets of out-of-work cooks, waiters, bussers, and bartenders — both through weekly $600 unemployment payments that should allow ex-staffers to earn their full salaries while out of work, and via one-time stimulus checks of up to $1,200 for individuals.

The bill also allows for loan forgiveness to restaurants facing crushing rent obligations and other burdens, but the size of that benefit will be severely weakened for establishments that lay off workers. That’s a serious issue given the expected slowdown in business when restaurants reopen their dining rooms. And little of the above applies to New York’s undocumented workers, who make up such an important part of the hospitality industry, and whose precarious legal status makes them among the most vulnerable from both a health and financial standpoint.

In a nutshell, local restaurants and workers need federal support, which is particularly important as the city and state governments say they can do little without it, and this measure isn’t nearly sufficient enough. Here’s everything you need to know about the bill.

Will hospitality workers be eligible for stimulus checks?

Yes, individuals making up to $75,000 will be eligible for $1,200 checks, while joint filers making up to $150,000 combined will get $2,400. The size of the check will decrease as income surpasses those levels, phasing out completely at $99,000 for singles and $198,000 for couples. Workers with children will see an extra $500 per child.

In theory, this all means that hospitality workers who are earning zero income right now should qualify for the maximum benefit here, right? Wrong. It’s possible that executive chefs, general managers, beverage directors, and well-paid waiters will be excluded, as the checks are determined by an individual’s 2019 or 2018 tax returns. So a fine dining waiter who earned, say, $100,000 last year, but is currently out of work, might not qualify for a single red cent under the current stimulus proposal. However, they would still likely get the more generous unemployment benefits.

Will non-citizens receive stimulus checks?

It’s not clear yet. The bill states that it does not apply to “non-resident alien individuals,” government jargon for people who aren’t legal permanent residents or who haven’t had a sustained stateside presence for the past three years. But these individuals are nonetheless required to pay income taxes, and on that front, the IRS website states that “even undocumented workers” who pass a so-called “substantial presence test” are treated as resident aliens for tax purposes. This suggests that those employees might be eligible for stimulus checks.

How will the bill help out workers on unemployment?

The legislation will help in two distinct and powerful ways: Primarily, it should allow workers to earn their full salary while collecting unemployment benefits, thanks to hefty supplemental payments of $600 per week. Generally speaking, unemployment insurance tops out at $504 per week in New York, with many hospitality workers receiving much less. Waiters currently earning the city average of $39,710 only get about $381 per week in unemployment — less than half their salary. Under the new federal measure, however, claimants will earn supplemental payments, known as Federal Pandemic Unemployment Compensation, on top of regular state unemployment payments, until the end of July. So under this rubric, that same waiter should collect $981 per week.

Many workers who need extra help will also be able to extend the unemployment period from 26 weeks to 39 weeks.

What about self-employed delivery drivers and other gig workers; do they benefit from the stimulus?

Drivers working for Uber Eats or other services will likely be able to collect federal stimulus checks, providing they meet the income requirements. They should also qualify for extended 39-week unemployment benefits, as the bill specifically includes “self-employed” workers in that section. That’s a big change for New York, where independent contractors often had to wade into a legal quagmire to argue for unemployment, sometimes waiting months to earn payouts. The New York Times reports that self-employed individuals who are out of work would also be eligible for the $600 payouts.

After workers exhaust their initial half-year unemployment period, who will qualify for the extra thirteen weeks?

Workers who show that they are unable to work according to a variety of detailed criteria relating to the coronavirus. The key datapoint for hospitality workers is that they can qualify for the extension if their place of employment is closed because of the virus.

Will people who already filed for unemployment need to do anything else or refile to claim the extra $600 per week?

The New York labor department’s website said that residents “do NOT need to do anything new,” and advises workers to not contact the department on this matter, so as to keep phone lines open for those making new claims.

Will non-citizens be eligible for the extended unemployment benefits in New York?

That depends. Non-citizens can qualify for unemployment if they were legally working when they lost their job and if they are legally eligible to take a new job. They must also meet the other general requirements for unemployment. Wait staff who spend a few months working in the U.S. on a tourist visa or visa waiver — something that is illegal but not uncommon — won’t qualify. Undocumented individuals don’t qualify for unemployment in New York.

What type of grant money, if any, does the bill give struggling restaurants?

The bill allocates $350 billion toward small business interruption loans with low interest rates. They’re largely designed to be “forgivable,” effectively turning them into grants. The forgivable portion of the loans include payments for utilities, rent, mortgage interest payments, and other obligations. Restaurants will depend on this measure until there’s more comprehensive (and necessary) reforms along the lines of actual rent forgiveness.

There are a few catches, however. Firstly: Each loan will be capped at 2.5 times the average monthly payroll of a given venue; that’s far from a bailout. The other catch is that the salaries of workers earning over $100,000 (like executive chefs and general managers) won’t count when determining the size of the loan. The third and biggest catch is that businesses will see the forgivable portion of their loan diminish if they lay off workers — notwithstanding a major exception we’ll get to in a minute — or if they lower a worker’s salary. Translation: If a restaurant ends up having to spend the bulk of the loan on paying workers so that they don’t have to pay it back, it’s possible there will be few funds left over to help with rent or utilities.

New York mandated that restaurants close their dining rooms, a move that might have prompted well over 67,000 layoffs. Does that mean those venues won’t qualify for loan forgiveness?

This is where things get complicated again. The goal of loan forgiveness is to create a financial incentive to keep people employed — and off of expensive public welfare programs like unemployment. But the drafters of the bill understand that paying bartenders is reasonably tough when it’s illegal to tend bar in many states due to the shutdowns. So restaurants can still qualify for forgivable loans if they rehire all of their full-time employees by the end of June.

That prompts two separate questions: First, will New York restaurants be able to open in three months time? Well, hopefully. Second, will they have enough business to be able to rehire all their employees? The short answer, of course, is probably not.

And restaurants of all sizes can apply?

For all intents and purposes, yes. An earlier proposal said large businesses couldn’t apply, but now the bill states individual establishments within those larger companies can apply, provided that they don’t employ more than 500 at a single location. That should allow groups like Momofuku, Danny Meyer’s Union Square Hospitality Group, and Stephen Starr’s restaurants to qualify. The larger question, of course, is whether the largest restaurant groups and chains — some of which are well funded and backed by billionaire investors — will crowd out smaller applicants during the funding process. Very few individual U.S. restaurants, after all, employ more than 500 workers.

Aren’t there separate emergency disaster grants as well?

That’s right, but they’re reasonably small. Restaurants and other small businesses harmed or shuttered by COVID-19 can request a $10,000 grant as part of a larger economic injury disaster loan. The grant can be used for expenses like rent or mortgage obligations, or payments to suppliers. The grants aren’t tied to keeping workers on payroll. Keep in mind, however, that $10,000 won’t even cover half a month’s rent for certain operators. And any money received under this provision will be subtracted from the amount of funds forgiven in an interruption loan.

Will businesses get any type of tax relief?

Yes, there will be a payroll tax holiday. Restaurants and bars, along with other businesses, will be able to defer the employer share of 2020 taxes for Social Security (usually 6.2 percent) and Medicare (1.45 percent). Half of those taxes will be due on December 31, 2021, and the other half will be due December 2022. In addition, restaurants can get help on employment taxes, though ones that get a small business interruption loan (as discussed above) will be ineligible.

Does the bill do anything to secure the health of restaurant and delivery workers?

Not a ton. There’s a provision calling for health care plans to eliminate cost-sharing for COVID-19 vaccines (which don’t yet exist) and novel coronavirus preventative health services (of which there aren’t a whole lot). Provisions in a House bill that called for free new coronavirus treatment didn’t make it into this bill.

This post has been updated with additional information about disaster grants.