Giving Compass' Take:

• Unemployed household workers face layoffs due to COVID-19 but are consistently left out of the legislation. Government aid should increase loan eligibility for this population.

• What can donors do to assist unemployed household workers? 

• Learn more about vetted coronavirus and COVID-19 funds.

As it extends aid to people put out of work by the COVID-19 pandemic, the federal government could be doing more to help one group of employers and the vital American workers they employ: Hundreds of thousands of nannies, housekeepers and others employed in private homes.

Starting April 3, millions of small businesses became eligible to apply for forgivable loans from the Small Business Administration (SBA) under the Paycheck Protection Program (PPP) (PDF), which aims to reduce the number of employees who are laid off from small businesses that cannot meet their payrolls. These loans provide up to two months of salary support and assistance with mortgage, rent, and utilities to help businesses retain and pay their employees.

But the SBA's interim final rule (PDF) excludes household employers. In 2019, there were about 250,000 private households in the United States registered as employers, with about 280,000 employees covered by state unemployment insurance programs.

These are the household employers who are following the IRS' tax regulations (PDF), treating their workers as household employees and covering payroll taxes so that their employees are eligible for unemployment insurance and other benefits. The SBA rule indicates that these employers do not meet the definition of a business under PPP—although, under the Families First Coronavirus Response Act they are required to provide additional paid sick time off and family and medical leave to their employees.

This exclusion creates two potential challenges. First, many household employers may lay off their employees—either because they no longer need their services, or because they are concerned about the risk of virus transmission. And while these employees would likely qualify for expanded unemployment insurance under the CARES Act, this would increase the burden on state unemployment systems, which have been unable to handle the 16 million new claims (PDF) during the past three weeks.

Read the full article about protecting household employers by Shanthi Nataraj and Krishna B. Kumar at RAND.