ERC - Employee Retention Credit of the CARES Act

The Employee Retention Credit (ERC) is intended to help businesses maintain payroll if they close or reduce hours due to emergency public health orders or experience a significant revenue loss.

NOTE: ERC is one payroll assistance option under the CARES Act. You cannot use the ERC if you have a Paycheck Protection Program (PPP) or an Economic Injury Disaster Loan (EIDL) or Grant.

In general, the ERC is a refundable payroll tax credit for 50% of qualified wages paid during the COVID-19 pandemic (capped at $5,000 credit per employee). Note: We are waiting for implementation guidelines and clarification from the IRS on how the ERC will be calculated and documented. Please check this page for updates.

Who is eligible for ERC?

Employers that conducted business during the 2020 calendar year, including tax-exempt organizations, are eligible for ERC if they meet the following criteria:

  • Operations have been fully or partially suspended due to government order; or
  • Gross receipts declined by more than 50% compared to the same quarter the previous year;
  • And do not have a PPP Loan or EIDL

Note: Self-employed individuals and governmental employers are not eligible for ERC.

How does ERC work with FFCRA emergency paid leave?

Wages paid under FFCRA emergency paid leave do not count toward ERC and will reduce the credit.

Can I claim ERC if I have a Paycheck Protection (PPP) Loan or Economic Injury Disaster Loan (EIDL)?

No, ERC cannot be used if you have a PPP Loan and/or EIDL. You may only choose one payroll assistance option under the CARES Act.


Disclaimer: This information is provided as a self-help tool and does not constitute legal or financial advice. Laws, regulations and lending products are changing daily and decisions as to whether or how to use this information and/or what actions to take in response to the COVID19 Pandemic are solely those of the employer. The providers of this information disclaim any and all responsibility and liability for its accuracy, completeness or fitness for your particular business purposes.

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