April 3, 2020 COVID-19 FFCRA & CARES What it Means for - - PowerPoint PPT Presentation

April 3, 2020

April 3, 2020

COVID-19 – FFCRA & CARES

What it Means for Employers and Your People

Hi High ghli ligh ghts o s of F FFCRA CRA

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• Effective: ~April 1, 2020. Expires: December 31, 2020.
• Emergency Paid Sick Leave
• Expanded paid FMLA leave for parents
• Covers employers with fewer than 500 employees
• Payroll tax credits available
• Exemptions available for small employers

April 3, 2020

Emergency Paid Sick Leave

Emergency Paid Sick Leave

• Paid Sick Leave
• Covers Employees unable to work– or telework– for specific

reasons related to COVID-19

• Requires Employers to Pay Two Weeks
• FTE: 80 hours total
• PTE: Ave. # hours worked in 2 weeks
• Can be used Intermittently with employer’s permission

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COVID-19-Related Reasons for Paid Sick Leave

1.

A governmental quarantine or isolation order related to COVID-19.

2.

Advice from a health care provider to self-quarantine due to concerns related to COVID-19.

3.

Experiencing symptoms of coronavirus and seeking a medical diagnosis. ______

4.

Caring for an individual under

• A quarantine or isolation order OR
• Has been advised by a health care provider to self-quarantine.

5.

Caring for a son or daughter if school or child care has been closed or is unavailable.*

6.

Another substantially similar condition specified by HHS.**

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Limits on Required Paid Sick Leave

• For Reasons #1 to #3,
• Entitled to full pay
• Not required to exceed $511 per day (or $5,110 total)
• For Reasons #4 and #5 (care of others)
• Entitled to 2/3 of their regular rate of pay
• Not required to exceed $200 per day (or $2,000 total)

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Emergency Paid Sick Leave

• Special Notes
• Does Reason #1 (quarantine or isolation order) include the

state Stay-at-Home or Shelter in Place Orders?

• Reason #5 (Child school and care) overlaps with the expansion
• f FMLA leave
• Employers may exclude health care providers or emergency

responders

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Use of Leave & Employee Notice

• Available to all employees
• May not require employees to use other PTO first
• Must Notify Employees
• Must document requests for leave
• Written or oral requests are acceptable

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April 3, 2020

Amendment to FMLA

Emergency Family Medical Leave Expansion

• Temporarily amends FMLA
• Includes employers with 1-499 employees
• Eligible employees need only have worked 30 days
• Requires employers to provide 12 weeks
• 10 weeks PAID
• 2 weeks unpaid (overlap with paid sick leave)
• Employees “unable to work (or telework) due to a need for

leave to care for” a child whose school or daycare is closed for COVID-19-related reasons.

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Reinstatement Rights for Employees

• Restoration to Prior Position
• Normal Rules Apply
• No protection from actions that would have taken place

regardless of the leave

• “Key” employees have fewer protections
• Highest paid 10%
• Can deny, if restoration would cause “substantial and grievous injury”

to operations

• Additional Conditions for Small Employers (<25 employees)
• Employee took FMLA to care for child
• Position no longer exists because of conditions during leave
• Employer made reasonable efforts to restore employee
• Employer made reasonable efforts for 1 year to contact employee

if equivalent position becomes available

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Small Business Exceptions

• Exemption for Employers with < 50 employees if the requirement to

provide leave would jeopardize the viability of the business.

• DOL Regulation 29 CFR § 836.40(b)
• Employer is EXEMPT if an authorized officer of the business has

determined that paid leave

• Would result excessive financial obligations, causing it to cease
• perating at minimal capacity;
• Employees’ absence would entail a “substantial risk to financial health
• r operational capabilities”
• Not sufficient available employees to perform the work performed by

those requesting leave

• Enforcement Limitations §826.251(b)
• An employee may not sue an employer under the eFMLA if the

employer is not otherwise subject to the FMLA.

• Employers may still be investigated, fined and sued by the DOL.

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Payroll Tax Credits for Employers

• Full Amount of Paid Leave (Sick Leave and FMLA leave)
• Credited against employer’s portion of Social Security and

Medicare taxes

• Maximum of $511/day for employee’s own conditions
• Maximum of $200/ day for an employee’s care for another
• (includes paid sick leave and paid FMLA leave)
• Credit also available to offset a portion of health insurance

plan costs offered during the paid leave

• IRS has issued preliminary guidance to allow expedited tax

credits

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Stay-at-Home Executive Orders

• Impact of State Stay-at-Home Orders
• Many prohibit in-person work unless for “essential infrastructure,” an

“essential business,” or to conduct “minimum basic operations.”

• Some prohibit in-person work “not necessary to sustain or protect life or to

conduct minimum basic operations.”

• See Cybersecurity & Infrastructure Security Agency Guidance
• www.cisa.gov
• Evaluate on case-by-case basis
• May Need Authorization Letters for Some Employees
• Other Measures for Ongoing Operations
• Social Distancing and Safety Measures
• Encourage sick employees to remain home
• Increased cleaning and disinfection

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April 3, 2020

CARES ACT

CARES Act

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Cononavirus Aid, Relief, and Economic Security Act (CARES Act)

• $2 Trillion allocated for businesses, individuals, federal

agencies and state and local governments

• There are tax credits, deferral payments, and loans available.

Key Provisions of CARES Act

• Small Business Paycheck Protection Program
• SBA Loans to business with <500 employees
• Goals: Maintain employment and businesses
• Exchange Stabilization Fund
• Department of Treasury-administered
• $50 Billion in loans to businesses important to national security
• $450 Billion in emergency loans for general businesses
• Expanded Unemployment Insurance Benefits
• $600 Supplemental benefit until July 31, 2020
• Access to benefits due to COVID-19
• Access to Retirement Benefits
• Allows individuals ability to withdraw up to $100,000 from

401(k) without penalties

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SBA Loans – Paycheck Protection Program

• Paycheck Protection Program (PPP)
• Who can apply?
• All businesses – including non-profits, veterans organizations, Tribal businesses,

sole proprietorships, self-employed individuals, and independent contractors

• Less than 500 employees – certain industries can have more
• Application done only through SBA approved lenders (not direct)
• Consult with legal counsel or advisor for eligibility
• Funds can be used for:
• Payroll costs, including benefits;
• Interest on mortgage obligations incurred before 2/15/20;
• Rent, under lease agreements in force before 2/15/20;
• Utilities, for which service began before 2/15/20
• Loan Amount: up to two months of average payroll costs (defined on next

slide) from the last year plus an additional 25% of that amount (250%), capped at $10 million.

• Loan payments deferred for six months
• Term: 2 years on any portion not forgiven
• Interest Rate: 1.00%
• Unsecured – no collateral requirement
• 100% SBA guarantee

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SBA Loans – PPP cont.

Payroll Costs Includes:

• Salary, wages, commissions, or similar compensation (capped at

$100,000 on an annualized basis for each employee)

• Payments of cash tips or the equivalent
• Payment for vacation, parental, family, medical or sick leave
• Allowance for dismissal or separation
• Group health care benefits “including insurance premiums”
• Payment of retirement benefits
• Payment of state or local tax assessed on the employee

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SBA Loans – Loan Forgiveness

• Loan Forgiveness
• The loan amounts will be forgiven as long as:
• Loan proceeds are used to cover payroll costs, and most mortgage interest,

rent and utility costs over the 8 week period after the loan is made; and

• Employee and compensation levels are maintained.
• Number of Staff: Loan forgiveness will be reduced if you decrease your full-

time employee headcount

• Level of Payroll: Loan forgiveness will be reduced if you decrease salaries and

wages by more than 25% for any employee making less than $100,000 annualized in 2019.

• Re-Hiring: You have until June 30, 2020 to restore your full-time employment

and salary levels for any changes made between February 15, 2020 and April 26, 2020.

• Request for loan forgiveness to be provided to lender servicing the
• loan. Request to include documentation verifying number of full-time

employees and pay rates, as well as payments on mortgages, lease, and utility obligations.

• Lender must make decision on forgiveness within 60 days.

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SBA Loans – Economic Injury Disaster Loan

• Economic Injury Disaster Loan program (EIDL) was signed

into law March 6th as part of Phase I of CARES Act.

• EID Loan program provides up to a $2 million working capital

loan for small businesses suffering from substantial economic injury as a result of COVID-19

• Terms of loans:
• Interest rate of 3.75% for small businesses and 2.75% for

private non-profits

• Loans over $25,000 require collateral including real estate –

SBA can waive collateral requirement on a case by case basis.

• Personal guarantees from owners who own > 20% of the

company for loans over $200,000 – SBA may waive

• New loan cannot be consolidated with any existing SBA loan

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SBA Loans – EIDL cont.

• Eligibility requirements similar to PPP – consult with legal

counsel or advisor

• Loans are amortized over a 30 year time period
• No loan forgiveness offered through EIDL program
• Payments of principal, interest, and fees are automatically

deferred for six to 12 months

• Application is direct through the SBA’s online portal – not

provided through lenders like PPP

• Loan advance of up to $10,000 is provided within 3 days of a

successful application – this loan advance will not have to be repaid!

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SBA Loans

What We Are Providing Our Clients:

• Tax detail reports
• Will include gross wages and benefit payments
• 941 summary report (if your lender requires one)
• ASO clients get an actual 941
• Certification from us that the reports are complete and

accurate.

• Specific requirements dependent on individual lender

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Tax Credits Tax credit and deferral options

• Deferral of employer social security tax payments
• Payroll Employee retention tax credit for employer

CREDIT AND DEFERRAL ARE UNAVAILABLE IF THE EMPLOYER RECEIVES A LOAN UNDER THE NEW SBA PAYCHECK PROTECTION PROGRAM

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Deferral of Payment Deferral of Payment of Social Security Taxes (Employer Portion Only)

• Payments can be deferred
• 50% due 12/31/2021
• 50% due 12/31/2022
• Client has sole liability for payment
• Pending Treasury final direction of the deferrals
• Deferral option not available if taxpayer has had

indebtedness forgiven under new SBA loan forgiveness provisions

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Tax Credit Employer Tax Credit for Employee Retention Related to COVID-19

• Credit is available to any employer:
• Whose operations are fully or partially suspended under

government orders due to COVID-19, or

• That had a decline of at least 50% in gross receipts as compared

to the same calendar quarter in the prior year

• Amount of credit : 50% of “qualified wages” with respect to

each employee for the quarter

• What does “Qualified wages” mean?

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Tax Credit Employer Tax Credit for Employee Retention Related to COVID-19

• Credit is taken against employer portion of Social Security taxes
• Excess is refunded
• No double benefit with:
• Work opportunity credit
• Employer credit for paid family and medical leave
• Credit not available if taxpayer has had indebtedness

forgiven under new SBA loan forgiveness provisions

• Pending Treasury final direction of the deferrals

Other Things To Consider For Your Employees

• Frequent and transparent communication with your team

about the state of your business

• EAP assistance
• Grief counseling if needed
• Checking into your Short-Term Disability benefit offering
• If you are PEO Client of EmPower’s, notably and uniquely, our

Guardian plan also has a quarantine benefit. This is not typical in the market and we’ve found that very few carriers are including this in their STD benefits. At a high level, if a person who has contracted or been exposed to a person with a highly transmittable disease or virus is ordered by their doctor to be quarantined, they may qualify for STD.

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Future Things To Consider

• Will temporary reductions in force need to be permanent?
• Workforce planning moving forward
• How to assess talent pool when your business has pivoted
• How to reengage your workforce
• What happens if the talent I laid off does not return?
• Compliance considerations around layoffs and leave

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Thank You to Our Partners

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BMO Harris Bank, N.A.

Evan S. Kirkstein Vice President Commercial Banking Evan.kirkstein@bmo.com T (414) 765-7647 M (414) 916-1810

Barnes & Thornburg

Jeanine M. Gozdecki Partner jeanine.gozdecki@btlaw.com T (574) 237-1277 M (574) 286-9357

April 3, 2020

Thank You for Attending

If we haven’t answered your question we will follow up with you Please submit any additional questions to hrquestions@empowerhr.com We encourage you to lean on your EmPower HR Business Partners for additional guidance