Blog
Tax Credits and PPP Updates – as of May 4, 2020
Matt Hatfield, CPA, rejoins us to discuss this week’s news related to the CARES Act / Paycheck Protection Program (PPP), tax credits and other financial matters in response to COVID-19 lockdowns.
Have a specific question for us? Shoot us an email at info@arcwood.com.
Ready to Reopen? Make sure you know the new rules.
As states, including Arizona, begin to reopen after COVID-19 shutdowns, what’s the process for reopening? What are the new safety and sanitation regulations? Dennis Hall and Diana Durham present guidance for small business owners and human resource managers.
Have a specific question for us? Shoot us an email at info@arcwood.com.
CARES Act, PPP and Preparing to Reopen
The CARES Act: Webinar, Q&A and Additional Resources
We recently hosted a webinar regarding the newly passed CARES Act. As a resource to our clients and community, we’ve made the webinar public, as well as the questions and answers we’ve received on this subject.
We will continue to do our best to pass on and disseminate general information to our community. If you have a general question related to the CARES Act you’d like us to answer on this post, please email us at info@arcwood.com.
If you feel your question is asking for a specific opinion for your company or organization, please email Peter Rowe or Diana Durham directly and we can determine if it may be necessary to have a specific engagement for research and an opinion.
Questions Asked & Answered
What is the proof an employer can reasonably request regarding an employee’s election to stay home to take care of their kids? Is proof required?
Per the DOL, if an employer intends to claim the tax credit for either the Paid Sick Leave or Paid FML leave, then they need to retain appropriate documentation for their records. Examples of notifications include: Dr’s note showing you or someone you are caring for has been tested or has COVID-19, notice that has been posted on a government, school, or daycare website, published in a newspaper or an email from an employee or official of the school or child care provider.
Can the employee continue to accrue leave while using Emergency Leave?
Just as an employee would not accrue sick or vacation time while out on any other leave, they would not be entitled to accrue leave during Emergency Leave since the employee isn’t actively working.
If we need to cut salaries to help cashflow, will this affect the eligibility CARES SBA Loan? Even if it’s for the month of April, 1 month?
It doesn’t seem to impact eligibility, just the forgiveness under the Paycheck Protection Program. Please review the PPP Information Sheet.
Do we submit the payroll amount for the 12 month period prior to the loan date?
We are hearing from our banker relationships to be ready with this data, possible the 941’s. We are also understanding the banks are assisting existing customers first, they will have the best information for you.
Can an employer require employees to telework 40 hours week, but reduce their pay? Any differences between Salary Exempt employees and Hourly employees?
An employer can reduce the wages of an employee, however, there are a couple of things to consider. For hourly employees, wages can’t be reduced below federal/state minimum wage (whichever is higher). Hourly employees should continue to clock in/out as they would if they were working in the office. For salaried employees, wages can’t be reduced below FLSA salary threshold ($35,568 annually). Salaried employees must be paid their entire weekly wage regardless of the number of hours they work.
Are the health care workers and health care offices exempt from this Emergency FMLA thing?
Per the DOL guidelines, a health care provider is anyone employed at a doctor’s office, hospital, health care center, clinic, post-secondary educational institution offer health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home. home health care provider, any facility that performs lab or medical testing, pharmacy, or any similar institution, employer, or entity.
How do you defer social security and other payroll taxes?
Eligible Employers will report their total qualified leave wages and the related credits for each quarter on their federal employment tax returns, usually Form 941, Employer’s Quarterly Federal Tax Return. Form 941 is used to report income and social security and Medicare taxes withheld by the employer from employee wages, as well as the employer’s portion of social security and Medicare tax.
Please review the included link for the IRS Tax Credits for Required Leave.
Who provides the posters that we have to put up?
The Department of Labor publishes these posters in both English and Spanish.
For employees that can work remotely – is the only way that they could qualify for the Emergency Paid Sick Leave/Family Leave is if they are sick themselves?
Per the DOL guidelines – An employee is unable to work and eligible for leave if the employer has work for you and one of the COVID-19 qualifying reasons prevents you from being able to perform that work, either under normal circumstances at your normal worksite or by means of telework.
If an employer allows for work outside of normal business hours, then you are able to work and leave is not necessary unless a COVID-19 reason prevents you from working that schedule.
Employees may be eligible for intermittent Paid Family Leave if an employer allows it and an employee is unable to telework a normal schedule of hours due to your child being home from school or without childcare.
Can employees defer their DCFSA contributions if their child’s care facility is closed?
Yes, this is a qualifying event as the billable rate has been changed to 0. Similar to summer recess.
If we did not furlough employees OR continue to pay them to stay home, or if a seasonal employee gets sick from the virus – Does the employer have to continue to pay the seasonal employee X under FMLA after their normal end of season employment given the following?
If an employee is working, whether at your office or teleworking, then they are eligible for paid sick leave and/or paid family leave if they have a qualifying COVID-19 reason. If an employee (this includes full-time, part-time, and temporary) is working, then they are eligible starting 4/1 for paid sick leave. If they have been an employee for 30 days or more, then they are also eligible for paid family leave.
Follow-up question on seasonal employees. If an employer furloughs or lays off an employee on or after 4/1, then the employee is not eligible for either paid leave effective the date the employee is no longer working.
Follow-up question if a seasonal employee is normally laid off of work on April 30th. If an employee is on a paid leave when an employer closes the worksite, the employer must pay the paid leave through the date of closure. Once the worksite is closed, an employee is no longer eligible for paid leave since they are no longer working.
Additional Resources
- USC = US Chamber of Commerce.
- SBA = Small Business Association
- DOL = Department of Labor
- IRS = Internal Revenue Service
- Tres = US Treasury
- CMS = Centers for Medicare and Medicaid Services
- EEOC = Equal Employment Opportunity Commission
- WHO = World Health Organization
- CDC = Centers for Disease Control and Prevention
- Arizona
Coronavirus implications for employers
The outbreak of COVID-19 is impacting nearly every facet of daily life and business in unprecedented ways. So how should employers proceed with such uncertainty? Diana Durham, President of Arcwood HR, shares her perspective on next steps for employers, and some potential legislative action being considered from Washington.
Wellness Programs
Wellness programs are generally health promotion and disease prevention programs and activities offered to employees as part of an employer-sponsored group health plan. There are three main types of wellness programs:
- Participatory wellness programs, which are generally available without regard to an individual’s health status and do not offer any reward based on satisfying a health-related standard.
- Activity-only wellness programs, which require an individual to perform or complete a health-related activity to obtain a reward.
- Outcome-based wellness programs, which require an individual to attain or maintain a specific health outcome in order to obtain a reward.
Wellness programs are subject to certain federal requirements. General compliance information for these different types of wellness programs appears below.
Participatory Wellness Programs
Participatory wellness programs offered as part of a group health plan generally must:
- Be made available to all “similarly situated individuals.” However, the following employees can be treated as different groups of similarly situated individuals: part-time and full-time employees, employees working in different geographic locations, and employees with different dates of hire or lengths of service.
- Not bar individuals from participating based on a health factor, including disability.
- In accordance with HIPAA, generally protect from disclosure any individually identifiable health information collected from or created about participants in the program. Click here for more information.
- If sponsored by an employer with 15 or more employees, offer reasonable accommodations that allow employees with disabilities to participate.
- If collecting employee health information and sponsored by an employer with 15 or more employees, distribute an ADA Notice Regarding Wellness Program to all individuals eligible to participate. Click here for a sample ADA Notice Regarding Wellness Program.
- If sponsored by an employer with 15 or more employees, ensure that the employer does not receive any information about program participants except where necessary for plan administration.
Activity-Only Wellness Programs
Activity-only wellness programs offered as part of a group health plan generally must:
- Not bar individuals from participating based on a health factor, including disability.
- Allow participants to obtain a reward at least once per year, and generally limit such rewards to 30% of the cost of coverage under the health plan for the employee and his or her dependents.
- Offer a reasonable alternative standard to individuals who, due to a medical condition, are unable to satisfy the standard necessary to obtain the reward.
- Distribute a Wellness Program Disclosure in all plan materials that describe the program. Click here to download a model Wellness Program Disclosure.
- In accordance with HIPAA, generally protect from disclosure any individually identifiable health information collected from or created about participants in the wellness program. Click here for more information.
- If sponsored by an employer with 15 or more employees, offer reasonable accommodations that allow employees with disabilities to participate.
- If collecting employee health information and sponsored by an employer with 15 or more employees, distribute an ADA Notice Regarding Wellness Program to all individuals eligible to participate. Click here for a sample ADA Notice Regarding Wellness Program.
- If sponsored by an employer with 15 or more employees, ensure that the employer does not receive any information about program participants except where necessary for plan administration.
Outcome-Based Wellness Programs
Outcome-based wellness programs offered as part of a group health plan generally must:
- Not bar individuals from participating based on a health factor, including disability.
- Allow participants to obtain a reward at least once per year, and generally limit such rewards to 30% of the cost of coverage under the health plan for the employee and his or her dependents.
- Offer a reasonable alternative standard to individuals who do not meet the program’s initial standard based on a measurement, test, or screening.
- Distribute a Wellness Program Disclosure in all plan materials that describe the program. This notice must also be furnished to any individual that fails to satisfy an outcome-based standard necessary to obtain a reward. Click here to download a model Wellness Program Disclosure.
- In accordance with HIPAA, generally protect from disclosure any individually identifiable health information collected from or created about participants in the wellness program. Click here for more information.
- If collecting employee health information and sponsored by an employer with 15 or more employees, distribute an ADA Notice Regarding Wellness Program to all individuals eligible to participate. Click here for a sample ADA Notice Regarding Wellness Program.
- If sponsored by an employer with 15 or more employees, offer reasonable accommodations that allow employees with disabilities to participate.
- If sponsored by an employer with 15 or more employees, ensure that the employer does not receive any information about program participants except where necessary for plan administration.
Impact of the new SECURE Act regulations
Brandon and his guest, Shawn Parker, from MGKS discuss some of the initial implications and opportunities found in the “Setting Every Community Up for Retirement Enhancement Act” of 2019, better known as the SECURE Act, which was just approved by the Senate on Dec.19, 2019.
The new year brings 21 new state minimum wages
The new year will ring in minimum wage increases in 21 states, with 4 more states and the District of Columbia implementing increases later in 2020. The highest minimum wage in 2020 will be $15.00 in Washington, D.C., effective July 1, 2020.
Paycor research found that 42% of surveyed organizations have negative feelings about their compliance management practices, in part because of limited resources and frequent changes to laws relating to minimum wage, paid sick leaves and pay equity laws.
The federal minimum wage for nonexempt employees remains at $7.25 per hour but if a state or local law requires a higher amount, employees must be paid at the higher rate. Arizona’s minimum wage rate is $12.00 for 2020.
It’s important for employers to stay on top of changes to minimum wage laws, as well as other wage and hour topics. Noncompliance can be costly – Employers paid a record $322 million in fiscal year 2019 to resolve wage and hour claims brought by the U.S. Department of Labor’s Wage and Hour Division (WHD).
WHD provides various online compliance resources for employers. It also launched a voluntary Payroll Audit Independent Determination (PAID) program, allowing employers to proactively investigate and correct overtime and minimum wage violations. Experts disagree on whether it’s a good idea for employers to participate, but the program is picking up steam. So far, more than six dozen employers have paid out more than $4 million in back wages to almost 7,500 employees via the PAID program.
Employers’ best defense to wage and hour claims remains a good offense. Overtime mistakes, improper misclassification and auto-deduct policies are frequent trouble spots. Employers can stay off WHD’s radar by keeping up with applicable federal, state and local laws, and by training front-line supervisors on compliant timekeeping policies and procedures.
Let Arcwood HR help you manage your wage and hour compliance. Contact us today to see how we can assist you in managing your employees and the ever changing employment laws.