General News

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.

In our latest Town Hall meeting, we hosted two experts – Matt Hatfield, CPA with the Lohman Company, and Dennis Hall – to discuss the latest news regarding the CARES Act, PPP loans, and preparing to reopen the economy.

CARES Act, PPP and Preparing to Reopen from RedPla.net

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

1. USC = US Chamber of Commerce.
   1. Coronavirus Small Business Guide
   2. Coronavirus Aid, Relief, and Economic Security Act: What Small Businesses Need to Know
   3. 10 Commonly Asked Coronavirus Small Business Loan Questions
2. SBA = Small Business Association
   1. Disaster Loan Applications
3. DOL = Department of Labor
   1. COVID-19 and the American Workplace
   2. COVID-19 and the Family and Medical Leave Act Questions and Answers
   3. Families First Coronavirus Response Act: Questions and Answers
4. IRS = Internal Revenue Service
   1. COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs
   2. HIGH DEDUCTIBLE HEALTH PLANS AND EXPENSES RELATED TO COVID-19
   3. Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic
5. Tres = US Treasury
   1. Paycheck Protection Program (PPP) Information Sheet.
6. CMS = Centers for Medicare and Medicaid Services
7. EEOC = Equal Employment Opportunity Commission
   1. PANDEMIC PREPAREDNESS IN THE WORKPLACE AND THE AMERICANS WITH DISABILITIES ACT
8. WHO = World Health Organization
   1. Coronavirus disease (COVID-19) Pandemic
9. CDC = Centers for Disease Control and Prevention 
   1. Coronavirus (COVID-19)
10. Arizona
    1. Governor Doug Ducey
    2. AZDHS

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:

1. 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.
2. Not bar individuals from participating based on a health factor, including disability.
3. 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.
4. If sponsored by an employer with 15 or more employees, offer reasonable accommodations that allow employees with disabilities to participate.
5. 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.
6. 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:

1. Not bar individuals from participating based on a health factor, including disability.
2. 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.
3. Offer a reasonable alternative standard to individuals who, due to a medical condition, are unable to satisfy the standard necessary to obtain the reward.
4. Distribute a Wellness Program Disclosure in all plan materials that describe the program. Click here to download a model Wellness Program Disclosure.
5. 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.
6. If sponsored by an employer with 15 or more employees, offer reasonable accommodations that allow employees with disabilities to participate.
7. 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.
8. 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:

1. Not bar individuals from participating based on a health factor, including disability.
2. 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.
3. Offer a reasonable alternative standard to individuals who do not meet the program’s initial standard based on a measurement, test, or screening.
4. 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.
5. 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.
6. 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.
7. If sponsored by an employer with 15 or more employees, offer reasonable accommodations that allow employees with disabilities to participate.
8. 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.

Peter and his “guest” discuss new data and privacy protection regulations affective small and mid-sized businesses. 

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.

Brandon discusses how maxing out the annual 401k contribution limit will actually net you more in net income distributions in retirement when compared with a traditional deductible 401k max contribution.

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.

This week on our weekly Money Radio (105.3 fm) segment Peter & Brandon Discussed QACA, the Qualified Automatic Contribution Arrangement a less commonly used type of Safe Harbor 401k plan. Which in some cases could be a better match formula and/or discretionary contribution than the older and more well know safe harbor match/contribution options.

1. A Third Safe Harbor Option, the QACA
   1. The QACA is a newer type of safe harbor 401(k) plan. Unlike the others, It includes a requirement for the plan to have an automatic enrollment feature. These work by automatically enrolling any eligible employee into the 401k on a certain date, without the need for them to actively enroll in the plan themselves.
2. QACA Match plans include the following special rules:
   • The QACA safe harbor matching contribution formula is a 100% match on the first 1% of compensation deferred and a 50% match on deferrals between 1% and 6% (3.5% total).
   • The plan’s default auto-deferral rate must start at no less than 3% and increase at least 1% annually to no less than 6% (with a maximum of 10%).
   • QACA safe harbor contributions can be subject to up to a 2 year cliff vesting schedule
3. There is also a nonelective QACA. It states:
   • • The nonelective QACA has a contribution of 3% to all participants, including those who choose not to contribute any amount to the plan.
     • QACA nonelective 3% contributions can also be subject to up to a 2 year cliff vesting schedule
     • Nonelective contributions can also be used to help satisfy Profit Sharing cross-testing. Fulfilling the minimum gateway for 9% profit sharing contributions to owners or other key groups as well as getting a pass for the plan’s nondiscrimination tests.

For more information on if a QACA safe-harbor plan may be appropriate for your company please contact Arcwood or your plan administrator.

This week on our weekly Money Radio (105.3 fm) segment Peter Rowe discussed the changes that are being implemented 1/1/2020 to allow business to use ICHRA, Individual Converge health Reimbursement Arrangements again. These can be a valuable tool for small businesses to offer their employees. Allowing them to make tax deductible contributions that their employees can use to buy their own policy’s on the individual market VS needing to offer full group plan. Peter also discussed their uses for larger employees looking to supplement the existing plans.