Our general counsel, Jeff King, working with Lobbyit, has been responding to Member questions about the recent legislation passed in response to the Coronavirus crisis. We have compiled the most common questions and answers below. This page will continue to grow. Please check back often.
Once the Families First Coronavirus Response Act (FFCRA) takes effect on April 1, 2020, you are given a tax credit for any paid sick leave that is a result of one of the reasons in the law, which includes a quarantine order. An employer can simply retain, as their FFCRA credit, otherwise-owed payroll taxes up to an amount equal to the costs they incurred in providing FFCRA leave up to the mandated caps. If retention of payroll taxes is insufficient to cover the costs of FFCRA leave, is entitled to a refund of the remaining amount. Under the law yesterday, “employers can seek an expedited advance from the IRS by submitting a streamlined claim form” The form should be released shortly.
According, the requirement to provide paid sick leave is not in effect yet, so there is no credit yet due. Any sick leave that you provide as part of company’s PTO policies is not covered by the law. Rather, the required sick leave is imposed under the FFCRA is in addition to PTO. Once the law becomes effective, you keep the payroll tax amount and apply for payment for any amount not covered.
There is no simple answer to your questions. I do not believe that the fact that one of the parents work from home necessarily means the family leave pay is not required. The act requires the 10 weeks of family leave if the employee is unable to work because a he or she need to care for a "son or daughter under 18 years of age [because] ... the school or place of care has been closed, or the child care provider of such son or daughter is unavailable.” A child care is defined as "a provider who receives compensation for providing child care services …” School is defined as "'elementary school’ or ‘secondary school’”. Accordingly, if a child’s preschool closes, that does not call into play the required pay leave.
Based on these provisions, the fact that the husband works from home would not be sufficient to avoid paying for the ten weeks of family leave. If, on the other, the husband takes care of other children who are not in school, you may have an argument that no leave is required.
On a side note, an employer will need to pay the employee two weeks of paid sick leave, followed by the 10 weeks of paid family leave.
UPDATE: The Department of Labor issued temporary rules implementing the paid sick and family leave that may impact your situation.
- The temporary rules provide that “generally, an employee does not need to take such leave if another suitable individual— such as a co-parent, co-guardian, or the usual childcare provider—is available to provide the care the employee’s child needs.” Accordingly, it there is a husband is at home, then the employer may not be required to provide the pay leave.
Under these new rules, the paid sick leave is required only if the employee is unable to work because of the quarantine order (or one of the other 4 reasons) AND you have work for the employee. If you do not have work because business is slow or because your store is also shut down under the quarantine order, then you are not required to pay the employee the 2 weeks of sick leave. Only if your store is BOTH open and have work for the quarantine employer must you provide the 2 weeks paid sick leave. The same rule applies to the family leave. The paid leave is required only if the employer has work for the employee.
These programs and new laws are confusing. There are two new laws that impact small businesses: The Families First Coronavirus Response Act (FFCRA) enacted 11 days ago, and the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was signed into law Friday.
FFCRA: I explained in my earlier email that the FFCRA was designed to require employers to pay sick and family leave to employees that were set home because of specified circumstances, including a quarantine order, experiencing symptoms of coronavirus, or school closings. To offset these costs, FFCRA provides employers with a tax credit. Employers may simply retain, as their FFCRA credit, otherwise-owed payroll taxes up to an amount equal to the costs they incurred in providing FFCRA leave up to the mandated caps. If retention of payroll taxes is insufficient to cover the costs of FFCRA leave, “employers can seek an expedited advance from the IRS by submitting a streamlined claim form” The form should be released shortly.
CARES ACT: The CARES Act establishes two different loans that were established as part of the First, the Act creates a payroll loan from the Small Business Act (SBA) for a small business like yours. The loan must be used to pay the following business expenses: payroll costs (that include pay under $100,000 per person, health insurance premiums, paid leave and state and local taxes); interest on mortgage obligations (not to include any principal); rent; utilities; and interest on any other debt obligations incurred prior to February 15, 2020. Companies can borrow up to 2.5 times the average monthly “payroll” costs incurred in the prior year. The loans are designed to be entirely forgivable in most cases. Please note, that these loans cannot be used to pay for the required sick and family leave wages covered by FFCRA. These costs are already covered by tax credits under FFCRA.
Second, the CARES Act expands the SBA’s existing Emergency Economic Injury Disaster Loan (EIDL) grant program. under the expanded EIDL program, borrowers can access an immediate $10,000 grant to be paid within 3 days of applying for the loan. The grant funds do not have to be paid back to the SBA if the EIDL loan application is denied. However, if you get the emergency loan, it may reduce the amount that will be forgiven under the payroll loan program.
You can call your local SBA office or your local bank to see about apply for these loans.
Member Example: I have not been able to locate an application for that program. The last payroll to be paid will be on the 30th of this month, then not again until the 15th of April. Two of my employees are salary plus commission, the other are all hourly. I have 9 employees.
Answer:
You can furlough your employees and advise them to file for unemployment. If you furlough them by March 31, you will not be required to provide the 2 weeks of paid sick leave and the 10 weeks of paid family leave under the Families First Coronavirus Response Act (FFCRA). The leave has to be provided in certain circumstances, including a quarantine order, employee has symptoms of coronavirus, and school closings. You can access the alert on WFCA’s website (wfca.org). According to the Department of Labor, the FFCRA becomes effective April 1, 2020. If employees are furloughed or let go by before that date, then the Act does not apply, and you will not be obligated to provide the pay leave under the federal law.
Furloughing all employees will impact the new Small Business Administration payroll loans, especially how much will be forgiven. More on these loans can be accessed in The Coronavirus Response Resource Center.
To qualify for a payroll loan, you must certify among other things, "that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments.” I believe you can qualify for a loan if you retain at least one employee, and that employee can be you if you are legitimately an employee and are normally paid a salary.
Keeping just one employee will impact how much of the loan is eligible to be forgiven. To calculate the amount that can be forgiven you take the average number of employees in the prior year by the number of employees paid during the eight weeks the loan is used. For example, assume you have 10 employees whose payroll costs were $600,000 over the past year. The monthly average would be $50,000, making you edible for a loan of $250,000 ($50,000 x 2.5). If you only retained one employee out of the ten, only 1/10th of the loan would be forgiven, that is $25,000. The remaining amount would be rolled into a ten- year loan or whatever term is ultimately agreed upon.
I did want to clarify one other issue. As indicated, if an employee is sent home before April 1, 2020, the paid sick and family leave requirement in the FFCRA do not apply. I wanted you to be aware, however, if furloughed or terminated an employee after March 1, 2020 and then rehire him or her, the obligations for paid leave come back in effect. This prevents an employer to avoid the FFCRA’s paid leave mandate by terminating an employee before the effective date of the FFCRA and then immediately rehiring the.
UPDATE: The Small Business Administration (SBA) has issued draft rules on the payroll loans. According to the rules:
- A business must use 75% of the loan for payroll costs to be eligible for 100% of the principle of the loan to be forgiven.
- In those rules, the SBA stated that the loans had to be used during the "8- week period beginning on the date of the origination of a covered loan” in order for the loan to be eligible to be forgiven
FOLLOW UP: Also, if an employee requests leave to stay home because their spouse is at high risk, but neither has the coronavirus, do we have to pay sick leave or paid leave for that? He has been out for a couple weeks now.
Answer:
Based on the fact you provided, you do not need to pay for any leave for several reasons.
First, self-quarantine does not qualify for paid sick or family leave under the new law, the Families First Coronavirus Response Act (FFCRA). To qualify for paid sick leave under the Act, the employee must be unable to work or telework because of one of 5 reasons related to COVID-19:
1. The employee is subject to a government-mandated quarantine or isolation order (100% of salary up to 511/day)
2. The employee has been advised by a health care provider to self-quarantine (100% of salary up to 511/day)
3. The employee is experiencing COVID-19 symptoms and seeking a medical diagnosis (100%of salary up to 511/day)
4. The employee is caring for an individual covered under reasons 1 or 2 above. (2/3rdof salary up to $200)
5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable due to COVID–19 precautions. (2/3rdof salary up to $200).
The 10 weeks of paid family leave is only required if the employee is not working because the employee is caring for their child because the school is closed or child care provider is unavailable due to the coronavirus. None of these allow an employee to just self-quarantine and collect the paid leave.
Second, the required paid leave applies only to an employee who was unable to work for one for the reasons cited above after March 31, 2020, the effective date of FFCRA. If the employee is rehired, then he or she would be eligible for the leave provided they became unable to work because of one of the reasons explained above.
FOLLOW UP: In Tennessee we will now be under a 2 week "safer at home" "strong recommendation" per the Governor. We currently compensate our salespeople for working in the showroom during operating hours plus commission. We are considering going to go to an appointment only showroom setting after today to comply with that recommendation. We feel as though we wouldn't be responsible for the showroom pay under this arrangement, if we kept them on as employees. Does that make sense to you, or are we setting ourselves up for a grievance situation?
Also, we are wondering if we should make them aware, they may be better off to draw unemployment than whatever commission they could earn on what is surely to be much less sales. Can you offer us some guidance there?
What are our responsibilities with regard to their insurance benefits if we chose to terminate them?
Answer:
Under the Families First Coronavirus Response Act (FFCRA) for an employee to qualify for paid sick leave under the Act, he or she must be unable to work or telework because of one of 5 reasons related to COVID-19:
1. The employee is subject to a government-mandated quarantine or isolation order (100% of salary up to 511/day)
2. The employee has been advised by a health care provider to self-quarantine (100% of salary up to 511/day)
3. The employee is experiencing COVID-19 symptoms and seeking a medical diagnosis (100%of salary up to 511/day)
4. The employee is caring for an individual covered under reasons 1 or 2 above. (2/3rdof salary up to $200)
5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable due to COVID–19 precautions. (2/3rdof salary up to $200).
I am not licensed in Tennessee and cannot give an opinion of its safer at home recommendation. With that said, it does not appear to be a government mandated quarantine or isolation order so laying off workers would not require you to pay for the 2 weeks of leave unless one of the other provisions apply. If you lay off the workers today, before the April 1 effective date of the law, then no sick pay would be due under the FFCRA. There may also be some obligations under Tennessee law that could impact you obligations.
As to your showroom employees, you can have them telework, but you must pay them for the hours worked from home.
Your employees that are laid off can apply for unemployment and may actually make more money, Their claims, however, could impact your unemployment rates next year. These are business and personal decisions that require you and your employees to assess.
The simple answer is maybe. Let me explain.
First, an employee is entitled to any paid time off (PTO) that your business provides. If you give 2 days of sick leave, and it has not been used, then you must still give the 2 days. If you provided not PTO, you are still required to provide it pursuant to the recently enacted Families First Coronavirus Response Act (FFCRA). The requirement under the FFCRA applies whether or not you had a PTO policy in place.
Second, the FFCRA requires 2 weeks of sick leave only if the employee is unable to work because of the quarantine order (or one of the other 4 reasons) AND you have work for the employee. If you do not have work because business is slow or because your store is also shut down under the quarantine order, then you are not required to pay the employee the 2 weeks of sick leave. Only if your store is BOTH open and have work for the quarantine employer must you provide the 2 weeks paid sick leave.
I know it’s a business tax deduction (100%?) later but could add up to a nice chunk of change to outlay in the here and now. Los Angeles has just been extended to May 15 for “Stay at Home”.
Answer:
I understand that all your employees are on leave and applying for unemployment benefits. This likely means that you do not need to provide paid sick or family leave under the FFCRA.
First, if you furlough or laid off your employees before April 1, you will not be required to provide the 2 weeks of paid sick leave and the 10 weeks of paid family leave under the FFCRA, unless you bring then back on before June 30, 2020 and then they qualify for sick or family leave.
Second, the leave has to be provided in certain circumstances, including a quarantine order, employee has symptoms of coronavirus, and school closings. They meet one of the qualifying events, you are not required to provide the employees with paid sick or family leave under the FFCRA.
Third, the FFCRA requires 2 weeks of sick leave only if the employee is unable to work because of the quarantine order (or one of the other 4 reasons) AND you have work for the employee. If you do not have work because business is slow or because your store is also shut down under the quarantine order, then you are not required to pay the employee the 2 weeks of sick leave. Only if your store is BOTH open and have work for the quarantine employer must you provide the 2 weeks paid sick leave. The same is true for the 10 weeks of family leave to care for a child. You are not required to provide the paid leave unless you have work for the employee. From what you explained, you do not have work for your employees and therefore you are not required to provide paid sick or family leave under the FFCRA.
Question:
We have been closed due to the LA County Public Health Order since 3/19 and possibly can re-open on 5/16. If that happens, I will likely bring everyone back, possibly with the exception of one salesperson who may get laid off at that point. Please clarify, if we are then to open and I bring them back to work, I then have to provide the 2 weeks sick leave. What is the point of that? They’re all likely going to collect UI until we re-open. Then they’re back on payroll, with hopefully some PPP money in the bank to help with the ramp up in business. Why am I paying upfront, out-of-pocket sick leave when they are now working? Seems like an unfair burden regardless of the tax deduction later on.
Answer:
This stuff can get complex and confusing. Here is my best explanation.
If you bring everyone on after 5/15, you must provide paid sick leave ONLY IF the employee cannot work or telecommute because of:
- Are subject to a Federal, State, or local quarantine or isolation order related to coronavirus (at 100% of regular pay up to $511/day);
- Has been advised by health care provider to self-quarantine due to coronavirus (at 100% of regular pay up to $511/day);
- Are experiencing symptoms of coronavirus and are seeking a medical diagnosis (at 100% of regular pay up to $511/day);
- Are caring for an individual who is subject to a quarantine or doctor’s order (at 2/3rds of regular pay up to $200/day); or
- Are caring for their child because the school is closed or child care provider is unavailable due to coronavirus and no one else is available (at 2/3rds of regular pay up to $200/day).
If the quarantine is lifted, then the first reason does not exist. Accordingly, you are obligated to provide the employee paid sick pay only if an employee fall into one of the other 4 categories.
In addition, you are required to pay at 2/3rds of regular pay up to $200/day for 10 weeks of family leave if an employee cannot work or telecommute because they are caring for their child because the school is closed or child care provider is unavailable due to coronavirus and no one else is available.
If any of you employees qualify for the paid sick pay or family leave, that will impact their unemployment benefits.
I checked this morning and did not see any legislation regarding business interruption insurance. WFCA is urging members to let their local leaders know that they should adopt the needed legislation. All you need to do is go to go to the WFCA website click on notice entitled "Business Interruption Insurance and Coronavirus - Take Action!”, select "Click here for Campaign for All Other States,” and submit your information. The link automatically identifies your state representatives and governor and allows you to send a letter of support via email to these state government officials to let them know how important this issue is to your business.
Generally, there is no legal difference. A furlough implies the time off is temporary and the employees will return to work. A layoff is more open-ended, and an employee may or may not be rehired at some time in the future. A reduction in force usually involves a permanent cut in employees and an elimination of positions, meaning that an employee will not be rehired at a later date.
There may be an impact on unemployment benefits, depending on the state unemployment policies. An individual applying for unemployment usually has to show they are seeking new employment. A furloughed employee may not need to show they are looking for work because they technically still have a job.
With a furlough and layoff, the employer must decide if it will continue healthcare benefits. If not, then, like reductions in force, the employer may have to offer these employees the right to continue on the health plan under the Consolidated Omnibus Budget Reconciliation Act (COBRA) that gives workers and their families who lose their health benefits the right to choose to continue group health for limited periods of time. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan. The federal COBRA law applies to employers with 20 or more full-time and part-time employees, while state COBRA laws apply to smaller employees.
Under the Affordable Care Act, commonly known as Obamacare, employers with 50 or more full time equivalent (FTE) employees are required to offer health insurance to employees working 30 hours or more a week or 130 hours or more a month.
An employer must provide paid sick leave ONLY IF the employee cannot work or telecommute because of:
- Are subject to a Federal, State, or local quarantine or isolation order related to coronavirus (at 100% of regular pay up to $511/day);
- Has been advised by health care provider to self-quarantine due to coronavirus (at 100% of regular pay up to $511/day);
- Are experiencing symptoms of coronavirus and are seeking a medical diagnosis (at 100% of regular pay up to $511/day);
- Are caring for an individual who is subject to a quarantine or doctor’s order (at 2/3rds of regular pay up to $200/day); or
- Are caring for their child because the school is closed or child care provider is unavailable due to coronavirus and no one else is available (at 2/3rds of regular pay up to $200/day).
Moreover, the 2 weeks of paid sick leave is required ONLY IF the business has work for the employee. If a retailer does not have work because business is slow or because its store is also shut down under the quarantine order, then it is not required to pay the employee the 2 weeks of sick leave. Only if the store is BOTH open and has work for the eligible employee must the business provide the 2 weeks paid sick leave.
The FFCRA went into effect on April 1, 2020. Accordingly, paid sick leave is required only for employees laid on or after April 1, 2020 provided the meet the other requirements, including that the employer has work for the employee.
No. If a business furlough or laid off employees before April 1, it will not be required to provide the 2 weeks of paid sick leave and the 10 weeks of paid family leave under the FFCRA. If a business brings the employees back on before June 30, 2020 and they then qualify for sick or family leave, the requirement for sick pay will apply.
Question:
We applied for the PPP and EIDL loans and are awaiting updates on those applications. We also submitted a claim against our Business Interruption Insurance as suggested and a letter to the state representatives. During a call last week, you discussed some additional programs that we should consider, especially designed for companies setup as an LLC, but potentially applicable to an “S” Corp. You mentioned the PUA (Pandemic Unemployment Assistance) program, but reviewing the qualifications, I don’t understand how it applies.
Whether an owner can get unemployment insurance is a complex issue that is not clearly laid out in the CARES Act or the information provided by the Department of Labor (DOL).
The CARES Act provides for Pandemic Unemployment Assistance (PUA) for individuals who are “not eligible for regular compensation or extended benefits.” §2102(a)(3)(A)(i). The Act also defines “covered individual” to include someone who is “self-employed.” §2102(a)(3)(A)(ii)(II). The DOL bulletins do not shed any more light on the topic stating only that:
Covered individuals also include self-employed, those seeking part-time employment, individuals lacking sufficient work history, and those who otherwise do not qualify for regular unemployment compensation or extended benefits under state or Federal law or PEUC.
Unemployment Insurance Program Letter No. 16-20, p.4, ¶ 4.a (April 5, 2020).
For members that are LLCs, the answer is easy. Each owner of an LLC is considered self-employed and subject to self-employment taxes. It is more complicate for member that are S-corporations. They are considered employees whose salaries are subject to FICA taxes, but not self-employment taxes. As a result, it is unclear if they are considered self-employed.
They may also not be considered individuals who are “not eligible for regular compensation or extended benefits.” A small business owner who operates as a S-corporation, even if a one-man shop, may be required to pay state unemployment insurance tax on their salary. As a shareholder in an S corporation who works in the business, the owners are considered an employee. Like any other employees who work for your business, they are entitled to receive employee benefits, including unemployment compensation. This applies as long as the company report the owner as an employee and pay state unemployment insurance taxes on their wages.
The answer for owners of S-corporations are they may be eligible for regular unemployment, including the extended benefit in the CARES ACT, if they included themselves as an employee and paid state unemployment insurance taxes. If they do not pay the tax, then they may be individuals who are “not eligible for regular compensation or extended benefits,” and thus eligible for the PUA unemployment benefits.
To be eligible for PUA benefits, the owner will need to certify that they fit into one of the reasons that allow for the benefit. These are listed as:
- The individual has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
- A member of the individual’s household has been diagnosed with COVID-19;
- The individual is providing care for a family member or a member of the individual’s household who has been diagnosed with COVID-19;
- A child or other person in the household for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency and such school or facility care is required for the individual to work;
- The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency;
- The individual is unable to reach the place of employment because the individual has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of the COVID-19 public health emergency;
- The individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19;
- The individual has to quit his or her job as a direct result of COVID-19; or
- The individual's place of employment is closed as a direct result of the COVID-19 public health emergency.
Unemployment insurance programs are run by the states with federal funding. Accordingly, each state may have different requirements. To determine whether you qualify for unemployment I recommend you contact your unemployment insurance office and discuss the possible unemployment benefits available.
If yes, how long do they qualify for unemployment benefits? We understand the $600 is only available through July 2020.
Answer:
The basic answers are that (1) your furloughed employees should be eligible for unemployment benefits; (2) employees who have had their hours cut may also be eligible for unemployment benefits; (3) employees are entitled to the additional $600 a week on top of what they receive under state law; (4) the additional $600 is available up to July 31, 2020; and (5) employees should be eligible for 13 weeks of unemployment on top of what the state allows, which is usually 26 weeks
Unemployment programs vary from state-to-state. I am not licensed in every state so I cannot provide legal advice on these state-run programs. With that understanding, let me explain what I understand.
The basic program in most states provides up to 26 weeks of benefits to unemployed workers, replacing about half of their previous wages, on average. Although states are subject to a few federal requirements, they are generally able to set their own eligibility criteria and benefit levels. Accordingly, the rules vary state-by-state.
In response to COVID-19, Congress recently enacted the Coronavirus, Aid, Relief, and Economic Security (CARES) Act. This Act provide additional unemployment benefits as explained below.
Federal Pandemic Unemployment Compensation (“FPUC”). Under the FPUC provision of the Act, individuals who are eligible for unemployment benefits will receive an extra $600 weekly benefit in addition to the amount the individual otherwise would be entitled to receive under state law. The $600 became available on March 28,2020 and the payment begins on the date of the employee became eligible for unemployment benefits. The $600 added benefit runs until the employee’s benefit are paid up or until July 31, 2020, whichever is earlier.
Pandemic Unemployment Emergency Compensation (“PUEC”). The PUEC provision provides for an additional 13 weeks of unemployment benefits for individuals who have exhausted benefits they are otherwise entitled to under state law. Therefore, eligible individuals now may receive unemployment benefits up to a maximum of 39 weeks, if the state allowed 26 weeks. The extended benefits are available through December 31, 2020.
Pandemic Unemployment Assistance (“PUA”). The PUA provision expands coverage to certain workers who traditionally are not eligible for unemployment benefits under state law, such as individuals who are self-employed, independent contractors, have limited work history, or who have exhausted all rights to regular or extended unemployment benefits, among others. This is particularly important for those who work largely as independent contractors and the self-employed.
Question: I am a business owner in Buffalo, NY. As you may know, all “Non-Essential Business” in NY State have been mandated to close our doors. Very early on we did consult with our insurance agent to find out if our “Business Interruption Insurance” was able to cover our losses. As I am sure you would expect, we were told that we were not covered. I was unable to attend the WFCA “Knowledge is Power” webinar today but an associate who was on the call suggested that we should start a claim with our insurance company regardless of what we were told by the agent.
Answer: It is recommended that flooring retailers and contractors file a claim for business interruption insurance if they have such coverage. While insurance carriers are likely to dispute coverage of this loss, it important to have the claim on file and not simply accept an initial denial of coverage.
As anticipated, states, including New York, are introducing legislation to require insurers to cover business interruption claims due to COVID-19. It is important that the legislators and governors from these states hear from WFCA members supporting these bills. You can simply go on WFCA’s website and click on the business interruption link, click on New York campaign, out in your address and you can automatically send an email to the governor and your state legislators supporting the bill.
In addition, there is a draft bill in Congress, the Pandemic Risk Reinsurance Program, that would require insurers cover business interruption claims due to COVID-19 and provide funds to ensure coverage. The bill is in the early draft stages, but the passage of bill like the one in New York will support the passage of the federal law too.
We urge you to file a claim and to support the New York legislation.
As I read the Act and regulations, you need to pay the employees whether or not they are brought back to work in order to have the PPP loan forgiven. Employees currently on unemployment that you pay for the 8 weeks with the PPP loan proceeds will have to come off unemployment while being paid and them go back on once the 8 weeks are up.
To have a 100% of the loan forgiven:
- 75% of the PPP loan must be used to pay employees, and
- The average number of full-time employees paid during the 8 weeks will be compared to the average number of full -time employees paid during, at your election, between February 15, 2019 and June 30, 2019 or January 1, 2020 and February 29, 2020. If you pay fewer employees during the 8-week period, the amount forgiven will be proportionately reduced.
Question:
I spoke with most all my payroll employees today and everyone is onboard with getting their weekly compensation starting this week and ramping up their hours, except for one. My warehouseman, who makes $700 per week (40 hours) is currently receiving about $1,050 a week between state ($450) and federal ($600) unemployment insurance programs. He stated that he didn’t want to come off unemployment until next week because he was in the middle of a two-week pay period from them, and if I wanted him to work this week I should pay him cash. I even told him that until the Stay At Home Order is lifted (right now at 5/15), I would only need him to work 25 of the 40 hours I would be paying him until the Order is lifted or the 8 week PPP period is completed.
That did not sit well with him. I explained that he needs to come back to work once I have let him know his employment is needed, he then said he didn’t feel safe from the virus until the Order is lifted. He works alone in our offsite warehouse, and basically his only interaction is with our installers and truck drivers for deliveries. We provide proper PPE (masks, wipes, gloves), and physical distancing can certainly be maintained under this scenario.
From your standpoint, what are my options here? I am inclined to tell him I must let him go if he doesn’t return to work, which I believe would ultimately terminate his unemployment insurance. One concern I have is what if any argument could be made by him that he is afraid to work. How does that impact his employment, his unemployment insurance, and my obligation to the PPP loan for his not receiving compensation?
Answer: Unemployment benefits are for individuals who do not have work, not for someone who refused to work. Generally, the employee cannot refuse to come to work and still qualify for unemployment benefits. If the employee is concerned with the risk of COVID-19, to legitimately refuse to work, they need to show both (1) a specific fear, such as they are at a higher risk of infection, and (2) that you have not reasonably addressed those issues. Here the employee has not stated anything but a general fear, and you have taken action to ensured minimal risk. You may want to offer the employee any paid time off that he has coming. Also remember, that not paying the employee out of the PPP loan may impact how much of the loan is forgiven.
Your issues with your warehouse manager are a matter of how you want to handle it. Your options are: (1) pay him for the 8 week whether or not he comes back (the PPP loan is to pay employees for the 8 weeks whether they are working or not); (2) pay him using his unused paid time off if he agrees; (3) terminate him for refusing to come back to work; (4) work out some other arrangement. The key is to discuss it with him and try to work out an accommodation.
One caution is to be sure that he does not have some disability or underlying health issue that would increase his risks of catching COVID-19. In that case, you will need to make some accommodations.
They are normally compensated based upon the specifics of a given job, not hourly. And how does the fact that they are still doing a minimal amount of installations currently, some weeks a little, other weeks could be nothing. Does that earned compensation get accrued until after the 8 weeks or added to their average weekly payment?
Answer:
I am not aware of any rules or information on how to calculate the amount paid for piecework employees specifically for PPP loans. Accordingly, it is likely the method normally used to calculate the hourly rate will be used. The federal Wage & Hour Division defines piece-rate as the “regular rate of pay for an employee paid on a piece work basis ... obtained by dividing the total weekly earnings by the total number of hours worked in that week.” The total hours must include all time worked, including traveling to a job site from the employer’s premises, picking up job materials and similar time. This calculation must also take into account any overtime worked by the employee. In California, the calculation is a little more complicated, because the employer must separate down time (e.g. two 10-minute breaks per day mandated by law) and pay for this time at the average rate of pay. This rate should be on the employees pay stub. The method for calculating the regular hourly rate for piecework employees is fully explained in an article in the Premier Flooring Retailer magazine that is available on WFCA’s website.
To simplify the calculation, I would pay each employee what they average over the prior 12 months, which is the amount you used to calculate the PPP loan. This seem consistent with the PPP rules and should help to ensure you use 75% of the loan to pay employees.
As to employees paid by piecework, the idea of the PPP loans to get employees paid by their employers to maintain those relationships. I would make the most sense to pay the average weekly amount paid to each of them over the prior 12 months. It helps ensure more of the loan is forgive and helps the employees.
I have not seen a COVID-19 EIDL tracker. There is one for EIDL loans for natural disasters here. You may be able to track the loan application status there. Otherwise, I suggest you contact your local SBA office to see if they can help.
I do not have a copy of your policy, but it may include an appeal right.
You may want to respond to the denial letter stating that you should have coverage because the Coronavirus has cause physical damage by infecting the facilities and the surrounding areas and request them to identify whether the decision on coverage is final and whether there is any internal appeals process. This should keep your claim active.
The qualifying reason being, taking care of children when schools are closed during a health crisis.
Answer:
Let me try to explain the FFCRA requirements for the paid sick and family leave.
- Anyone who was furloughed, laid off, or terminated before April 1, 2020 is not entitled to the paid sick and family leave UNLESS they are brought back to work on or after April 1, 2020 and subsequently furloughed, laid off, or terminated.
- Is an employee is asked to come back to work on or after April 1, but cannot because they are caring for a child who is not is school and there is no child care available, that employee is entitled to the paid sick and family leave.
- The obligation to provide the paid sick and family leave under the FFCRA expires on December 31, 2020.
- If the employer done not have work for the employee (whether because of a shelter in place order or because business is slow), the employer does not have to pay sick or family leave even if the employee otherwise qualifies for the paid leave. For example, it an employee is asked back to work on April 30, 2020 when a shelter in place is lifted, but then furloughed a week later because there is no work, the employer does not have to pay sick and family leave under FFCRA.
- The employer may face liability if it discriminates on who it brings back to work in order to avoid paying an employee who qualifies for the paid sick and family leave, especially if the individual is a women, a minority, or disabled. This is a more complicated question, but there is a risk to an employer doing this.
Question:
What can or should I do for the following situation? Does she qualify for EFMLEA?
- Bookkeeper was laid off March 13th when we were given shelter in place orders and the store was closed.
- She was offered her position back on May 11th when we are able to open again.
- She signed a form that said she would not be returning to work because she did not have childcare.
- I'm not sure if this situation is actually COVID 19 related but I have to assume it is. Her pre-school closed and her mother who did the rest of the time is no longer able to do it because her father is very susceptible.
- She has not returned to work yet.
Answer:
While I have not seen anything specific on the issue, the simple answer to your question based on the facts provided is that the bookkeeper may be entitled to 2 weeks of sick pay and 10 weeks of family leave at 2/3rds of her normal pay up to $200 a day under the Families First Coronavirus Response Act (FFCRA). To be eligible, an employee must "been employed for at least 30 calendar days by the employer …” I see nothing in the FFCRA that requires the employee be employed by March 1, 2020, or that the 30 day of employment be immediately prior to the leave request. It could be interpreted that once you laid her off she was no longer an employee, but the fact that you offered her job back would undercut that argument. Accordingly, if the bookkeeper was employed by you for at least 30 day prior to laying her off, the FFCRA leave requirements likely apply.
To be eligible, the employee must verify that she cannot work because she needs to care for a child whose childcare provider is unavailable due to COVID-19. The employee should: (1) certify that he or she needs to care for a child under the age of 18 because the child’s school, child care, or child care provider is closed or unavailable because of COVID-19; (2) provide the name and age of the children; (3) identify the school or place of care closed; and (4) certify that no other person will be providing care. It remains unclear how much effort a parent is expected to make to find alternative childcare if their first choice is being closed for the summer.
Your company is entitled to the tax credits for any leave paid under the FFCRA. The tax credit is applied against an employer’s portion of Social Security taxes. If the amount of taxes collected is not sufficient to cover the cost of paid leave, employers can seek an expedited payment from the IRS by submitting a streamlined claim form. It is an employer’s right to not take the tax credit. As double benefits are prohibited, employers cannot take deductions for the amount of any tax credit.
Finally, I do not know if the bookkeeper could cover partial unemployment since her pay would be 2/3rd of her normal pay. She may also be eligible under the California Paid Family Leave Program. I am not licensed in California to practice law and cannot give an opinion on these issues
