Follow Up Questions from 4/16/2020 Webinar

April 17, 2020

Thank you for attending our second webinar in our series: Navigating HR and Financial Aspects of COVID-19. Below are the questions we received and the respective answers.

CARES Act Provisions (Unemployment, Tax Credits SBA/PPP Loans and Checks for Individuals):

Unemployment

Q: If an employee does not want to come back to work (unemployment and 600 is more), does it affect my PPP grant?

A: We expect that the employee will have consequences by rejecting the work as unemployment has requirements, but please keep in mind that businesses have until June 30th, 2020 to restore headcount/salary levels for any changes made between February 15th – April 26th, 2020.

Q: Which states is the 600.00 money flowing?

A:  The majority of states are already getting the $600 unemployment payment out and if not, it is backdated.

Q: If someone gets the virus at work is it covered under workers compensation? Do I need to report it to my carrier quickly to cover my business in case the person heaven forbid passes away?    Also, if I have a higher deductible healthy plan I sponsor, is the co-pay and deductible waived for corona illness? I don’t think my benefits and liability agent understands.

A: It is hard to prove if the employee got COVID-19 at work, so there will need to be good documentation if they do feel that is where they got it, as it will probably be investigated by the WC carrier. I would tell your WC carrier ASAP. Corona TESTING is waived, NOT treatment.

SBA/PPP Loans

Q: When do I have to use PPP money by?

A: You have 8 weeks from the date the funds are received.

Q: Do you get to choose the date to start your 8 weeks?

A: Please work with your lender on possible distribution dates that work best for your business.

Q: We applied for PPP right away and got a request for docs from our bank in a few days and uploaded those right-away, but since then no word at all — about a week. Is there any way to check on your application’s status?

A: Yes, you should be following back up with your bank to see if they can give you a status update.

Q: We have created a form, as well, for E-EMLS and E-PSL, but is that an actual requirement or optional?

A: It is highly recommended as that can be used as your form of tracking and documentation.

Q: I had 27 employees on Feb 15th.  I’ve laid off 23 of them and I have applied for the PPP.  If I take the PPP, I plan on paying my employees for the full 8 weeks and then I understand that I must have 27 employees back on payroll by July 31st or I won’t be eligible for loan forgiveness.  My issue is that I don’t think my business will be back up to speed for at least a year (90% of my business is hotels) and I doubt I will need 27 employees until then.  Any suggestions on how I should handle this?

A: I would make sure you speak to your accountant about this as you want to maximize the part that is forgiven.

Q: If you have 25 employees prior to loan and after loan in 8 weeks have 20 employees are you okay?

A: Yes, you have until June 30th, 2020 to restore at least 75% of your headcount/salary levels for any changes made between February 15th – April 26th, 2020.

Q: Can PPP loans be used for bonuses or profit sharing?

If bonuses are justified and part of your normal business practices, then they could be considered payroll costs as well. It’s highly recommended that you document the reasons for the bonuses. Same holds true for-profit sharing, if it’s part of your normal business practices, then you could fund your profit share as it is an employee benefit.

Q: If you are not able to spend the entire PPP for 75% of payroll and 25% of (let’s say rent), what was used will be forgiven and the balance would be a loan at the 1%…correct?

A: Yes, whatever is not forgiven turns into a loan payable at 1% over 2 years.

Q: If you are s-corporation and paid a wage but haven’t been paid in weeks, after you are funded can you pay back what you haven’t been paid?

A: You can pay wages to yourself if it is paid within the parameters defined by legislation. Loan forgiveness can then be requested.

Q: Does payroll costs include the payroll fees? It is gross payroll that the 2.5 times is calculated, correct?

A: Payroll costs include state and local taxes assessed. It does not include federal taxes. Essentially, you take your monthly payroll (up to $8333 per employee ~ 100K cap) add employer state taxes and benefits expense and multiply it by 2.5.

Q: What utilities covered?

A: Utilities include gas, electricity, water, telephone, or internet.

Q: Can you pay workers that have worked a bonus pay after funded?

A: This can be tricky, if bonuses are part of your normal business practices, then yes. It’s highly recommended that you document the reasons for the bonuses.

Q: Is workers comp insurance considered a medical expense?

A: As of right now, it does not appear that WC would be considered a medical expense for reasons of PPP.

Q: Can you breakdown the $166,000 qualified wage calculation?

A: $100,000 max per employee divided by 12 months – $8,333 X 2 months = $16,666 X 10 employees

Q: So, can I give his work to another employee and use PPP grant to pay that employee?

A: Yes

Q: If I have a manager making $100K a year, $8,333 annualized per month, could we give them a Bonus of $5k, and would that be covered under the PPP???

A: No. The cap on the PPP loan forgiveness is 100k. per employee.

Q: Can you pay payroll liabilities (FICA, FUTA) with PPP funds?

A: Payroll costs include state and local taxes assessed. It does not include federal taxes. (Social Security, Medicare, and FUTA)

Q: We use a payroll service that creates our checks and pays the payroll taxes. They don’t seem to know about the part of the taxes that aren’t included in the forgiveness. Can you clarify again in detail?

A: IRS Code 21, 22, and 24 taxes during the covered period are not forgiven under the current term of the PPP process.   

Q: Is there a specific form to request forgiveness?

A: It’s going to be managed by the lender, so they should be able to provide guidance and/or forms that may be required.

Q: Is this a pro-rated forgiveness, are “all or nothing”, meaning if my payroll is less, I owe the entire loan or just a portion of it?

A: To be fully forgiven, the business must meet at least 75% of the forgiven amount for payroll and the remaining for utilities. Forgiveness will be reduced on a sliding scale if full-time headcount declines, or if salaries and wages decrease.

Q: Is unemployment pay included in the 75% of payroll costs?

A: State Unemployment that is assessed on employee’s wages is included. Federal Unemployment is not.

Q: A friend applied last night with PayPal Loan Builder.com loan funding and received money today?  They were so frustrated with BB&T so they went elsewhere.

A: We do advise that if banks are being unresponsive, that you look for a new bank or banker. You could even involve your CPA to see if they have relationships that you can leverage. You can also reach out to PuzzleHR if you need assistance.

Q: If we are not going to get the loan, will the bank tell us or just leave us in silence because at Bank of America there is no way to ask any questions and you aren’t allowed to ask your local banker?

A: Each bank is handling communications differently.  I have heard that it’s been challenging to get information from some of the larger banks.

Q: If your business is still financially solvent but you get the loan and use 100% of it to cover payroll, will you still be able to get the loan forgiven?

A: Yes. As long as you use the funds from the loan for it’s intended purpose, you may qualify for full forgiveness.

Q: Say I use the 75% on payroll… I spend it all on payroll in the 8-weeks.  At the end there isn’t enough business to keep by employees busy, and since PPP funds run out, so I can’t pay them. I lay them off on June 15th… after my 8 weeks.  Do I jeopardize forgiveness?

A: Yes, as it is outlined in the PPP loan, you have until June 30, 2020 to restore your FT employment and salary levels for any changes made between February 15 – April 26th, 2020. 

Q: If any employees quit during that time and our employee percentage drops below 75%, does that hurt our chances of getting the loan forgiven?

A: Yes. You would need to hire someone else to replace them in order to keep your salary thresholds at the minimum of 75%.

Q: Can we receive approval for the “grant forgivable”10K advance on the EIDL AND the forgivable PPP loan?

A: You can receive up to 10K from the grant and qualify for the PPP forgiveness loan.

Q: How long after the 8-week term is up do we have to retain the 75% of employees?

A: You have until June 30th, 2020 to restore at least 75% of your headcount/salary levels for any changes made between February 15th – April 26th, 2020 to be eligible for forgiveness. After June 30th, there’s no clear timeframe outlined.

Q: In your opinion, why are the big banks being so difficult if they have nothing at risk?

A: From what we have heard, they just don’t want to deal with some of the challenges with the process.

Q: Is the SBA EIDL loan still available?

A: Yes

Q: So, if you go to a different bank and apply, what happens to your original application?

A: Applications are processed on a first come first serve basis. There’s no harm in submitting multiple applications.

Q: We have a loan number, does that mean we have money coming and it did not run out for us?

A: We’d assume that if you have a loan number you should be receiving the loan, but you will want to validate that with your bank.

Q: I had 9 employees going into the PPP. My loan funded this week. At the same time, one of my employees was just ordered to not return to work by doctor (she is pregnant). We do not offer any paid leave for her, but of course will hold her position under FMLA. So, I’m just starting the 8-week PPP period. Any ideas how this will be looked at for forgiveness? Should I hire another employee to get back to 9? I’d rather pay the employee that went out, but not sure I can do that.

A: Employee and compensation levels need to be maintained so that could be done either way, by paying that employee while she is on leave or hiring a temporary employee to cover during that time.

Q: I got a text from my bank about 3 days ago stating that my PPP is in the final process and they would be contacting in a few minutes to review the loan terms and then sign the documents digitally. I later got another text that they are processing my PPP. Then I got an email from them stating there is no money. I think that they are giving preference to their better customers?

A: Please call your bank to speak with them directly.

Q: If the money is gone, what are the chances that your bank will take an application until the feds provide more funds?

A: Please contact the bank directly for more information.

Q: Can you fight a non-forgivable decision made by the bank?

A: We would assume there is an appeals process, but those details have not been announced. 

Q: Do 1099 employees count toward that 75% payroll requirement?

A: No, they cannot be included in the payroll costs. 1099 contractors would need to apply for their own loan.

Q: Can you apply for the PPP loan in any state?

A: Yes

Q: Can you prepay commissions or vacation if you are needing to get to the full amount of the 75%

A: If this is not part of the usual compensation process, I would not advise it. 

Q: Do you have to wait until June to apply for forgiveness?

A: We’d assume that the forgiveness process would start after the June 30th audit of employee count/wages. Please consult with your lender on the details of their forgiveness process.

FFCRA Provisions (General Questions, Emergency FMLA and Emergency Paid Sick Leave):

General Questions

Q: If you have an employee out and you have knowledge of them being sick or caring for a sick child, do they need to request cares act? Do you have to offer?

A: They should be utilizing the FFCRA which has the enhanced sick leave as well as enhanced FMLA.

Q: What can an employer ask and not ask employees if they are displaying questionable symptoms?

A: You can send an employee home if they appear sick. You can ask them if they have been exposed to someone with Coronavirus. You are also now able to take their temperature.

Paid Sick Leave

Q: Are we able to require a doctor’s note before allowing someone to return to work?

A: Yes

Other:

Q: Do you know what channels we go through to get our business deemed essential (we do work for Insurance companies – specifically post claim to get people back into their home or business)?

A: Each state has their own process to apply for a waiver.  Please check your state’s specific government website for guidance.

Q: I heard from someone that attended a prior webinar of yours about the importance of a communication plan with your employees. Is there a sample form we could access to see best guidelines when sending information to employees about returning to work?  Including information about “we are working on bringing you back on this date, and it needs to be known that denying this request to return to work makes you ineligible for unemployment benefits.”

A: PuzzleHR can customize a communication plan, based on your specific business needs. Please email us at info@puzzlehr.com

Q: How does PuzzleHR advise companies to get employees to feel comfortable again coming into work? Regardless if the federal and state governments say it is safe to work again?

A: Being honest and open to questions from your employees and good communication. Explain to them what you plan to do to maintain a clean environment, communicating the return to work plan and explain where the business and community is at with everything. We are here to help develop these communications.

Q: Wish we could leverage our accountant, but they charge us every time we call, is that normal?

A: It is normal practice for CPAs and Accountants to bill by the hour.