COVID-19 Follow Up Questions from 4/2/2020 Webinar
April 3, 2020
Thank you for attending our second webinar in our series: Navigating HR and Financial Aspects of COVID-19. You can find a recording of the webinar on our COVID-19 Resource Page. Below are the questions we received during the from the webinar and our answers.
CARES Act Provisions (Unemployment, Tax Credits SBA/PPP Loans and Checks for Individuals)
Unemployment
Q: Does the unemployment increase of $600 week also apply to Work Share programs? Is everyone eligible for the additional $600 unemployment benefits? Part time employees? People that make less than that?
A: The CARES Act encourages states to adopt workshare programs as a complement to unemployment programs. Pandemic unemployment compensation is a flat amount to those on UI, including those who are receiving a partial unemployment benefit check.
Q: How do you apply for Federal Unemployment only?
A: Affected employees apply for SUI and, it seems, the Fed is coming in over the top with the $600 benefit. No separate filing is required.
Q: If someone is employed at 2 jobs, and loses one of them, but still retains the second job. Could the person apply for unemployment as a result of loss wages for 1 of the jobs if their weekly salary exceeds the state unemployment benefits?
A: Yes.
Q: Don’t you lose unemployment benefits though, if your employer lets unemployment know your job is available again?
A: Yes, when the state requires you to look for another job. At this point there is nothing from the Fed to verify you have a job available. More to come.
Q: Don’t you lose unemployment benefits though, if your employer lets unemployment know your job is available again?
A: Yes, when the state requires you to look for another job. At this point there is nothing from the Fed to verify you have a job available. More to come.
Q: If someone is employed at 2 jobs, and loses one of them, but still retains the second job. Could the person apply for unemployment as a result of loss wages for 1 of the jobs if their weekly salary exceeds the state unemployment benefits?
A: Yes.
Q: 1099 subcontractors are not eligible for state unemployment but are eligible for the Federal $600/week. Would they apply the same as a W-2 employee?
A: No, there is a separate application for 1099/Contract workers.
Q: What happens to business UI rates with furloughs/layoffs?
A: Historically rates have increased. States then needed to borrow money from the Federal government which was required to be paid back through an increased Federal unemployment tax rate (reference 2008 recession).
Tax Credits
Q: What is the down-in-the-weeds mechanism for getting the credit? If we use a payroll service or something like Quickbooks that does our payroll and tax payments, will we need to work with them? Is there separate paperwork?
A: For tax credit, you reduce tax payments after April 1st by the total credit you calculate made up of wages and employer provided healthcare.
For PPP Loan, you need your 941 and 2019 payroll detail.
Q: I was told the payroll tax credit was only for wages & employer Social Security tax. Are you saying that Employer Medicare tax is credited as well?
A: No, it is only wages and social security tax.
SBA/PPP Loans
Q: Are we able to hire back individuals who were laid off due to the downturn and claim them when submitting for the SBA Payroll Protection program?
A: 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.
Q: Do we need to rehire part time employees get PPP forgiveness?
A: Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount. Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
Q: What about a current loan, can they stop payments for a certain time period?
A: Depending on the loan, work with your financial institution to see if payments can be reduced or paused.
Q: What would be considered utilities under the PPP Loan?
A: Business/office utilities are covered under the loan; it is not broken down within the application on specific utilities.
Q: Can we take a SBA Loan in tandem with the PPP Loan?
A: The PPP loan is an SBA loan and they can only take out one PPP Loan.
Q: Does head count for refund for the PPP loan start on Day of Origination? If some employees have joined another workforce during a recent lay-off (because of lack of business COVID-19) when do they need to be replaced to match head count form previous year totals.
A: 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.
Q: The first speaker mentioned you cannot “double dip” – Excluding the Family First Corona Virus Act, can I apply to both the SDA Economic Disaster Loan and the Payroll Protection Program and use funds from both?
A: If the business claims the FFCRA credit for mandatory sick leave and/or family leave, the wages associated with the FFCRA credit are not eligible as qualified wages for the employee retention credit. Yes, you can apply for the protection, but you cannot apply that employee’s wages.
Q: So based on the employee levels bullet, that means all employees must be kept? I am already behind on utilities, I won’t be able to pay the old bills, just the bills that come in during the 8 weeks?
A: No, not all employees need to be kept, not over 25% of workforce. You should use the proceeds from these loans on your: Payroll costs, including benefits; Interest on mortgage obligations, incurred before February 15, 2020; Rent, under lease agreements in force before February 15, 2020; and Utilities, for which service began before February 15, 2020.
Q: Many of my employees make over 100k, if I reduce them to 100k for sitting home, will I be penalized on the forgiveness?
A: You can reduce their salaries now and 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.
Q: Is it a single PPP loan per company, I own 7 companies, can I get on per company?
A: Yes, you can have seven loans, one for each company as long as they have separate EINs.
Q: Can you include Part Time and 1099 employees/contractors or is it just limited to W2 FTEs? For the payroll protection program?
A: Part-time employees are covered under the PPP loan but converted to full-time equivalent, however1099/Contract Employees are not. Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
Q: In terms of double dipping if you are getting payroll tax credits for those using the federal sick leave/FMLA program are those salaries removed from what would count towards the PPP program?
A: Yes.
Q: Can we include 1099 subcontractors as part of Payroll? I thought I read somewhere that they can be included.
A: No, it will not count as wages paid to employees.
Q: Is the FT employee headcount just FT employees or FTE employees
A: It includes part-time employee wages.
Q: Does a “critical business” qualify for the Paycheck Protection Program?
A: Yes
Q: In reference to the loan, what happens if employees resign?
A: You will also owe money if you do not maintain your staff and payroll.
Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made 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.
Q: Will the PPP loan forgiveness be considered income to us? On our biz taxes or personal taxes?
A: No.
Q: Are part-time employees included in Payroll Protection Program? Or only FT employees?
A: Yes, part-time employees are converted to full-time equivalents.
Q: It listed you can only take one loan. I have 6 LLCs that are all related to my business. Each has their own EIN and own tax return. I am 100% owner of all of them and file taxes as an S corp. Do I only apply for one entity that acts as the parent entity, or would I submit 6 applications since they are legally separate?
A: Since they each have an EIN you can apply for each entity separately.
Q: Did the PPP max loan amount decrease from 2.5 times payroll to 2.25 times salary?
A: Salary, wages, commissions or tips are capped at $100,000 annually per each employee.
Q: I had heard that if you take the grant, you cannot apply for the loans….true?
A: No.
Q: If you wait to bring back employees until the end of May, do you get full credit for their employment for the forgiveness of the loan
A: Yes, you have until June 30th.
Q: Is it better to apply through a bank or SBA?
A: Check with your local bank first.
Checks for Individuals
Q: What if you are married, but file single?
A: It is based on how you filed your 1040 return in 2019, if already filed. If not, it is based on how you filed your 1040 in 2018.
Q: Is anything being considered for adult dependents i.e students living at home?
A: If they are claimed on your return, they are considered a child and it would be $500 per child.
Q: I have heard that the individual checks will have to be paid back in the future through taxes. Is this true?
A: This is causing a deficit but at this time we do not know how they will be relayed.
Q: Employees have changed bank accounts since last tax filing. How can they get the new banking info to ensure IRS gets money to right account?
A: The IRS is working to put together an online portal so individuals can go online and update banking information. More to come.
Q: The IRS does not have my direct deposit information. What can I do?
A: In the coming weeks, the Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail. If you prefer a check to be sent and your address is not updated, the IRS will allow you to update your address online within 15 days of being notified so the check can be sent.
FFCRA Provisions (General Questions, Emergency FMLA and Emergency Paid Sick Leave):
General Questions
Q: How does an employee prove they, or their family member has COVID-19. Do they need to provide the employee documentation from a medical provider to prove this is accurate information?
A: Yes, they need to provide medical documentation.
Q: Is there any forms available for recording each employee request to leave FFCRA?
A: If you are using a payroll provider, contact them. If not contact Puzzle HR and we can provide one for you.
Q: What is the down-in-the-weeds mechanism for getting the credit? If we use a payroll service or something like Quickbooks that does our payroll and tax payments, will we need to work with them? Is there separate paperwork?
A: For tax credit, you reduce tax payments after April 1st by the total credit you calculate made up of wages and employer provided healthcare.
For PPP Loan, you need your 941 and 2019 payroll detail.
Q: I was told the payroll tax credit was only for wages & employer Social Security tax. Are you saying that Employer Medicare tax is credited as well?
A: No, it is only wages and social security tax.
Q: We are considered a critical service. Is there any support from the stimulus package that can help with payroll?
A: At this time, we do not see any specific support for essential services businesses. Some benefits of FFCRA have exemptions of essential workers. We will continue to monitor this and communicate any clarifications or changes.
Q: If an employee is requesting time under FFCRA for childcare, are there things I need to ask to allow for this?
A: Yes, you can ask for a notice or documentation showing your child does not have school or childcare.
Q: Can both parents living under the same roof take advantage of the FFCRA?
A: Yes.
Emergency FMLA
Q: If you layoff some staff and that drops you below the 500 employees threshold does that then make you obligated to provide EFMLA? They are temporarily laid off.
A: It depends on the day the employees leave would start.
Q: When will we know if the EFMLA will affect the normal FMLA for someone going out on maternity leave?
A: As of 4/3/2020, it can reduce FMLA. We continue to monitor and communicate any changes.
Q: For EFMLA, what about small companies under 50 employees who are on the verge of going in under?
A: FFCRA states The Secretary of Labor has authority to exempt small businesses with fewer than 50 employees if business viability is jeopardized by following the FFCRA. DOL published last week that small businesses may exempt themselves due to school/childcare closure only if certain criteria are met.
Paid Sick Leave
Q: If an employee tests positive for COVID-19 and is then eligible for paid sick leave but employer offers short term disability, which would prevail?
A: The emergency paid sick leave pays for the first 80 hours and typically short-term disability plans have a wait time of 10 days. Employers should confirm with their vendors and/or state plan for potential exclusions.
Q: Does it matter for paid sick leave cap of 80 hours that we are a 50 hour week? Should we charge it as a 40 hour week instead?
A: FFCRA allows for 80 paid hours.
Q: We are with a PEO who issues the W-2s, but we meet all of the joint employer requirements. Will you summarize again how that affects us with the emergency pay?
A: They use the joint employer test for EPSL and two or more of the following: Hires or fires the employee, supervises the employee work schedule or conditions of employment, determines employee rate of pay and method of payment or maintains the employee personnel records. Expect some additional clarification on this.
Q: If our business is closed due to not being essential. That is not a qualifier for the Emergency Paid Sick Leave?
A: No
Q: The first speaker mentioned you cannot “double dip” – Excluding the Family First Corona Virus Act, can I apply to both the SDA Economic Disaster Loan and the Payroll Protection Program and use funds from both?
A: If the business claims the FFCRA credit for mandatory sick leave and/or family leave, the wages associated with the FFCRA credit are not eligible as qualified wages for the employee retention credit. Yes, you can apply for the protection, but you cannot apply that employee’s wages.
Q: In terms of double dipping if you are getting payroll tax credits for those using the federal sick leave/FMLA program are those salaries removed from what would count towards the PPP program?
A: Yes.
State Specific Provisions:
Q: Los Angeles has implemented 80 hours of paid sick time. Is there a poster required?
A: No
Q: Can you please discuss how the emergency Paid Sick Leave applies to employer with more than 500 employees in NY?
A: Private employers with 500 or more employees are not covered by the FFCRA but are still subject to New York’s sick leave law if they employ New York workers. Generally, employers must provide 14 days of paid sick leave under the state law for a quarantine or isolation order due to COVID-19. In contrast, private New York employers with fewer than 500 employees are subject to both the federal and state laws.
Other:
Q: Does the health care include EMS / ambulance services, or only hospitals?
A: Yes.
Q: Will you make the recording and slides available afterwards?
A: Yes, the recording is on our website and please email info@puzzlehr.com to get the slides.
Please give us the info on where to apply for the $10,000 grant and any additional information on that.
A: https://covid19relief.sba.gov/
Q: Contact for the accounting firm?
A: Eric@kanterpa.com or 813-855-5433