Some companies are in the midst of rehiring employees laid off due to the pandemic, and for others that’s still in the future. Either way, as you make plans to protect your employees’ health, be sure you know how to protect your business too. In this post we’ll talk about two important ways you must follow the law and best practices as you continue or begin the rehiring process.
Avoid Discrimination Claims
Any time you lay off an employee and later refill the position, the potential exists for a discrimination claim if you offer the job to someone else or end up hiring a different person. It’s critical to understand what may constitute discrimination so you can avoid it.

Of course, your policies should state explicitly that your hiring practices do not discriminate on the basis of race, color, religion, sex (including pregnancy, sexual orientation, or gender identity), national origin, age (40 or older), disability and genetic information (including family medical history), or protected veteran status. But in the age of COVID-19 extra caution is warranted.

According to the Centers for Disease Control and Prevention (CDC), some people are especially vulnerable to severe COVID-19 disease and complications, including people over 60, those with underlying medical conditions, pregnant women, and others. But these do not count as valid reasons to not rehire an employee. Even if you have your employees’ best interests and health in mind, it can still be construed as age or other discrimination. One option may be to discuss plans for a delayed start or work from home if possible; however, the employer should make the final decision whether to accept this kind of arrangement.
You can also avoid claims of discrimination by using the same considerations for making both layoff/furlough and rehiring decisions. For example, if a business laid off employees based on seniority, then seniority could be the main factor considered when deciding who to bring back to the active workforce.
But there are valid reasons to not rehire someone, or to delay a return-to-work temporarily, as long as it is not discriminatory, based on objective criteria, and well-documented. Some examples include, but are not limited to:

• documented past poor performance
• significant changes to the job that make the person no longer qualified
• newly added job duties that the person cannot perform (for non-discriminatory reasons)
• diagnosis of COVID-19 in the employee, a family member, or person the employee is caring for
• current doctor’s orders to self-quarantine
• inability to obtain childcare (or dependent care) due to school or care center closure due to COVID-19

Always make rehiring decisions on a case-by-case basis, taking care that you are able to document the legitimate non-discriminatory reasons for making such decisions.  If you are uncertain, consult with an attorney or employment specialist.
Document Offers to Return to Work
It is always the best practice to make a formal, written offer of employment. This helps document the actions that an employer took. Retain records of any response, or document a lack of response from any employee as well. Because many employers have taken out PPP loans, they may wonder how rehiring impacts loan forgiveness. It is unlikely the SBA will penalize employers in the loan forgiveness calculation if the employer can show that they made a good faith, written offer of rehire, and can document the employee’s rejection of that offer. Letters should include a return-to-work date, an overview of what’s changed and what hasn’t, the status of their benefits, a summary of new health and safety procedures for reassurance, a deadline to accept or decline the offer, and a job offer to return an employee to “suitable work.” Exact definitions vary from state to state, but in general, suitable work means a job that offers wages comparable to recent employment and work duties that correspond to education level and previous work experience.
Just because you offer suitable work, however, does not guarantee it will be accepted. Those collecting unemployment are usually required to certify weekly that they are attempting to find employment (though some states have suspended this requirement due to the unique circumstances of many COVID-19 layoffs). It’s implied that offers of employment must be accepted except if there is “good cause” to reject it, such as a change to the nature of the work, reduced pay or salary, a new duty location, for example. When an employee refuses an offer to return to work and is collecting unemployment compensation benefits, a final determination of whether good cause exists must be made by an administrative law judge.
Two reasons that do not qualify as “good cause” are fear of contracting COVID-19 (as long as you are following safe practices and taking reasonable precautions for worker and customer safety during the pandemic) or the fact that the person is earning more from unemployment benefits than the offered wages or salary. Depending on your state’s requirements, you may be required to report these types of refusals.
For example, in Ohio, “employees are expected to return to their previous employment if asked to do so and if there is not otherwise good cause for refusing to return to work.” Refusing to return to work without good cause makes an individual ineligible for further unemployment benefits. Employers can notify the agency by filing the “Eligibility Notice/Refusal to Return to Work Form. https://secure.jfs.ohio.gov/covid-19-return-to-work/.
Employers are eager to get back to business as usual. They need to follow health and safety precautions to continue opening the economy, but it is also important to take steps to protect company’s legitimate business interests when rehiring employees. If you have any questions regarding how to handle reopening your business and COVID-19, or for any other employment and labor law matters, please contact Matthew Stokely at mstokely@pselaw.com or Kristina Curry at kcurry@pselaw.com, or call (937) 223-1130.

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In response to the COVID-19 health emergency, Congress passed the Families First Coronavirus Response Act (FFCRA). The FFCRA mandates two (2) weeks of Expanded Paid Sick Leave (EPSL) and up to 10 weeks of Expanded Family Medical Leave (EFMLA) be available to employees of businesses with fewer than 500 employees. One of the goals of the FFCRA was to provide paid leave for employees whose children no longer had a “place of care” to attend during the work day due to COVID-19.
Most children were in the midst of finishing the 2020 spring academic semester when the COVID-19 health emergency began. This timing meant that it was easy to determine if a child belonged to a specific “place of care” that had closed due to COVID-19, because it was likely the school or daycare that child had been attending since the 2019-2020 academic school year began – i.e. before the pandemic.
Now that summer is here, parents and employers are faced with the new challenge of identifying what constitutes as a “place of care” under the FFCRA. Many summer camps and programs were closed down before children were able to attend – or even enroll. Such camps and programs therefore would not have been “places of care” of any child at the time they closed. So how are parents to prove that their intentions were to enroll their child in a specific camp or program that has since shut its doors?
In the Field Assistance Bulletin No. 2020-4, the U.S. Department of Labor (“The Department”) further explains in the FFCRA the definition of a “place of care”, as well as other ways of satisfying the requirement of naming the summer camp or program that a child would have attended. A “place of care” is defined as a physical location in which care is provided for the employee’s child while the employee works and includes summer camps and summer enrichment programs. The Department noted that, among others, the following steps may satisfy the requirement of naming a specific “place of care” for a child;

• If the camp or program had an application process, submission of an application prior to the camp’s closure;
• Submission of a deposit prior to the camp’s closure;
• Recent prior attendance, such as attendance during the summer of 2018 or 2019, so long as other eligibility requirements are satisfied;
• Acceptance to a wait list for the camp or program;

As noted in the FFCRA, there may be other circumstances that show an employee’s child’s enrollment or planned enrollment in a summer camp or program. It would be impossible to address every potential circumstance under which an employee may satisfy these requirements. Therefore, the Department recognized in its guidance that there can be no one-size-fits-all rule.
When determining whether to approve or deny FFCRA leave to an employee based on the closure of a summer camp or program, employers should consider whether there is evidence of a plan for the child to attend the camp or program or, short of a “plan,” whether it is still more likely than not that the child would have attended the camp or program had it not closed due to COVID-19. If you need assistance regarding the approval or denial of FFCRA leave, or other employment law matters, please contact Kristina Curry or Matt Stokely or call (937) 223-1130.

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Here is a summary of the new provisions in the Paycheck Protection Flexibility Act:

• Extends the minimum repayment time of PPP loans to five years. This applies to any PPP loan made on or after June 5, 2020. Borrowers and lenders are free to negotiate a longer term of repayment at 1% interest.

• Extends the covered period for using PPP loan proceeds from June 30, 2020, to December 31, 2020.

• Extends the covered period for PPP loan forgiveness from eight weeks from the date of origination to the earlier of 24 weeks from the origination date or December 31, 2020. A borrower who received a loan before the bill’s enactment could elect to continue using the 8-week covered period set forth in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

• Extends the deadline for the safe harbors for FTE levels and salary reductions from June 30, 2020, to December 31, 2020.

• Provides that the amount of loan forgiveness will not be reduced by a reduction in the number of full-time equivalent employees, if, with respect to the period February 15, 2020, to December 31, 2020, the borrower is able to document in good faith that it was unable to rehire employees or unable to return to the same level of business activity due to an inability to comply with governmental standards related to sanitation, social distancing, or other safety requirements due to coronavirus.

• Provides that at least 60 percent of PPP loan proceeds should be used for payroll costs to receive loan forgiveness (overturning the 75 percent standard set forth by the Small Business Administration (SBA) and U.S. Treasury Department).

• Eliminates the six-month deferral of payments due under PPP loans and replacing it with a longer 10-month deferral as long as the borrower applies for forgiveness within 10 months of the end of the covered period. The covered period is the earlier of 24 weeks from loan origination or December 31, 2020.

• Allows for all employers to take advantage of the CARES Act deferral of the employer portion of social security payroll taxes, regardless of whether they have had a PPP loan.

 
Additional guidance from the Small Business Administration and the U.S. Treasury Department is expected within the coming weeks.  The attorneys at Pickrel, Schaeffer and Ebeling advise clients on all aspects of post-pandemic planning and legal compliance.  If you need assistance with planning for these changes, modifying your existing PPP loan forgiveness plan, or other strategies to return to business safely, please contact Kristina Curry or Matt Stokely at kcurry@pselaw.com or mstokely@pselaw.com, or call (937)223-1130.
 
You may also be interested in the following article:  https://www.pselaw.com/returning-to-business-and-ppp-loan-forgiveness/
 

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Companies that were not eligible to take the loan, because they were large companies with other forms of liquidity that they could draw upon, may return the funds by May 14, 2020 with “no questions asked.” 

The U.S. Treasury and the SBA issued frequently asked questions (FAQs) on PPP loans. One question asks whether businesses owned by large companies with adequate sources of liquidity to support their ongoing operations qualify for PPP loans. According to the SBA FAQ, all borrowers must evaluate their economic need for a loan under the standards in effect at the time of the loan application. The standards are set by the Coronavirus Aid, Relief and Economic Security (CARES) Act, which established the PPP, as well as subsequent regulations.  Borrowers must certify that their PPP loan request is necessary due to “current economic uncertainty” that made the loan necessary to support ongoing operations. The certification must be made in good faith, taking into account the borrower’s current business activity and ability to access other sources of liquidity in a way that’s not “significantly detrimental” to the business.

Treasury Secretary Steven Mnuchin has stated that PPP loans of $2M or more will be scheduled for audit. The loan application notes that making a false statement to obtain a guaranteed loan from the SBA is punishable by imprisonment of up to five years and/or a fine of up to $250,000.  The federal False Claims Act (FCA) permits treble damages, or triple the amount of the government’s actual damages, as well as civil penalties, imprisonment up to five years and a fine up to $250,000 for criminal liability.  Further guidance is expected from the SBA and Treasury within the coming days.  Please contact Kristina Curry at kcurry@pselaw.com, or one of our attorneys who are prepared to assist you if you have questions regarding your PPP loan, loan forgiveness, or whether you should consider any responses to the repayment deadline date on May 14, 2020. 

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• Record keeping requirements for PPP What is FTE?
• Loan Forgiveness Unemployment What are the important dates to keep in mind?
• How do I bring back employees if they have been laid off? 
• Should I be concerned about employees not returning when I can bring them back to work?
• Are there other options to consider as an employer if I didn’t get a PPP loan?

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In response to the COVID-19 health emergency, Congress passed the Families First Coronavirus Response Act (FFCRA), which provided for mandatory Expanded Paid Sick Leave (EPSL) and Expanded Family Medical Leave (EFMLA) for employees of businesses with fewer than 500 employees.  The U.S. Department of Labor (DOL) has assembled and continues to update several resources for employers, including a Frequently Asked Questions (FAQ) page to answer practical questions regarding how employers should apply the new laws, and what employees should expect if the need to take leave arises.  The Frequently Asked Questions (FAQ) may be found here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions  

If you are required to pay your employees expanded sick leave or family medical leave, you should also keep in mind that the FFCRA provides employers with tax credits equal to 100% (with capped limits) of the amount an employer pays to employees under both the expanded sick leave and expanded family medical leave provisions until the end of the year or until these provisions are modified by Congress.  Employers should also consider the availability of various SBA loan programs and other assistance which may provide for reimbursement, loan forgiveness, and up-front advances on payroll taxes for amounts paid under the new paid leave provisions of the FFCRA.  Information on some of these programs, including information under the Paycheck Protection Loan provision designed to help employers maintain their current payrolls, is available via the U.S. Treasury at https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses

More recent updates to this guidance from the DOL include whether an employer with fewer than 50 employees may take an exemption from providing paid leave under the EPSL and EFMLA programs.  The DOL has also announced a temporary stay on enforcement of the expanded paid leave laws under its Field Assistance Bulletin No. 2020-1.  Below is a summary of these recent updates:

TEMPORARY LIMITED NON-ENFORCEMENT PROVISIONS

The DOL will not bring enforcement actions against any public or private employer for violations of the Act occurring within 30 days of the enactment of the FFCRA, i.e. March 18 through April 17, 2020, provided that the employer has made reasonable, good faith efforts to comply with the Act.  For purposes of this non-enforcement position, an employer who is found to have violated the FFCRA acts “reasonably” and “in good faith” when all of the following conditions has been met:

1. The employer remedies any violations, including by making all affected employees whole as soon as practicable, by ensuring that all covered employees are paid all applicable sick leave and family leave wages.
2. The violations of the Act were not “willful,” meaning the employer did not know or show reckless disregard for whether the employer was in compliance with the new law.
3. The DOL receives a written commitment from the employer to comply with the Act in the future.

If the public or private employer either (i) violates the Act willfully, (ii) fails to provide a written commitment to future compliance with the Act, or (iii) fails to remedy the violation upon notification by the DOL, the employee seeking payment, or a representative of that employee, including by making all affected employees whole as soon as practicable, the DOL reserves its right to exercise its enforcement authority.

After April 17, 2020, this limited stay of enforcement will be lifted, and the DOL will resume enforcement under all applicable provisions of law.

SMALL BUSINESS EXEMPTION FROM EXPANDED PAID LEAVE PROVISIONS FOR SCHOOL CLOSINGS OR CHILD CARE UNAVAILABILITY ONLY

Under the FFCRA, the DOL was given the authority to promulgate rules for when an employer could claim an exemption from having to pay expanded leave benefits due to hardship.  The recent guidance from the DOL regarding small business (less than 50 employees) exemptions from paying sick leave benefits and extended leave benefits apply only to those situations where an employee is taking sick leave or family leave as a parent of a child when the child’s school is closed or the child’s care provider is unavailable.  Employers must still currently provide paid sick leave to all covered employees who must take sick leave under any other provision of the new law, which includes paid sick leave to cover other employee situations such as a diagnosis of COVID-19 or seeking a diagnosis, or upon the advice of a health professional to that the employee should quarantine at home due to a diagnosis or exposure to COVID-19.

Under the small business exemption, the employer, including a religious or nonprofit organization, with fewer than 50 employees is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern.  According to the DOL guidance, a small business may claim this narrow exemption if an authorized officer of the business has determined that:

1. The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
2. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
3. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

Employers are encouraged to obtain legal counsel to assist with determining whether their business operations meet the criteria for the limited exemption.  We will provide updates as additional guidance is made available regarding the small business exemption.

IMPACT OF THE FFCRA ON EMPLOYERS’ EXISTING PAID LEAVE POLICIES

Paid Sick Leave.

Under the new FFCRA emergency paid sick leave provisions, employers are not permitted to apply a covered employee’s existing paid sick leave time to satisfy the requirement to pay expanded leave under the FFCRA, unless the employee agrees.  Paid sick leave under the FFCRA is leave time that must be provided in addition to your employee’s other leave entitlements.  You may not require your employee to use provided or accrued paid vacation, personal, medical, or regular sick leave before the paid sick leave.  You also may not require your employee to use such existing leave concurrently with the paid sick leave under the FFCRA.  But if you and your employee agree, your employee may use preexisting leave entitlements to supplement the amount he or she receives from paid sick leave, up to the employee’s normal earnings.  Note, however, that you are not entitled to a tax credit for any paid sick leave that is not required to be paid or exceeds the limits set forth under the FFCRA.  You are free to amend your own policies to the extent consistent with applicable law.

Expanded FMLA to Care for a Child.

According to the new guidance issued by the DOL via it’s regularly updated Q&A FAQ, employers may require employees to use personal leave or paid time off, but not medical or sick leave if the employee is not ill.  After the first two workweeks (usually 10 workdays) of expanded family and medical leave under the EFMLA, you may require that your employee take concurrently for the same hours expanded family and medical leave and existing leave that, under your policies, would be available to the employee in that circumstance.

If you do so, you must pay your employee the full amount to which he or she is entitled under your existing paid leave policy for the period of leave taken.  You must pay your employee at least 2/3 of his or her pay for subsequent periods of expanded family and medical leave taken, up to $200 per workday and $10,000 in the aggregate, for expanded family and medical leave.  If your employee exhausts all preexisting paid vacation, personal, medical, or sick leave, you would need to pay your employee at least 2/3 of his or her pay for subsequent periods of expanded family and medical leave taken, up to $200 per day and $10,000 in the aggregate.  You are free to amend your own policies to the extent consistent with applicable law.

You may pay your employees in excess of FFCRA requirements.  But you cannot claim, and will not receive tax credit for, those amounts in excess of the FFCRA’s statutory limits.

There is one difference regarding an employee’s eligibility for paid sick leave versus expanded family and medical leave.  While your employee is eligible for paid sick leave regardless of length of employment, your employee must have been employed for 30 calendar days in order to qualify for expanded family and medical leave.  For example, if your employee requests expanded family and medical leave on April 10, 2020, he or she must have been your employee since March 11, 2020.

Employers Subject to FMLA Prior to April 1, 2020 Are Not Required to Provide Additional Leave.

Prior to April 1, 2020, employers with 50 or more employees and public employers were generally subject to providing FMLA leave to eligible employees under certain circumstances.  For such employers, if an employee was covered by the FMLA prior to April 1, 2020, his or her eligibility for expanded family and medical leave depends on how much leave he or she has already taken during the 12-month period that the business used for regular FMLA leave.  Employees may take a total of 12 workweeks for FMLA or expanded family and medical leave reasons during a 12-month period.  If an individual employee has taken some, but not all, 12 workweeks of available leave under FMLA during the current 12-week period that is documented by the employer, he or she may take the remaining portion of leave available.  If the employee has already taken 12 workweeks of regular FMLA leave during this 12-month period, the employer is not required to provide any additional FMLA leave under the expanded provisions in the FFCRA.

However, the employee may still be eligible to take paid sick leave.  If you are an employer who has properly designated and documented all FMLA leave, and were subject to the regular FMLA provisions prior to April 1, 2020, you may be able to shorten the length of time that you are now required to provide paid FMLA leave under the FFCRA.

If you have any questions regarding the application of the new guidance for implementing the FFCRA’s paid leave provisions or any other questions regarding the new COVID-19 related laws, please contact either Matt Stokely or Kristina Curry at (937)223-1130 or email mstokely@pselaw.com or kcurry@pselaw.com .

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On March 27, 2020, Congress approved the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a two-trillion-dollar aid package to help individuals and businesses who are experiencing the effects of the coronavirus pandemic and to stimulate the economy. Numerous programs are available and while the following list may not be exhaustive, here are just a few of the employment and small-business- related provisions, as well as a summary of benefits available to individuals, under the new law:

SUMMARY OF EMPLOYMENT AND SMALL BUSINESS-RELATED PROVISIONS

Employee retention credits.  The CARES Act provides eligible employers with a refundable payroll tax credit equal to 50% of certain “qualified wages” (including certain health plan expenses) paid to its employees in a calendar quarter if the employer is engaged in an active trade or business in 2020 and if, during the calendar quarter, one of the following conditions applied:

(i) the operation of that trade or business is fully or partially suspended due to a governmental order related to COVID-19; or

(ii) the gross receipts for that trade or business are less than 50% of gross receipts for the same calendar quarter of the prior year.  

For employers with more than 100 employees, wages eligible for the credit are wages that the employer pays employees who are not providing services due to the suspension of the business or a drop in gross receipts. For employers with 100 or fewer employees, all wages paid qualify for the credit.

The credit is capped at $5,000 (50% of $10,000 qualified wages) per employee for all calendar quarters.  Section 501(c) tax-exempt organizations are eligible for the credit, but governmental entities and companies receiving small business interruption loans under the CARES Act are not.

Paycheck protection program. This program gives the Small Business Administration (SBA) the ability to guarantee $350 billion in loans to small businesses via a network of more than 800 banks. The Paycheck program provides eight weeks of cash-flow assistance to small businesses with fewer than 500 employees.  No collateral or personal guarantees will be required by the lender. The portion of these loans that employers use for payroll costs, interest on mortgage payments, rent and utilities may qualify for forgiveness, provided that small businesses receiving these loans maintain their payrolls until June of 2020.

The interest rate on the loans cannot be greater than 4%. The CARES Act increases the SBA guaranty of such loans to 100% until the end of 2020.

In order to approve these loans, lenders are only required to determine whether a business (1) was operational on February 15, 2020, and (2) had employees for whom it paid salaries and payroll taxes, or a paid independent contractor.  Borrowers are required to make certifications regarding the impact of COVID-19 on their business and intentions regarding use of the loan.

The U.S. Treasury has the authority to approve new lenders who do not currently make 7(a) SBA loans to make Paycheck Protection Loans.   Businesses interested in Paycheck Protection Loans should contact their financial institution.  Further guidance is expected within the coming days regarding lenders who have been added to the list of lenders already approved to make these loans.

SBA Economic Injury Disaster Loans (EIDL).  The CARES Act creates a new emergency grant of $10,000 for small businesses that apply for an SBA economic injury disaster loan (EIDL).  EIDLs are loans up to $2 million with interest rates of 3.75% for businesses and 2.75% for nonprofits, and principal and interest payments deferred up to 4 years.  The EIDL loans may be used to pay for expenses that could have been met had the disaster not happened, including payroll and other operating expenses.  The EIDL grant does not need to be repaid even if the applicant is denied an EIDL.  A small business may apply for an EIDL grant and a Paycheck Protection loan.  The EIDL grant will be subtracted from the amount of the Paycheck Protection loan that is forgivable.   For businesses with existing SBA loans, (such as a 7(a), 504, or microloan) or take one out within 6 months after the CARES Act is enacted, the SBA will pay all loan costs for borrowers, including principal, interest, and fees, for six-months.  SBA borrowers may also seek an extension of the duration of their loan and delay certain reporting requirements.   More information on this program is available here: https://covid19relief.sba.gov/#/

Immediate payroll tax credits and advance refunds for employee sick leave and FMLA leave. The law provides for advance refunding of the payroll tax credits enacted last week in the Families First Coronavirus Response Act (FFCRA). The credits for required paid sick leave paid family leave under the recently expanded employee paid leave provisions may be refunded in advance using forms and instructions the IRS will provide. The IRS is instructed to waive any penalties for failure to deposit payroll taxes under Sec. 3111(a) or 3221(a) if the failure was due to an anticipated payroll tax credit.

Any tax credit advances are capped at the same amount as provided in the Families First Coronavirus Response Act (FFCRA), which provided for expanded emergency FMLA leave and emergency paid sick leave, with respect to tax credits, as originally enacted.

For paid emergency FMLA leave, the amount of the credit is equal to 100 percent of the “qualified family leave wages” that the employer is required to pay for the applicable quarter. This dollar-for-dollar credit is capped at $200 per employee per day, up to a maximum aggregate amount for all calendar quarters of $10,000 per employee.

For paid emergency sick leave, the amount of tax credit is capped at $511 per employee per day if the employee takes leave for reasons of quarantine, self-quarantine, or symptoms/diagnosis and at $200 per employee per day if the employee takes leave to care for a quarantined individual, for qualifying child care reasons, or to care for an employee’s own substantially similar condition. FFCRA also provides tax credits for self-employed individuals who would be entitled to receive emergency paid sick leave if they had been employed by a third-party employer.

The CARES Act also modified the FFCRA to provide that employees who were “laid off” by an employer on or after March 1, 2020, may potentially qualify for emergency paid FMLA leave if they are later rehired by the same employer. Layoff, however, is an undefined term.

To be eligible for this exception, a re-hired employee must have worked for the employer for at least 30 of the last 60 calendar days prior to layoff.

Payroll tax delay. 50% of 2020 employer payroll taxes until Dec. 31, 2021 will be delayed, and the other 50% will be due Dec. 31, 2022. 50% of self-employment taxes will not be due until those same dates.

Delay on single employer pension plan contributions. Single employer pension plans are allowed to delay quarterly contributions for 2020 until the end of the year.  Employers may also use 2019 funded status for the purposes of determining funding-based limits on plan benefits for the plan years that include 2020.

Click here for the Complete Guide for Small Businesses.

SUMMARY OF BENEFITS AVAILABLE TO INDIVIDUALS

Pandemic unemployment assistance. Temporary pandemic Unemployment Compensation assistance will be available through December 31, 2020.  The law expands the number of weeks of Unemployment Compensation available from 26 to 39 weeks. The provisions expand the availability of Unemployment Compensation to self-employed individuals, independent contractors, part-time workers (who are not covered by all states in normal circumstances) and others who are unable to work for reasons related to COVID-19.  Such reasons include the following:

•    being diagnosed with COVID-19;

•    experiencing symptoms of COVID-19 and seeking a COVID-19 diagnosis or testing;

•    a member of the individual’s household has been diagnosed with COVID–19;

•    caring for a family member or household member who has been diagnosed with COVID-19;

•    caring for a child or other household member whose facility has been shut down due to the coronavirus pandemic;

•    being unable to reach the place of work due to quarantine imposed as a direct result of the COVID-19 public health emergency;

•    being unable to reach the place of employment because a health care provider has advised self-quarantine due to concerns related to COVID–19;

•    being 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;

•    becoming the breadwinner or major support for a household because the head of the household died as a direct result of COVID-19;

•    quitting a job as a direct result of COVID-19; and

•    closure of place of business as a direct result of COVID-19.

In additional to the normal state unemployment benefits which vary from state by state, the CARES Act would provide an additional $600 per week benefit for up to four months, the intent of which is provide benefits that are closer to 100% of an individual’s normal income. 

Recovery rebates for individuals and families. The law provides for payments to taxpayers which will be treated as an advance on refunds of a 2020 tax year credit. Individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child. The credit will not be available to taxpayers with adjusted gross income (AGI) above $150,000 (for joint filers), $112,500 (for heads of household), and $75,000 for other individuals. The credit is not available to nonresident aliens, individuals who can be claimed as a dependent by another taxpayer, and estates and trusts. Taxpayers will reduce the amount of the credit on their 2020 tax return by the amount of the advance refund payment they receive.

No action on their part will be required to receive a rebate check, since the IRS will use a taxpayer’s 2019 tax return if filed or their 2018 return if they haven’t filed their 2019 return. This includes many individuals with very low income who file a tax return despite not owing any tax in order to take advantage of the refundable Earned Income Tax Credit and Child Tax Credit. The IRS will use a direct deposit method of providing the payment if that has been used in the past.  Individuals can also register for direct deposit at https://www.irs.gov/refunds/get-your-refund-faster-tell-irs-to-direct-deposit-your-refund-to-one-two-or-three-accounts

The best way for individuals and families to ensure they receive a recovery rebate is to file a 2019 tax return if they have not already done so. The law also instructs the IRS to engage in a public campaign to alert all individuals of their eligibility for the rebate and how to receive it if they have not filed either a 2019 or 2018 tax return.

If individuals have a past due debt to a federal or state agency, or owe back taxes, the rebate will nevertheless not be reduced.  The law turns off nearly all administrative offsets that ordinarily may reduce tax refunds for individuals who have past tax debts, or who are behind on other payments to federal or state governments, including student loan payments. The only administrative offset that will be enforced applies to those who have past due child support payments that the states have reported to the Treasury Department.

The recovery rebated are expected to go out to individuals and families within the next 2-3 weeks.

Retirement plan distributions. Up to $100,000 in coronavirus-related distributions from retirement plans will not be subject to the 10% additional tax for early distributions. Coronavirus-related distributions can be taken up to Dec. 31, 2020.  Taxpayers will be eligible to take the distribution if they have been diagnosed with SARS-CoV-2 virus or COVID-19 disease, a spouse or dependent has been diagnosed with SARS-CoV-2 virus or COVID-19 disease, they have experienced adverse financial consequences from being quarantined, furloughed, or laid off, have had his or her work hours reduced, or who is unable to work due to lack of child care. The law also allows loans of up to $100,000 from qualified plans, with delayed repayment provisions.

In order to begin the process of applying for a coronavirus-related distribution from a retirement plan, individuals should contact the plan or plan administrator for their individual retirement account. 

If you have questions regarding any of the above provisions of the CARES Act, or need further assistance with employment law or COVID-19- related matters, the attorneys at Pickrel, Schaeffer and Ebeling are here to assist you.  Please contact Kristina Curry, Matt Stokely or another PS&E attorney at (937) 223-1130 or via our website at www.pselaw.com.

The post President Signs “Cares Act” – passed by US House and Senate appeared first on Pickrel Schaeffer & Ebeling.

On March 27, 2020, Congress approved the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a two-trillion-dollar aid package to help individuals and businesses who are experiencing the effects of the coronavirus pandemic and to stimulate the economy. Numerous programs are available and while the following list may not be exhaustive, here are just a few of the employment and small-business- related provisions, as well as a summary of benefits available to individuals, under the new law:

SUMMARY OF EMPLOYMENT AND SMALL BUSINESS-RELATED PROVISIONS

Employee retention credits.  The CARES Act provides eligible employers with a refundable payroll tax credit equal to 50% of certain “qualified wages” (including certain health plan expenses) paid to its employees in a calendar quarter if the employer is engaged in an active trade or business in 2020 and if, during the calendar quarter, one of the following conditions applied:

(i) the operation of that trade or business is fully or partially suspended due to a governmental order related to COVID-19; or

(ii) the gross receipts for that trade or business are less than 50% of gross receipts for the same calendar quarter of the prior year.  

For employers with more than 100 employees, wages eligible for the credit are wages that the employer pays employees who are not providing services due to the suspension of the business or a drop in gross receipts. For employers with 100 or fewer employees, all wages paid qualify for the credit.

The credit is capped at $5,000 (50% of $10,000 qualified wages) per employee for all calendar quarters.  Section 501(c) tax-exempt organizations are eligible for the credit, but governmental entities and companies receiving small business interruption loans under the CARES Act are not.

Paycheck protection program. This program gives the Small Business Administration (SBA) the ability to guarantee $350 billion in loans to small businesses via a network of more than 800 banks. The Paycheck program provides eight weeks of cash-flow assistance to small businesses with fewer than 500 employees.  No collateral or personal guarantees will be required by the lender. The portion of these loans that employers use for payroll costs, interest on mortgage payments, rent and utilities may qualify for forgiveness, provided that small businesses receiving these loans maintain their payrolls until June of 2020.

The interest rate on the loans cannot be greater than 4%. The CARES Act increases the SBA guaranty of such loans to 100% until the end of 2020.

In order to approve these loans, lenders are only required to determine whether a business (1) was operational on February 15, 2020, and (2) had employees for whom it paid salaries and payroll taxes, or a paid independent contractor.  Borrowers are required to make certifications regarding the impact of COVID-19 on their business and intentions regarding use of the loan.

The U.S. Treasury has the authority to approve new lenders who do not currently make 7(a) SBA loans to make Paycheck Protection Loans.   Businesses interested in Paycheck Protection Loans should contact their financial institution.  Further guidance is expected within the coming days regarding lenders who have been added to the list of lenders already approved to make these loans.

SBA Economic Injury Disaster Loans (EIDL).  The CARES Act creates a new emergency grant of $10,000 for small businesses that apply for an SBA economic injury disaster loan (EIDL).  EIDLs are loans up to $2 million with interest rates of 3.75% for businesses and 2.75% for nonprofits, and principal and interest payments deferred up to 4 years.  The EIDL loans may be used to pay for expenses that could have been met had the disaster not happened, including payroll and other operating expenses.  The EIDL grant does not need to be repaid even if the applicant is denied an EIDL.  A small business may apply for an EIDL grant and a Paycheck Protection loan.  The EIDL grant will be subtracted from the amount of the Paycheck Protection loan that is forgivable.   For businesses with existing SBA loans, (such as a 7(a), 504, or microloan) or take one out within 6 months after the CARES Act is enacted, the SBA will pay all loan costs for borrowers, including principal, interest, and fees, for six-months.  SBA borrowers may also seek an extension of the duration of their loan and delay certain reporting requirements.   More information on this program is available here: https://covid19relief.sba.gov/#/

Immediate payroll tax credits and advance refunds for employee sick leave and FMLA leave. The law provides for advance refunding of the payroll tax credits enacted last week in the Families First Coronavirus Response Act (FFCRA). The credits for required paid sick leave paid family leave under the recently expanded employee paid leave provisions may be refunded in advance using forms and instructions the IRS will provide. The IRS is instructed to waive any penalties for failure to deposit payroll taxes under Sec. 3111(a) or 3221(a) if the failure was due to an anticipated payroll tax credit.

Any tax credit advances are capped at the same amount as provided in the Families First Coronavirus Response Act (FFCRA), which provided for expanded emergency FMLA leave and emergency paid sick leave, with respect to tax credits, as originally enacted.

For paid emergency FMLA leave, the amount of the credit is equal to 100 percent of the “qualified family leave wages” that the employer is required to pay for the applicable quarter. This dollar-for-dollar credit is capped at $200 per employee per day, up to a maximum aggregate amount for all calendar quarters of $10,000 per employee.

For paid emergency sick leave, the amount of tax credit is capped at $511 per employee per day if the employee takes leave for reasons of quarantine, self-quarantine, or symptoms/diagnosis and at $200 per employee per day if the employee takes leave to care for a quarantined individual, for qualifying child care reasons, or to care for an employee’s own substantially similar condition. FFCRA also provides tax credits for self-employed individuals who would be entitled to receive emergency paid sick leave if they had been employed by a third-party employer.

The CARES Act also modified the FFCRA to provide that employees who were “laid off” by an employer on or after March 1, 2020, may potentially qualify for emergency paid FMLA leave if they are later rehired by the same employer. Layoff, however, is an undefined term.

To be eligible for this exception, a re-hired employee must have worked for the employer for at least 30 of the last 60 calendar days prior to layoff.

Payroll tax delay. 50% of 2020 employer payroll taxes until Dec. 31, 2021 will be delayed, and the other 50% will be due Dec. 31, 2022. 50% of self-employment taxes will not be due until those same dates.

Delay on single employer pension plan contributions. Single employer pension plans are allowed to delay quarterly contributions for 2020 until the end of the year.  Employers may also use 2019 funded status for the purposes of determining funding-based limits on plan benefits for the plan years that include 2020.

Click here for the Complete Guide for Small Businesses.

SUMMARY OF BENEFITS AVAILABLE TO INDIVIDUALS

Pandemic unemployment assistance. Temporary pandemic Unemployment Compensation assistance will be available through December 31, 2020.  The law expands the number of weeks of Unemployment Compensation available from 26 to 39 weeks. The provisions expand the availability of Unemployment Compensation to self-employed individuals, independent contractors, part-time workers (who are not covered by all states in normal circumstances) and others who are unable to work for reasons related to COVID-19.  Such reasons include the following:

•    being diagnosed with COVID-19;

•    experiencing symptoms of COVID-19 and seeking a COVID-19 diagnosis or testing;

•    a member of the individual’s household has been diagnosed with COVID–19;

•    caring for a family member or household member who has been diagnosed with COVID-19;

•    caring for a child or other household member whose facility has been shut down due to the coronavirus pandemic;

•    being unable to reach the place of work due to quarantine imposed as a direct result of the COVID-19 public health emergency;

•    being unable to reach the place of employment because a health care provider has advised self-quarantine due to concerns related to COVID–19;

•    being 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;

•    becoming the breadwinner or major support for a household because the head of the household died as a direct result of COVID-19;

•    quitting a job as a direct result of COVID-19; and

•    closure of place of business as a direct result of COVID-19.

In additional to the normal state unemployment benefits which vary from state by state, the CARES Act would provide an additional $600 per week benefit for up to four months, the intent of which is provide benefits that are closer to 100% of an individual’s normal income. 

Recovery rebates for individuals and families. The law provides for payments to taxpayers which will be treated as an advance on refunds of a 2020 tax year credit. Individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child. The credit will not be available to taxpayers with adjusted gross income (AGI) above $150,000 (for joint filers), $112,500 (for heads of household), and $75,000 for other individuals. The credit is not available to nonresident aliens, individuals who can be claimed as a dependent by another taxpayer, and estates and trusts. Taxpayers will reduce the amount of the credit on their 2020 tax return by the amount of the advance refund payment they receive.

No action on their part will be required to receive a rebate check, since the IRS will use a taxpayer’s 2019 tax return if filed or their 2018 return if they haven’t filed their 2019 return. This includes many individuals with very low income who file a tax return despite not owing any tax in order to take advantage of the refundable Earned Income Tax Credit and Child Tax Credit. The IRS will use a direct deposit method of providing the payment if that has been used in the past.  Individuals can also register for direct deposit at https://www.irs.gov/refunds/get-your-refund-faster-tell-irs-to-direct-deposit-your-refund-to-one-two-or-three-accounts

The best way for individuals and families to ensure they receive a recovery rebate is to file a 2019 tax return if they have not already done so. The law also instructs the IRS to engage in a public campaign to alert all individuals of their eligibility for the rebate and how to receive it if they have not filed either a 2019 or 2018 tax return.

If individuals have a past due debt to a federal or state agency, or owe back taxes, the rebate will nevertheless not be reduced.  The law turns off nearly all administrative offsets that ordinarily may reduce tax refunds for individuals who have past tax debts, or who are behind on other payments to federal or state governments, including student loan payments. The only administrative offset that will be enforced applies to those who have past due child support payments that the states have reported to the Treasury Department.

The recovery rebated are expected to go out to individuals and families within the next 2-3 weeks.

Retirement plan distributions. Up to $100,000 in coronavirus-related distributions from retirement plans will not be subject to the 10% additional tax for early distributions. Coronavirus-related distributions can be taken up to Dec. 31, 2020.  Taxpayers will be eligible to take the distribution if they have been diagnosed with SARS-CoV-2 virus or COVID-19 disease, a spouse or dependent has been diagnosed with SARS-CoV-2 virus or COVID-19 disease, they have experienced adverse financial consequences from being quarantined, furloughed, or laid off, have had his or her work hours reduced, or who is unable to work due to lack of child care. The law also allows loans of up to $100,000 from qualified plans, with delayed repayment provisions.

In order to begin the process of applying for a coronavirus-related distribution from a retirement plan, individuals should contact the plan or plan administrator for their individual retirement account. 

If you have questions regarding any of the above provisions of the CARES Act, or need further assistance with employment law or COVID-19- related matters, the attorneys at Pickrel, Schaeffer and Ebeling are here to assist you.  Please contact Kristina Curry, Matt Stokely or another PS&E attorney at (937) 223-1130 or via our website at www.pselaw.com.

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On March 26, 2020, House Bill 197 was forwarded to the Governor and was signed into law on Friday, March 27, 2020.  The Bill, tolls any expiring administrative limitation or statute of limitation created under the Revised Code until July 30, 2020.  The Bill is retroactive to March 9, 2020 and is designed to allow individuals or businesses additional time to assess, and/or take, any actions which may have been on the verge of expiring. 

Additionally, for individuals or businesses already in litigation, the statute provides some additional relief from pending discovery cut-off and other pretrial deadlines. 

The most immediate effect of this statute may come into play with regard to Board of Revision filing deadlines, that are set to expire March 31, 2020.  Any business or individual who has taken a closer look at their real estate valuation issues as a result of this pandemic may wish to contact Mike Sandner at Pickrel, Schaeffer and Ebeling Co., L.P.A. to explore whether there is still an opportunity to pursue these claims even after the March 31, 2020 deadline as a result of the passage of House Bill 197.

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