Perspectives

The CARES Act provides much-needed financial assistance to a wide-variety of businesses, self-employed persons and sole proprietors. Here’s a summary of the key aspects of the Act.

Self-Employed, Sole Proprietors and Independent Contractors Now Eligible for Unemployment Compensation Benefits – The CARES Act makes unemployment compensation benefits available for persons not traditionally eligible (self-employed, independent contractors, those with limited work history, and others) who are unable to work as a direct result of the coronavirus public health emergency.

Small Business Relief for Maintaining Payroll – Under the CARES Act, eligible businesses (companies with up to 500 employees) that maintain their payroll while workers are forced to stay home would be able to receive up to 8 weeks of cashflow assistance. Small businesses would get loan guarantees while workers must stay home. This is delivered through the SBA Economic Injury Disaster Loans (EIDL) or expanded 7(a) Program loans. Employer can qualify to have a certain amount of the 7(a) loans forgiven with no tax consequences.
Grants of up to $10,000 – These are available as part of the SBA’s EIDL program. The SBA must distribute EIDL emergency grants within 3 days. Applicants are not required to repay emergency grants, even if they are ultimately denied EIDL.

Payroll Tax Deferrals – Employers and self-employed individuals may also defer payment of the employer share of the Social Security tax on employee wages. Deferred employment tax must be paid over the following two years, with half of the amount required to be paid by December 31, 2021, and the other half by December 31, 2022.

Payroll Tax Credit – The Act provides a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis. The credit would be available to employers whose: (1) operations were fully or partially suspended, due to a COVID-19 related shutdown order; or (2) gross receipts declined by more than 50% when compared to the same quarter in the prior year. The credit would be provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit would be provided for wages paid or incurred from March 13, 2020, through December 31, 2020.

Penalty-Free Withdrawals from Retirement Accounts – The Act creates a new emergency retirement plan distribution option dubbed the “coronavirus related distribution,” or “CRD” for short. Small business owners could use this money to help them through the COVID crisis while waiting on another form of assistance mentioned above. A CRD can be drawn from an employer sponsored retirement plan such as a 401(k) or from individual retirement accounts (IRAs), in any amount up to $100,000. The normal 10% penalty tax levied on early plan distributions by the Internal Revenue Service (IRS) is waived. Furthermore, the individual taking a CRD can spread the reported income over three years for tax purposes, and the distribution also can be repaid within three years to avoid taxation.

If you are a small business owner and want to know more about financial assistance available to you in the CARES Act, please call your LegalShield Provider Law Firm.

Posted on April 1, 2020

Families First Coronavirus Response Act

Late on Wednesday evening, President Trump signed the Families First Coronavirus Response Act which, among other things, addresses federal emergency FMLA and paid sick leave. Below are the highlights.

Emergency Family and Medical Leave Expansion Act

Effective Dates: April 2, 2020 – December 31, 2020

Covered Employers: Private employers with fewer than 500 employees and public agencies of any size (though employers with fewer than 50 employees are shielded from civil FMLA damages in an FMLA lawsuit, meaning reduced liability in terms of back pay or liquidated damages)

Eligible Employees: Employees who have been employed for at least 30 calendar days by the employer

Leave Entitlement: Up to 12 weeks

Reasons for Leave: Eligible employees may take up to 12 weeks of leave for a qualifying need related to a public health emergency. Such qualifying need is limited to circumstances in which the employee is unable to work or telework due to a need to care for a minor child if the child’s school or place of child care has been closed or is unavailable due to a public health emergency.

Financial Benefit: The first 10 days of emergency FMLA leave is unpaid unless an employee elects to utilize any accrued vacation leave, personal leave, or medical or sick leave (including emergency paid sick leave, discussed below) concurrently.

After 10 days, employees are eligible for an amount that is not less than two-thirds of their regular rate of pay based on the number of hours the employee would otherwise be normally scheduled to work.

In the case of an employee whose schedule varies from week to week to such an extent that an employer is unable to determine with certainty the number of hours the employee would have worked had the employee not taken leave, the employer should use: (1) a number equal to the average number of hours that the employee was scheduled per day over the immediately preceding 6-month period (including leave hours); or (2) if the employee did not work over the immediately preceding 6-month period, the reasonable expectation of the employee at the time of hiring of the average number of hours per day that the employee would normally be scheduled to work.

Emergency FMLA leave pay need not exceed $200 per day or $10,000 in the aggregate.

Notice: Employees with a need for leave must provide as much notice as is practicable.

Reinstatement: Employees are eligible for reinstatement pursuant to default FMLA rules. An exception applies for employers with fewer than 25 employees if certain conditions are met (such as non-existence of previously held position due to economic conditions, etc.)

Emergency Paid Sick Leave Act

Effective Dates: April 2 – December 31, 2020.

Covered Employers: Private employers with fewer than 500 employees and public agencies of any size

Eligible Employees: All current employees, regardless of days of service.

Leave Entitlement: 2 weeks of paid leave, meaning 80 hours for full-time employees. Part-time employees receive a number of hours equal to that worked on average over a 2-week period.

Reasons for Leave:

• Employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19
• Employee has been advised by a health care provider to self-quarantine because of COVID-19
• Employee is caring for an individual ordered or advised to quarantine or isolate
• Employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis
• Employee is caring for a son or daughter whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 precautions
• Employee is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor

Financial Benefit: Employees should receive their regular rate of pay for leave related to their own care, diagnosis, quarantine, or isolation. When employees use paid sick leave to care for a family member or for school or child care closures, they are entitled to two-thirds their regular rate of pay.

Emergency sick leave pay may be limited to $511 per day and $5,110 in the aggregate where leave is taken for the employee’s own illness, diagnosis, quarantine, or isolation, and $200 per day and $2,000 in the aggregate for leave taken to care for others or for school or child care closures.

Carryover: Paid sick time under the new law does not carryover after December 31, 2020.

Existing Leave Policies: Paid sick leave under the new law is available to employees in addition to leave under an existing company policy. Employers may not require employees to first use accrued leave under existing company policy before using sick leave under the new law.

Tax Credits

The law provides for reimbursement for employers via payroll tax credits. Refundable tax credits equal to 100% of qualified family and sick leave wages an employer pays for each calendar quarter will be available. Tax credits against income taxes are also available to self-employed individuals (at a reduced, two-thirds rate when using emergency paid sick leave to care for family members or due to school or child care closures).

This blog article is intended for general informational purposes only and should not be construed as legal advice or opinion. Contact myHRcounsel with questions concerning specific facts and circumstances.

Posted on March 19, 2020

A new bill signed Friday April 12, 2019 by Governor Tim Walz is set to go into effect August 1.

The new Hands-Free Cell Phone bill is aimed at reducing accidents caused by distracted driving. The bill, in effect, will ban drivers from using their cell phones while driving unless the function is hands-free or voice-activated. …

Minnesota employers, be prepared.  A broad new wage theft and employee recordkeeping law goes into effect on August 1, 2019.  This leaves employers with less than two months to prepare to comply. …

WFJ’s Small Business Team has counseled clients in the execution of small business asset purchases for a diverse set of industries, including restaurants/food service, manufacturing, publishing, insurance, retail, and many others. …