The challenges faced during the COVID-19 emergency are far-reaching and have impacted virtually every business. Not only have stay at home and business closures drastically impacted revenue, but the expansion of employee paid leave and emergency benefits have added another dimension to the problem. The lightning-fast pace of changes from Washington DC has left many Atlanta business owners wondering how to keep pace while focused on business continuity. To help address these concerns, Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act, to provide immediate relief to companies and individuals. While there are many business tax, business financing, and retirement plan changes mandated, there were also several employee benefits, payroll, and unemployment changes as well. To help clients, prospects, and others, Wilson Lewis has provided a summary of key points below.
Paid Leave & Business Incentives
- Paid Leave Limitation Provisions – There is clarification about the compensation companies are required to pay employees for qualifying leave as implemented in prior legislation. The Act states that an employer’s requirement to provide two full weeks of emergency paid leave should not exceed $511 per day or $5,111 in total for an employee impacted by COVID-19. It also states those who need time off to care for a child or quarantined individual is limited to $200 per day or $2,000 in total.
- Rehired Employees Paid Leave – Prior to the CARES Act, the Family Medical Leave Act (FMLA) was changed to permit employees with at least 30 calendar days of service were to receive expanded FMLA benefits. The CARES Act formally amends FMLA to ensure paid leave is provided to employees that were laid off after March 1, 2020, worked for an employer at least 30 of the last 60 days and were rehired.
- Advance Refunding of Tax Credits – Since companies will need to pay the initial costs of expanded paid leave provisions, there was a tax credit created to help offset these expenses. To ensure cash flow issues are not created, the Act has created an advanced refunding of the tax credits process. It permits companies to keep payroll taxes owed to the amount equal to the costs incurred providing required paid leave. It’s important to note when the payroll tax credit is not enough to cover costs, the company can request an advance of anticipated credits or refunds from the IRS.
- Social Security Tax Deferral– To help companies optimize cash flow, the Act permits all employers to delay payment of the employer’s portion of 2020 Social Security. Under the deferral, businesses are required to pay 50% of outstanding taxes by December 31, 2021, and the final 50% no later than December 31, 2022.
New & Expanded Unemployment Programs
- Short Time Compensation (Work Sharing) – This program is designed to reduce the number of layoffs resulting from reduced demand while allowing employers to keep employees that will be needed when demand increases. Employees experiencing a reduction in hours are allowed to collect a portion of unemployment benefits to cover lost wages. To offer this benefit, employers must have an approved plan implemented with the state workforce agency. Since program participation is initiated by the employer, they will need to file the necessary application and paperwork.
- Expansion of Unemployment Benefits – The Act expands access to unemployment benefits for those who are traditionally not eligible to receive them under federal or state laws. This includes self-employed individuals (consultants and independent contractors), those seeking part-time employment, and those with an insufficient work history. To qualify an individual must be unemployed, partially employed or unable to work because they have COVID-19, a household member has COVID-19, they are providing care to an infected family member, a child’s school is closed due to the emergency, was scheduled to start a job nut cannot or has been advised to self-quarantine. The amount of unemployment available is equal to the state calculated amount plus $600. Payments for qualifying unemployment will be made retroactively starting from January 27, 2020, through year-end, up to 39 weeks.
- Supplemental Pandemic Payment – The Act also provides additional relief to those receiving unemployment by paying an additional $600 of compensation per week. The additional payment is available to employees of both public and private sector companies and is not dependent on the amount of benefit currently received. The supplemental payments are available through July 31, 2020, and are reimbursed by the federal government.
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The expanded pay, benefits and unemployment compensation is designed to help individuals manage through the change. However, the details of the programs including how businesses will be impacted is important to consider. If you have questions about the information outlined above or need assistance with a COVID-19 business concern, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to guiding you through this challenging time.