Join our multipart livestream series to engage in the latest changes related to these uncertain times. You’ll hear strategies for navigating what these developments mean for you. Topics include issues related to legislation, liquidity, workforce, and other relevant topics.
In case you missed it:
What we talked about:
Rohen: Welcome back to our Livestream Series. Again, our first priority is your health and the wellness of you and your families, and all of us in the CLA family want you to know that we are thinking of you first during this time and we are here to support you. We have a lot to cover in today’s 30 minutes. Thank you for all your questions; please keep reaching out to us! We have provided links in the description box to make it easier to reach us.
Recently, three very large pieces of legislation have passed through Congress and been signed into law, all helping our country respond to the ongoing COVID-19 crisis. We anticipate a fourth measure in the coming weeks, and the CLA family will be keeping you updated and informed about its contents as we learn more. On Tuesday, we started unpacking the CARES Act from a tax and lending perspective and, for the first few minutes of our session today, we’ve brought back Leslie Boyd to recap some of the key points from that session. Thanks for coming back, Leslie.
Boyd: Thanks for having me back, Jen.
Rohen: We had thousands of questions from Tuesday and they’re still coming in. New rules were released Tuesday night related to a change in duration and interest charged on the Paycheck Protection Program, from 4% to 50 basis points on those loans. Can you please recap what that Paycheck Protection Program, or PPP, is and some key things to know about it?
Boyd: Using the Payment Protection Program under section 7(a) of the Small Business Act, the CARES Act provides for the U.S. Small Business Administration (SBA) to make loans under the Paycheck Protection Program (7(a) PPP). Unlike the SBA Economic Injury Disaster Loan Program, this program will be administered through qualified banks rather than directly from the SBA.
- Eligible organizations generally include small businesses with less than 500 employees, including sole-proprietors, independent contracts, and other self-employed individuals, 501(c)(3) nonprofits, 501(c)(19) veteran’s organizations and tribal business concerns.
- Allowable uses include payroll support (salaries, sick/medical leave, insurance premiums, etc.), mortgage interest, rent, and utility payments incurred during the eight-week period following the origination date of the loan.
- Loan amount will be forgiven for amounts spent by borrower during the eight-week period after the origination date of the loan for allowable uses, subject to certain limitations and possible reductions.
- Loan Forgiveness amount will be reduced proportionately based on quotient of 2020 Full-time-equivalent (FTE) employees during the period from February 15 to June 30, 2020 compared to a corresponding prior year or representative pre-COVID-19 period.
- Forgiveness amount will NOT be subject to tax.
Rohen: Thanks, Leslie. That’s super helpful. For everyone in the audience, please use the links in the description to ask questions and we will direct you to the appropriate resource to help with the process. Leslie, the other questions that a lot of people are asking have to do with the employee retention credit and how it works with the PPP. Can you tell us a few things you’d like for us to highlight and take away from the conversation on that topic?
Boyd: Yes, it’s important to note that this credit cannot be taken for any organization taking advantage of the PPP. It’s a refundable payroll credit that can be claimed by employers with an average of more than 100 employees for all employees who are retained but not currently working as a result of COVID-19. For employers with an average of fewer than 100 employees, all wages paid qualify for the credit so long as they meet other requirements related to suspension of business or reduction in gross receipts.
The credit is computed on a calendar-quarter basis and equals 50 percent of qualified wages up to $10,000 paid to each employee or $5,000 in actual credit. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. Wages paid under the FFCRA are not included as “qualified wages.”
Rohen: Thanks, Leslie, I think that sums it up perfectly. I’m sure this sparks a few more questions for our audience, but hopefully also provides a little clarity on these issues. We ask that you continue to contact your CLA advisor for more information and certainly feel free to use the links in the description box to ask questions. We will direct you to the appropriate person. You may also find information on our COVID-19 Resource page at claconnect.com. We will also be hosting industry specific webinars as time unfolds, in order to help apply these provisions to your specific business situation. Please stay tuned to our communication for future sessions and please register to attend as invitations arrive.
As we approach our topic today, no one would deny these are extraordinary times. How organizations handle the next several months will, in part, define the identity of the business and showcase its culture.
We have brought in one of CLA’s human resources consultants, Thomas Schultz. Thomas bring more than 25 years of experience as a human resources professional in a number of areas including: leadership coaching, employee relations, benefits, training and development, change leadership, and employment law matters.
Today, Thomas is going to talk about a number of things including how to discuss COVID-19 with employees, sharing insights on how employers are communicating operational stances; and the need for furloughs or layoffs based on the FFCRA; and finally to provide some insight on how to document your efforts to comply with the law, and keep your employees informed.
Rohen: Welcome Thomas. Let’s start by having you talk about the main themes employers are struggling with during this time.
Schultz: Thank you for having me and hello to our CLA Family and clients. Prior to the COVID-19 pandemic, employers were already facing significant challenges to attract, recruit, and retain staff. Now, with the pandemic impacting our workplaces, there is no shortage of additional stress by both leaders and their staffs.
My goal through the topics today is to explain and then model the specific tools and tips. No doubt, if I do my job well, you may also come away with more questions and we would be pleased to help you with those specifies offline.
Clients today are falling into two broad categories: those trying to remain operational, as they provide services or goods that the rest of us rely on; and those who have to communicate the difficult decision to temporarily, or perhaps permanently, slow or stop operations.
In both cases, leaders are painfully aware of the impacts of decisions on their employees and their families - regardless of the options they choose.
Each asks the same thing that their employees are, “Just tell us our options.” So, as we go forward for the remainder of our time here, let’s keep that in mind.
Rohen: So, for those employers who have work and are trying to stay operational, what advice are you giving them?
Schultz: There is an operational side to communicating, as well as a personal side. The harder of the two tends to be the personal side because of the amount of emotion involved.
High performing employers define the challenge to their employees. Twenty-five years in human resources has repeatedly shown me that when people understand the challenge and the responsibilities they have, they take action.
Practically speaking, employers should talk in terms of two specific things: (1) the facts that define the current challenge and (2) how each employee is vital to each other by remaining available for each other, and in support of customers or clients.
It might sound something like this, “Our Company has an important role to play during these difficult times. Our customers, clients, and members know we are under pressure and rely on us to deliver the support and products that define ‘who we are’ as an organization. We will be stressed not only as an organization, we will be an individuals. Each of us need to know we can rely on others as we do our jobs.
The second area of communication is around the operational side. These are the steps that the organization is taking to follow safe working protocols. It includes things like the washing of hands, limiting or eliminating close contact, and so on.
Rohen: What options does an employer have in response to those employees who are truly concerned about their workplace and fearful of coming into work?
So to be clear, what we are talking about is when someone is not otherwise covered by the Families First Coronavirus Response Act (FFCRA), but is concerned about reporting to work, because of a fear of the virus.
There are potentially three responses that employers can choose from. Keep in mind that clients should consult local and/or state statutes that may impact the options that I will reference. The options include:
- Allowing the person to remain off of work through some form of discretionary paid or unpaid time off.
- Asking the employee, which available, unused paid time off benefits they will apply to cover the time off.
- Requiring the employee to use available, unused paid time off benefits they will apply to cover the time off.
Unless otherwise allowed by specific state unemployment rules, none of these options create eligibility for unemployment. We can all empathize with the concern about exposure. However, the current Department of Labor questions and answers reinforce that the person would not be eligible for benefits under the FFCRA in cases like this.
Rohen: Some employers are deciding whether to have their staff apply for unemployment. What should they be keeping in mind as they talk about that with their staff?
Schultz: The decision to lay people off is one that business owners talk with me about almost every day. These people share how stressful decisions like this are and struggle to understand their options. Based on the most recent Families First Coronavirus Response Act: Questions and Answers from the Department of Labor (DOL), Questions 23 - 28 talk through several situations related to an employer closing and the benefits under the FFCRA. The document states that employees impacted by a partial or full company closure are not eligible for benefits under the FFCRA, unless those benefits have already started.
Rohen: Is there really a difference between the reasons for people collecting unemployment?
Schultz: For the sake of our discussion here, a person can become eligible for unemployment benefits as a result of a:
Furlough – meaning the company’s workload has slowed and the person is not able to work their full shift. In these cases, the person remains employed and has an expectation of returning to work at their employer; OR
Terminated – meaning that the employer has separated employment with the individual and there is no expectation of returning to work with the employer.
Broadly speaking in both cases, there is a separation event that was not caused by the actions of the employee. Again with the exception of state specific rules, which are outside the scope of this time, situations like these normally result in eligibility for unemployment benefits.
The difference I would like to highlight is the impact on an employee’s employment status and benefits availability.
Clients need to be talking with their benefits carriers because furloughed employees may be able to maintain their benefits eligibility. Employees not furloughed may qualify for COBRA benefits.
Rohen: So let’s talk more about the FFCRA and the Cares Act; what steps should employers take to document their actions?
Schultz: There is a requirement for employers with less than 500 employees to post the WH1422 Employee Rights PAID SICK LEAVE AND EXPANDED FAMILY AND MEDICAL LEAVE UNDER THE FAMILIES FIRST CORONAVIRUS RESPONSE ACT poster at least through the end of the year.
Some companies question the need to post the notice. Like other mandated postings, there are penalties for failure to post the notice (found here).
Before getting into more specifics, let’s start with the understanding that the basis for the FFCRA is the Federal Family and Medical Leave Act (FMLA). One of the key provisions of the FMLA is that employers, not employees, have the primary responsibility to recognize when an employee may be eligible for benefits under the law.
Questions 15 and 16 of the DOL questions and answers talks about the records that needs to be kept under the law. Private sector employers use the documentation for leave taken through refundable tax credits.
CLA recommends using clear, consistent, documentation.
There is a handful of key information commonly required to be kept including, but not necessarily limited to:
- Unique identification of the employee taking leave
- Date of hire
- Leave dates
- Pay provided during the leave
- The date that the pay was issued
- The cost of benefits provided
Remember that the certification requirements under the FMLA still apply. There are exceptions made where there is no way to get documentation — for example during some school closures.
CLA encourages employers to provide employees with layoff and furlough letters, resulting in eligibility for unemployment. These letters serve two purposes(1) they help reduce confusion and (2) they also serve as a method of documentation under the Cares Act.
Rohen: What if there is little to no information provided by an employee related to their request for FFCRA time off?
Schultz: It may not be possible to get documentation for things like expanded family and medical leave to care for a child whose school or place of care is closed, or child care is unavailable, due to COVID-19. Employers can use sources of information like a notice that has been posted on a government, school, or day care website.
Rohen: What about those staff who are collecting unemployment; what types of communication and documentation should be kept for those individuals?
Schultz: For most employers, they want to bring their employees back to work as soon as possible.
Some of the “best practices” involve the use of electronic communications and the use of social media.
For those employers with corporate intranet sites, it includes providing “status updates” on operations.
For social media it can include showcasing how employees are staying busy — and perhaps supporting others in their community — even with the specific restrictions that may be in place.
The key is to keep employees connected in some way to the business and each other. Without that happening, people may be more likely to look for other opportunities.
Perhaps most importantly, it also shows a “cadence of interaction” that results in deeper connections.
And that takes us back to what Tom Landry said, ‘“During a time of crisis, leadership is a matter of having people look at you and gain confidence; seeing what you do and how you react. If you are in control; they are in control.
Sometimes communication can be that, “ there is nothing new,” but that you are wishing everyone good health and are looking forward to getting back to normal.
Rohen: Thank you, Thomas, for that guidance through these extremely challenging issues. I think our employers can help manage their organizational culture and support their employees through these times. To our audience, thank you for the extremely active chat. We will be getting back to you with answers to your questions in the coming days.
As a reminder, please stay tuned to our COVID-19 resource page on claconnect.com for updates and more information. Our next livestreams are Tuesday and Thursday.Look for webinar invitations from your specialized industry leaders on specific applications of these laws to you. If you have questions related to this livestream, please use the links in our description box. We look forward to working with you, soon, and from our CLA family to yours, please stay safe and healthy.