PayNW is committed to helping its clients navigate the COVID-19 crisis and related legislation. Below you will find summaries of some the most important federal payroll-related programs, a description of specific ways PayNW can help, a summary of relevant Washington State programs, links to resources for other US states, and a link to some very helpful COVID-related HR resources and policies.
New Federal Legislation
CARES Act S.3548
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. Three provisions of the Act that help small and medium-sized businesses are the Paycheck Protection Program, payroll tax deferral and an employee-retention tax credit.
Paycheck Protection Program
Under the CARES Act, businesses qualify for loans available through the U.S. Small Business Administration (SBA). The program provides loans to eligible businesses that are partially forgivable to encourage businesses to retain employees during the COVID-19 crisis.
Funds loaned under the Paycheck Protection Program (PPP) may only be used for the following items (although the Act does provide some exceptions):
- Payroll costs
- Costs related to group health care benefits during paid sick, medical or family leave, and insurance premiums
- Employee salaries
- Mortgage interest payments
- Interest on any other debt obligations incurred before the Act’s covered period (February 15, 2020 through June 30, 2020).
A loan funded under PPP is eligible for forgiveness and cancellation for up to the full amount of the loan’s principal. The amount of the loan eligible for forgiveness is subject to reduction if the borrower terminates employees or reduces employee salaries and wages during the eight-week period that begins on the date that the loan is funded.
Loans for this program are available until June 30, 2020. Contact your bank now to learn more about this important program and whether it is right for your business.
Learn more about the Paycheck Protection Program
Payroll tax deferral
The CARES act also provides for the delay of payment of Employer Social Security tax (6.2% of applicable wages) and some self-employment taxes incurred between March 27, 2020 and December 31, 2020. 50% of deferred amounts are due by December 31, 2021 and the remainder is due December 31, 2022. However, payroll tax deferral is not available to businesses that obtain a loan under the Paycheck Protection Program that is later forgiven. Further guidance on this restriction is still forthcoming. Employers should exercise caution utilizing the payroll tax deferral option until they fully understand the effect on their ability to obtain an SBA Paycheck Protection Program loan or determined that they will not seek such a loan.
PayNW will defer your employer social security tax payments only at your direction, however employers are reminded that those payments are still due and payable under the deferred deadlines.
Employee Retention Tax Credit
The CARES Act provides payroll tax credit equal to 50% of qualified wages paid up to $10,000 per employee. Employers are eligible for the credit for any quarter in which they have either had to fully or partially suspend operation of business because of governmental orders due to COVID-19, or if they have had more than a 50% decline in gross receipts as compared to the same quarter a year ago. Employers who receive a Small Business Interruption Loan under the CARES Act cannot claim the employee retention credit.
For all three of these options under the CARES Act, employers should consult with their tax advisor.
Families First Coronavirus Response Act (FFCRA) HR 6201
The Families First Coronavirus Response Act (FFCRA) goes into effect on April 1, 2020. For a good synopsis of the key points of the FFCRA from the IRS, click here.
The FFCRA mandates that employers of less than 500 employees must provide paid leave for employees affected by and unable to perform their work due to the coronavirus. This paid leave is of two types:
- Paid sick leave. 80 hours of paid sick time available at the employee’s full regular rate of pay subject to dollar caps. This is reduced to two-thirds pay if the leave is due to caring for others (sick or quarantined family member or child whose school or childcare is unavailable)
- Paid Emergency FMLA. Ten additional weeks of paid FMLA for those who must stay home to care for a child whose school or childcare is closed. The ten weeks are to be paid at two-thirds the employee’s rate of pay, subject to dollar caps. Provisions are made to calculate part-time workers’ regular rate of pay.
Payroll Tax credits are available to employers to offset all costs of providing these paid leaves. Credits also include the portion of health insurance costs that is attributable to the paid leave provided. Credits can be used immediately by offsetting the cost associated to FFCRA leave against all federal employment taxes in the pay period.
HR 6201 requires employers to post this notice in a conspicuous location in the workplace (or each work location, if employees report to different buildings). Employees who are working from home must receive the notice as well; employers can distribute it via email, snail mail, or by posting to an internal or external website intended to provide information to employees.
Download the required FFCRA notice
FFCRA Notification Requirements FAQ
Required Employer Documentation for Leave Tax Credits
The documentation required to claim an FFCRA payroll tax credit is listed below. Employers may not require more documentation from employees than is described below. The IRS has a very helpful overview and FAQ that covers other common questions about the tax credits in detail.
Employers can substantiate eligibility for FFCRA sick leave or family leave credits by receiving a written request from the employee that includes the following:
- Their name
- The date or dates for which leave is requested
- A statement of the COVID-19 related reason they are requesting leave and written support for such reason
- A statement that they are unable to work, including by means of telework, for such reason.
For leave based on a quarantine order or self-quarantine advice, the request should include the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine. If the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee should be included.
For a leave request based on a school closing or child care provider unavailability, the statement should include the name and age of the child (or children) to be cared for, the name of the school or place of care that has closed, and a representation that no other person will be providing care for the child during the leave. If a child who needs care is 15 or older, the employee must affirm that there are special circumstances (but need not explain them) — the IRS otherwise assumes kids 15 and older can take care of themselves for the length of a workday.
According to the DOL, this is the extent of the documentation employers may require.
Department of Homeland Security Announces Flexibility in Form I-9 Requirements
On March 20, 2020, DHS announced new flexibility in Form I-9’s physical proximity requirements. Employers who are implementing physical proximity precautions due to COVID-19 may defer the review of an employee’s identity and employment authorization documents in the employee’s physical presence. However, Section 2 documents must still be inspected remotely, and employers must obtain a copy of these documents.
Employers must write “COVID-19” as the reason for the physical inspection delay in the Additional Information field of Form I-9 once normal operations resume.
Jump to Section
- CARES Act S.3548
- Families First Coronavirus Response Act (FFCRA) HR 6201
- Department of Homeland Security Announces Flexibility in Form I-9 Requirements
Resources for Washington Employers
How PayNW Can Help
Paychecks mailed directly to employee residence
Understanding that many employees are now either working from home or temporarily unable to come to their place of work, PayNW can switch paper paychecks to be delivered to each employee’s home address, instead of sending paychecks to the work location. To understand if this is the right option for your business, contact your CSR to learn more.
FFCRA leave tracking and credit obtainment
PayNW can help its clients track the new Sick Leave and Emergency Paid FMLA Leave mandated by the FFCRA. Earnings codes are now available to be configured to client specific circumstances. Leave can be requested and approved and tracked using PayNW’s HCM system. Clients are being provided a FFCRA Leave configuration questionnaire in order to expedite deployment of these new leave types.
PayNW can help clients utilize the employment tax credits provide by the FFCRA by offsetting the cost of the newly mandated sick and paid FMLA leave against their federal employment taxes. Should clients have credits beyond their federal employment taxes, PayNorthwest can assist with obtaining advanced payment of the credit by completing Form 7200 on behalf of the client.
If your best option in response to this crisis is to furlough some of your workforce, PayNW can help guide you in how to best manage your system data to help facilitate unemployment claims, maintain seniority and benefits should you so choose, minimize your system cost with us, and set you up for the easiest possible return of your people when furlough is over.
CARES Act provisions
PayNW cannot advise clients on which of the CARES Act provisions relating to payroll and payroll taxes is best for them (the provision are in some cases mutually exclusive of each other).
SBA Paycheck Protection Program: PayNW can assist clients in producing payroll reports requested by the client’s bank in the application process.
Payroll Tax Deferral (Employer Social Security tax deferral): If client decides to avail itself of this option, PayNW will reduce tax collection from clients accordingly and initiate a reminder and collection for the deferred taxes based on the deferral timelines outlined in the CARES Act
Employee Retention Credits: If client determines they qualify, PayNW will offset client payroll taxes collected as allowed per guidelines from the IRS.
Resources for Washington State Employers
Washington State’s Employment Security Department (ESD) rolled out emergency rules that ease the burden of temporary layoffs for workers and employers during the COVID-19 emergency.
Key changes during the COVID-19 emergency are:
- Employees are eligible for unemployment benefits and employers are eligible for relief of benefit charges if operations need to be temporarily ceased as a result of COVID-19
- Workers with a minimum of 680 hours are eligible for standby
- Work search requirements can be waived for employees who are asked to self-isolate by a medical professional or a public health official
Washington State Employment Security Department resources for businesses affected by COVID-19
State of Washington Governor Jay Inslee Issues New Proclamation to Temporarily Suspend Wage Garnishments
Read the full proclamation here
Programs to Help Businesses Keep Workers During COVID-19 Crisis
SharedWork allows employers to reduce the hours of permanent and hourly employees by up to 50% while allowing the employees to collect partial unemployment benefits to replace a portion of their lost wages.
If you are a Washington State employer and considering reducing your workforce’s hours, this program may be a valuable option for you and your employees. While your company does need to provide a designated representative to work directly with SharedWork, PayNW is here to assist you in providing reports and information from the PayNW system.
Read more about SharedWork from Washington’s Employment Security Department
If you need to temporarily cease or scale back operations you may place workers on standby for up to eight weeks during a single claim year. While on standby, your employees can collect unemployment benefits without having to look for other work. They must also accept any work you offer that they can do without breaking isolation or quarantine. Relief of benefit charges cannot be granted in this situation.
Resources by State
- North Carolina
- North Dakota
- New Hampshire
- New Jersey
- New Mexico
- New York
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
COVID-19 Crisis HR Support Center
Thank you from the bottom of my heart for all of your guys hard work and dedication to get us all Small Business owners through this absolute C.R.A.Z.Y times!! Please know that your guys’ hard work never goes unnoticed and that it is always appreciated!!!
Stay safe and healthy!!!