Guidance Regarding Executive Order’s Payroll Tax Deferral

In early August, President Trump signed an Executive Memorandum directing the Secretary of the Treasury to defer the payment of payroll taxes from September 1 until December 31, 2020 for employees earning less than $4,000 per pay period (or $104,000 per year). Late in the day on August 28, 2020, the Treasury Department and IRS released guidance on the issue.

Employers may opt to temporarily stop deducting eligible employees’ payroll tax payments, from September 1 until December 31, 2020. The deferred payroll tax payments represent employees’ shares of Social Security taxes, in the amount of 6.2% of wages. Only Congress can change or forgive tax liability. If Congress does not enact legislation to forgive the deferred tax liability, employers would have to make these payroll tax payments or collect them from employees during the period January 1 to April 30, 2021 (“payback period”).

This payroll deferral presents potential challenges for both employees and employers. Unless the employer pays the employees’ portion of the tax payments that are owed, employees would pay the deferred tax payments along with their customary payroll tax payments in the first few months of 2021. This would result in double payment (12.4% of wages) during the payback period. While many employees may welcome the short-term cash gain in 2020, others fear the double financial hit in 2021. Employers share the concern this may be too financially burdensome for employees. Another potential issue for employers would be handling repayment for employees who are no longer employed, whether through termination, layoff, or resignation. Tax deferrals may also decrease Social Security funding. Given the first September payrolls start tomorrow, it is unlikely that any payroll systems are equipped to handle this change.

We encourage employers to tread carefully on this issue. Before implementing the tax deferral, employers should consult with their HR departments to assess employee interest and with their accountants to assess the tax risks. After that, communication with employees is critical to apprise them of any changes and the impact on their pay both now and in 2021.

Lake Effect HR & Law will continue to monitor developments related to COVID-19 relief. Please keep watching for blogs and emails from us for important legal updates and HR best practices. Contact us at info@le-hrlaw.com or 1-844-333-5253.

Engaging & Retaining Employees, While Navigating FFCRA & FLSA

Five months after quickly transitioning to a “temporary” virtual workplace, many employees are still working at home. They are also managing caregiving and work responsibilities, as well as their own physical and emotional wellbeing. Employers are now struggling with how to adapt short-term fixes into sustainable, longer- term solutions that will engage and retain a virtual workforce.

In the face of this challenge, consider incorporating the following practices into your workplace culture to support your employees’ wellbeing and fulfill your organization’s mission and strategic initiatives.

  • Maintain flexible scheduling. As home and work priorities shift, employees may be more productive and focused during non-traditional business hours or blocks of time during the day, including evenings and weekends. When team members work different hours, encourage them to communicate and be transparent about their schedules. This will promote a productive workflow and strengthen working relationships.
  • Continue virtual work. If your team has proven they can be successful working virtually, continue to provide this flexibility. This may give those employees who need or want to work from another location an opportunity to spend the summer at their cabin, rent a VRBO, or stay with out-of-town family or friends for an extended time.
  • Welcome the interruptions. Intentionally or inadvertently, we have met (or heard in the background) our coworkers’ furry friends, kids, family, and roommates. We’ve had an opportunity to visit our coworkers’ homes through the lens of our computer cameras during video conferences. Rather than begrudging the interruption, welcome this opportunity to get to know one other as individuals, not just coworkers.
  • Encourage employees to collaborate on pod learning and/or caregiving responsibilities. As many school districts have decided on some version of virtual learning, employees may want the opportunity to work together to create pod learning or shared childcare. Connecting employees in this manner may provide them an opportunity to work alternate days or times. In addition, consider converting unused conference rooms to temporary classrooms or playrooms, just be sure to check with your worker’s compensation carrier.
  • Promote wellness benefits and other wellbeing resources. Work closely with your benefits broker, understand your current organization’s wellness benefits, and educate your employees on these offerings. During your annual renewal, consider additional, lower cost, but high health reward benefits to better support the wellness needs of your staff. These benefits may include an employee assistance plan (EAP) or subscription services to wellness apps, online yoga classes, coffee clubs, or other services that support wellness activities for your entire employee population, even those who do not participate in your health, dental, and vision plans. Focus as well on virtual activities your employees can engage in together, such as company-wide or departmental fitness or step per day goals.
  • Encourage use of paid time off. We might not be planning our once-in-a-lifetime vacation this year, but there are many adventures awaiting us locally. Remind employees of their PTO balance and encourage them to take time to recharge, this may include helping them efficiently tackle their work tasks so they can enjoy the time away. Add some fun and promote their time away by sharing pictures of their adventures on an internal shared site.
  • Support your wellness/social committee. A wellness committee is usually made up of a group of employees that are passionate about wellness and engaging their coworkers in some office fun. This group may be able to plan virtual celebrations, arrange for group wellness activities, or delivery company branded gifts to employees’ homes, like customized face masks and small hand sanitizers! Include gift certificates to encourage employees to support local restaurants and shops.
  • Review processes and procedures. Update processes and procedures to be more efficient and relevant in your current work environment. Review expense reimbursement procedures to determine if you should start reimbursing for employees’ virtual expenses, such as cell phone, internet, hotspot, or office supplies/equipment.
  • Evaluate leaders’ job duties and responsibilities. In addition to leading people, leaders have their own job responsibilities and deadlines to meet. Provide leaders more time to lead during these uncertain times by transferring job duties that may provide others a growth opportunity. You may find that after updating processes and procedures to be more efficient, employees may have more capacity and would welcome to learn a new skill.
  • Continue coaching and development efforts. Employees want and need frequent feedback and recognition, especially during times of change and uncertainty. Consider adapting your process to better suit your current workplace situation to ensure supervisors are frequently communicating with direct reports. Encourage managers to check in with their teams to find out how they are doing, if they need additional resources, and to remove any roadblocks.
  • Keep calm and communicate. The COVID-storm has not passed yet, keep communicating frequently with your employees. Now, more than ever, employees want to know how COVID-related changes are impacting the organization and themselves. Discuss with employees the direction of the organization, how they can support the organization’s initiatives, and when they achieve their goals.
  • Be true to your organization’s mission. When considering how to adapt your workplace, remember your guiding star – your organization’s mission, vision, values, and strategic plan.

If you have questions about managing and engaging a virtual workforce, leave requests, or other FFCRA or FLSA related questions, the HR and legal team at Lake Effect can help.

We are closely monitoring the impact of COVID-19 on the workplace. Keep watching for blogs and emails from your Lake Effect team for important legal updates and HR best practices. The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to help. Contact us at info@le-hrlaw.com or 1-844-333-5253.

Employers Must Submit Form for Unemployment Benefits Relief by August 15, 2020

As a reminder, Wisconsin Act 185 mandated that unemployment benefits that are the result of COVID-19 may be charged against the state’s UI fund balance and not to the employer’s UI account.

Wisconsin employers must submit Form UCB-18823-E by August 15 to ensure that COVID-19 related unemployment benefits for employees’ initial claims filed between May 17 – June 30, 2020 are not charged to employers’ UI accounts. For initial claims filed after June 30th, this same form must be submitted within 30 days after the employee’s initial claim is filed.

The Wisconsin Department of Workforce Development is not requiring employers to submit the UCB-18823-E form to receive relief for employees filing initial unemployment benefits claims during the weeks of March 15 – May 16, 2020.

We are closely monitoring the impact of COVID-19 on the workplace. Keep watching for blogs and emails from your Lake Effect team for important legal updates and HR best practices. The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to help. Contact us at info@le-hrlaw.com or 1-844-333-5253.

President Trump Signs Executive Actions After Covid-19 Stimulus Talks Stall in Legislature

After COVID-19 stimulus talks broke down in the Legislature last week, President Trump signed four Executive Actions on Saturday, August 8, 2020. Those actions cover the following:

  • Unemployment: Congress previously authorized an additional $600 per week in federal unemployment compensation benefits for eligible workers, but that funding expired on July 31. This Executive Memorandum creates a new lost wages assistance program to continue until December 6, 2020, or until the federal Disaster Relief Program (DRF) is depleted to $25 billion, whichever occurs first. Under the new program, states may provide up to $400 per week in additional unemployment compensation benefits to workers who otherwise qualify for state benefits. In order to participate in the program, a state must agree to pay 25% ($100 per week for each eligible worker) of the additional benefits, and the federal government will pay the remaining 75% ($300). The federal government will fund the program, up to a maximum of $44 billion, out of its DRF. States may use remaining dollars previously allocated to them under the CARES Act or any other available state funding.

While aimed at providing relief to unemployed workers, the new program will likely create challenges. States already face budget shortfalls in the wake of the pandemic and will be hard-pressed to afford the new wage assistance costs. In addition, the program creates a new, separate program and will not be administered through the existing state unemployment program. Thus, it will require states to create a new administrative system, placing further demands on limited state resources. The details on administration and state funding have not yet been finalized.

  • Payroll Tax Deferral: Congress previously deferred most employer payroll taxes for the remainder of 2020. This Executive Memorandum directs the Secretary of the Treasury to defer the payment of payroll taxes from September 1 until December 31, 2020 for employees earning less than $4,000 per pay period (or $104,000 per year). Notably, this is only a payroll tax deferral for employees, and those payments will have to made at a later date unless Congress directs otherwise. Payroll taxes partially fund Social Security and Medicare, and a permanent reduction in payroll taxes would lower funds available for those programs.
  • Student Loans: As part of an earlier stimulus effort, Congress suspended student loan payments until September 30, 2020. This Executive Memorandum directs the Secretary of Education to waive interest and defer payments on student loans held by the federal government until December 31, 2020. Notably, principal payments are not cancelled, only deferred until the end of the year. Presumably, those cumulative payments will be due on December 31, and then full interest and principal payments will restart in January 2021.
  • Evictions: The federal government previously ordered a moratorium on foreclosures and evictions during the COVID-19 crisis, but that order expired on July 24, 2020. This Executive Order directs the Secretary of Health and Human Services and the Director of the CDC to consider whether any measures temporarily halting residential evictions for failure to pay rent are reasonably necessary to prevent further spread of COVID-19. It further directs the Secretary of the Treasury and the Secretary of Housing and Urban Development to identify available Federal funds to provide temporary financial assistance to renters and homeowners facing financial hardships caused by COVID-19. Notably, this Order does not by its own terms extend the prior moratorium or ban evictions.

President Trump’s unilateral Executive Actions will likely face legal challenges, as the U.S. Constitution delegates taxing and spending powers exclusively to Congress, not the Executive Branch. Lake Effect HR & Law will continue to monitor developments related to COVID-19 relief. Please keep watching for blogs and emails from us for important legal updates and HR best practices. Contact us at info@le-hrlaw.com or 1-844-333-5253.

FFCRA & FLSA Updated Guidance From The Department Of Labor

The Department of Labor (DOL) recently updated its COVID-19 guidance related to the Families First Coronavirus Response Act (FFCRA) and the Fair Labor Standards Act (FLSA). This guidance from DOL addresses questions employers may confront as their communities face new public health orders and in-person school closures and delays.

FFCRA Guidance

As a reminder, employees may be eligible for up to 80 hours of leave under FFCRA’s Emergency Paid Sick Leave Act (EPSLA) and up to 12 weeks of leave under FFCRA’s Emergency Family and Medical Leave Expansion Act (EFMLEA). See our FFCRA Overview for the particular requirements of each leave program.

Employers should also note that a district court in New York recently struck down several significant FFCRA regulations, including those EPSLA regulations related to employees on temporary layoff or furlough and the expansive scope of the healthcare provider exemption for both EPSLA and EFLMLEA leaves. The impact of the ruling is not clear at this point, and we expect more information in the near future. We will keep you posted in our blogs about any changes to FFCRA as a result of that legal process and other lawsuits that are currently pending. In the interim, employers should contact legal counsel before denying a FFCRA leave request.

DOL’s guidance on FFCRA includes almost 100 frequently asked questions about the leave programs. Three that are of particular significance relate to virtual school and returning employees:

  • Online Schools Are “Closed”
    • Under the guidance, a school that has moved to an online platform for instruction is “closed” for purposes of FFCRA. (Question #70) This means that employees may be eligible to take up to a total of 14 weeks of continuous or intermittent EPSLA and EFMLEA leave to care for a child whose school is operating virtually. Although not specifically addressed by DOL, this guidance would also apply to schools operating a hybrid model. Under the hybrid model, the school is “closed” on those days in which a student cannot attend the physical school but open on those days when in-person instruction is offered.
    • If the school offers an option for virtual or in-person instruction, the school is not “closed” and FFCRA leave is not available for caregivers who choose the virtual option.
    • Employees who used some of their leave in the spring or summer when schools were closed due to COVID-19 are entitled to use their remaining amount in the fall if they are otherwise eligible.
  • Requiring a Negative COVID-19 Test Before Returning to Work
    • According to DOL, employers may require that an employee test negative for COVID-19 before returning to work from FFCRA leave as long as this requirement applies to all employees. (Question #94)
    • However, requiring a negative test is not mandatory. Dane County employers should note that PHMDC now strongly recommends against requiring employees to test negative before returning to work. Instead, employers may rely on the CDC (or your local public health department) guidelines for monitoring symptoms over a period of time.
  • Employers May Not Discriminate Based on Use of or Eligibility for FFCRA Leave
    • Employers may not use an employee’s request for FFCRA leave, or an assumption that the employee will request leave, to make any employment decision, including whether to recall an employee from furlough. (Question #97)

FLSA Guidance

DOL added important clarifications for non-exempt and exempt employees in its updated FLSA guidance. The updates include:

  • Flexible Scheduling for Non-Exempt Employees
    • To allow “needed flexibility” during the pandemic, employers that allow their non-exempt employees to work remotely with flexible schedules do not need to count all of the time between the first and last work activity during the day as hours worked. Instead, employers only need to pay for those hours actually worked. (Question #15)
    • This flexibility allows “windowed work” for non-exempt employees. Windowed work is breaking up a workday into blocks – or windows – of business and personal time while working from home.
  • Changes to Exempt Employees’ Job Duties and/or Salaries
    • As long as employers continue to pay the required minimum weekly salary of $684, employers may temporarily require exempt employees to perform non-exempt job duties and may prospectively reduce exempt employees’ salaries due to economic reasons related to COVID-19. (Questions #16 and #19)
    • Note that exempt employees must be paid their full salary for any week during which they perform any work, with the exception of their first and last workweeks.

We are closely monitoring the impact of COVID-19 on the workplace. Keep watching for blogs and emails from your Lake Effect team for important legal updates and HR best practices. The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to help. Contact us at info@le-hrlaw.com or 1-844-333-5253.

Lake Effect HR & Law, LLC
(844) 333-5253 (LAKE)
info@le-hrlaw.com

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