Great HR Information for You and Your Clients

Great HR Information for You and Your Clients

Great HR Information for You and Your Clients

End of Year 2020 Human Resource Updates

Around this time of year, most small and medium-sized businesses (SMBs) may be wondering what mandates and challenges they’ll likely face in 2021. Following a year marked by a deadly pandemic, socio-political unrest, a contentious presidential election season, and economic uncertainty, SMBs can expect policy changes and proposals in some federally mandated benefits.

It’s not surprising that COVID-19 and the current economic slowdown prompted Congress to adjust federal laws and regulations. These changes will affect the way SMBs plan and administer a few benefits, ranging from group health plans to leave policies.

 

Highlights:

 

• Healthcare: Patient Protection and Affordable Care Act (ACA) 

The cost of employer-sponsored health plans could account for a larger share of workers’ household income in 2021. The IRS raised the threshold on employers’ lowest-cost, single coverage healthcare plans to 9.83% of employees’ earnings, up from 9.78% in 2020, but slightly lower than 2019’s rate of 9.86%. The IRS makes annual rate adjustments, known as cost-sharing limits, to ensure compliance with the ACA’s affordability mandate.

Benefits experts attribute the higher threshold to premiums for employer-sponsored and private-market plans outpacing income growth for workers. Cost-sharing limits apply to employers who had 50 or more full-time workers, or full-time equivalent employees (FTEs), in the previous calendar year. Employers may want to price some plans below the threshold to avoid penalties for not complying with the ACA. To price plans based on cost-sharing limits, employers will need information on household incomes. However, they can calculate this data based on documentation they already have on file, including employees’ pay rates and employees’ W-2 forms.

Employers also can expect higher penalties for noncompliance with the ACA in 2021. Infractions classified as Penalty A rose from $2,570 annualized in 2020 to $2,700 annualized in 2021. Penalty B infractions rose from $3,860 annualized in 2020 to $4,060 annualized in 2021.

 

• Social Security 

Employers will see a modest increase in their share of payroll taxes under the Federal Insurance Contributions Act (FICA) as of January 1, 2021. The cap on earnings subject to the Social Security (SS) tax will increase from the current $137,700 to $142,800 in 2021. Employers and employees split the 12.4% tax (6.2% each) set by law to fund SS. The payout will be a bigger share of the benefit’s cost in 2021 to cover the $5,100 cap increase.

 

• Medicare 

The Medicare portion of the FICA tax remains at 1.45% for both employers and employees, with no limit on earnings. Also, employers must continue to withhold the additional 0.9% Medicare tax on employers earning more than $200,000 in a calendar year.

 

• COVID-19 deferments 

Due to the pandemic, certain employers will be able to defer their payroll taxes into 2022. The Coronavirus Aid, Relief, and Economic Security (CARES) Act that lawmakers passed in March 2020 allows employers to defer the deposit and payment of their share of FICA taxes from March 27 through December 31, 2020, and then pay to the Treasury Department one half of the tax owed by December 31, 2021, and the second half by December 31, 2022.

The CARES Act allows employers to suspend the withholding of employees’ share of FICA taxes from September 1 to December 31, 2020. The deferment applies to only employees earning less than $4,000 during a biweekly pay period and salaried employees earning less than $104,000 a year. However, employers that defer withholdings can collect payments from employees between January 1 to April 30, 2021, to pay the tax. The Society for Human Resource Management recommends that employers prepare for the increase in payroll taxes by adjusting their payroll tax system to cover the cost increase and notifying employees in advance of the change.

 

• Leave benefits

SMBs that pay qualified leave wages currently are eligible for tax credits under the Families First Coronavirus Response Act (FFCRA), which evolved under the CARES Act. Employers that offer qualified sick leave, family leave, and retention leave — as well as health plan expenses — may take refundable tax credits against a certain share of their employment taxes through December 31, 2020. The FFCRA applies to employers with fewer than 500 workers and some public employers.

The legislation allows employers whose operations were fully or partially suspended by government orders or who experienced a decline in business due to COVID-19 a tax refund of up to 50% of the qualified wages. Included in the allowance are health expenses and a $10,000 limit per worker in qualified retention wages covering a sum of calendar quarters.

 

• Unemployment insurance

The CARES Act became law, in part, to help employers stay in business and keep workers on the payroll during the pandemic. But the $600 per week unemployment insurance benefit (UI) and the 39-week extension in state benefits from earlier this year were only temporary solutions.

Based on Bureau of Labor Statistics data, the Center on Budget and Policy Priorities (CBPP) — a nonprofit policy and research organization — forecasts a 10.2% hike in the unemployment rate for the first quarter of 2021. Unless Congress and the Administration agree to extend the CARES Act’s provisions beyond the current year and before the presidential election on November 3, 2020, SMBs can expect no changes in UI policy for 2021.

Information provided by our ADP Rep: Click here and complete the form to be connected.

EIDL Borrowers Beware of the Rewarded Whistleblowers!

EIDL Borrowers Beware of the Rewarded Whistleblowers!

EIDL Borrowers Beware of the Rewarded Whistleblowers!


It’s just not worth it! Whistleblowers are everywhere because they are protected and rewarded. So is accepting the loan without serious review really worth taking the money?

There are so many specific rules and regulations that many EIDL borrowers had failed to understand before accepting the loan which could put you in a situation to tell your client that their best course of action is to return the money immediately before whistleblowers report them.

As accounting professionals, we want to help our clients do the right things with managing their finances and sometimes we have to say the things they don’t want to hear but need to be said. If your client has accepted or is considering to apply and accept the EIDL, your eagle eye and mother’s concerning voice should be used when consulting your client.

So besides recommending that your client read all the details carefully and suggest they consult an attorney if needed, it’s important for you to know some of the important points like these: (just to name a few)

  • Businesses can’t take out dividends for over 30 years if they received an EIDL loan and do not repay it in full.
  • There’s fine print about a collateral agreement in the application for loan amounts greater than $25,000.
  • EIDL applications are still being accepted but the $10,000 advance on the loan that could be considered a grant, is no longer available.
  • All EIDL borrowers’ private details will be available in the public records because of the Freedom of Information Act, enumerated at 5 U.S.C. § 552. Violating a loan covenant can cause the interest rate on that loan to increase or even cause it to be considered in default.

Source: https://www.forbes.com/sites/alangassman/2020/07/28/many-eidl-loans-will-cause-disaster-for-unassuming-borrowers/#6473e5db3049

 

 

Covid Lawsuits and Claims Against Employers Increasing Nationwide

Covid Lawsuits and Claims Against Employers Increasing Nationwide

Covid Lawsuits and Claims Against Employers Increasing Nationwide

Watch out! Among everything else employers are facing during this pandemic to stay afloat, you can add liability lawsuits to the list. 

“Did you know that, “As of mid-June, more than 230 lawsuits directly related to labor and employment violations have been filed (including 30 class action suits). California leads the nation with 32 employment lawsuits already filed.” – Littler

As businesses are struggling to stay open and operational, the workplace liability lawsuits are piling up in the courts nationwide. It’s imperative for employers to stay up to date with federal, state, and local regulations during the pandemic to make sure they have an understanding of their employee’s rights.

There various types of lawsuits currently being filed against employers, but we wanted to inform all of you of the top 3 being seen across the nation.

Top 3 Types of COVID Lawsuits Against Employers:

1. Paid Leave Claims – Employers are seeing a rise in claims from employees alleging they were denied leave they were entitled to by way of the Families First Coronavirus Response Act (FFCRA). Employers need to makes sure their leave programs coordinate with these new regulations.
2. Discrimination Claims – Americans with Disabilities Act, which governs what medical information employers can seek from employees. With that said, laws that prohibit discrimination on the basis of age, pregnancy, and other bases are areas employers should be careful. Particularly where employers are beginning to return their employees to the workforce, they should be mindful of potential legal “pitfalls” even where they believe they are acting in an employee’s best interests.
3. RIFS and Downsizing ClaimsEmployers that have been forced to downsize their workforces should be mindful of the federal Worker Adjustment and Retraining Notification (WARN) Act. Under the WARN Act, employers may be required to provide 60 days’ notice to workers when they are laid off for an extended period, or when the employer closes its business. It is unclear as to what exemptions they may have when related to Covid-19.

 

We know that some of you may have HR questions relating to complying with Covid workplace regulations, so we wanted to present a resource for our CPA MOMS community.

We have partnered nationally with ADP who is a trusted advisor in the HR/Payroll industry and it’s their priority to ensure you have the proper tools and expertise necessary to safely re-open and maintain your business. Our national rep, Rachel, is helping clients cut costs and gain access to more hands-on support during this tumultuous time.

If you are interested in setting up a free consultation or getting more information, please fill out the contact form and she will get in touch you as soon as possible: CPA MOMS ADP Contact Form

 

Sources:
https://www.littler.com/publication-press/publication/covid-19-lawsuits-and-claims-increasing-courts-nationwide

 

 

President Trump Signs 5 Week PPP Application Extension into Law

President Trump Signs 5 Week PPP Application Extension into Law

President Trump Signs 5 Week PPP Application Extension into Law

Extended at the final hour! With a new application deadline, there is clarity on the PPP forgiveness guidelines. 

The President officially signed a five-week extension for PPP loan applications with a new deadline of August 8th. With approximately $130 billion of funding remaining, this is a huge opportunity for small business owners to access funding as the surge in COVID cases may case another partial or full shut down. With the new application deadline, we finally get more clarity to prepare for your work ahead. 

Guideline Update Highlights:

1. A borrower may apply for forgiveness any time on or before the maturity date of its loan – including prior to the end of its applicable covered period – if the borrower has used all the loan proceeds for which it is requesting forgiveness.
2. Borrowers that choose to apply for forgiveness prior to the end of their applicable covered period and who have reduced salaries or hourly wages for employees in excess of 25% must calculate such reductions for the full length of the covered period.
3. If a borrower does not apply for loan forgiveness within ten months after the last day of the covered period, or if the SBA determines that the loan is not eligible for forgiveness (in whole or in part), the borrower must begin paying principal and interest. If this occurs, the lender must notify the borrower of the date the first payment is due.

With the extension for PPP applications and the ease of forgiveness regulations, we are expecting to see a jump in applications during the next 5 weeks. Though some borrowers are finding it hard to match with lenders, the SBA launched their new lender matching tool which should help speed up their process in receiving funding.
(see prior blog post regarding the SBA Lender Matching Tool)

Congress has indicated that an additional COVID relief package will be considered in mid-July. As we receive more information regarding that relief we will be sure to keep you updated.

 

Sources:

https://www.forbes.com/sites/allbusiness/2020/07/08/ppp-loan-program-extended-loan-data-released-what-small-businesses-need-to-know/#43b77dfd7f11 
https://www.natlawreview.com/article/ppp-updates-borrower-details-released-application-extension-revisions-to-forgiveness

 

PPP Application Deadline 6/30/20 – Use SBA Lender Matching Tool

PPP Application Deadline 6/30/20 – Use SBA Lender Matching Tool

PPP Application Deadline 6/30/20 – Use SBA Lender Matching Tool

Too Little Too Late? With the Short Deadline, SBA Finally Launches a Lender Matching Tool to Make it Easier for Small Businesses to Access Funding. 

The SBA’s Lender Match resource is meant for pandemic-affected small businesses who haven’t applied for or received an approved PPP loan. It connects small businesses trying to access PPP funds with lenders before the loan application deadline of June 30, 2020.

How it Works:

“Within two business days after entering their information into the Lender Match platform, a borrower receives an email from lenders who have been matched with them. The borrower can see lenders’ requests for them to begin an application.  Borrowers are then able to begin the application process directly from the email they receive.”

Lender Match was on pause due to CARES Act implementation priorities and loan volume. It is now being reinstated for CDFIs and other Small Asset Lenders.  Leads will only be forwarded to CDFIs and Lenders with < $10b in assets until the PPP program ends on June 30, 2020, at which time Lender Match will be open to all participating SBA Lenders.  Lender Match not only connects borrowers with accessing PPP loans, but also other SBA lending products, such as 7(a), 504, Microloans, and Community Advantage loans which are currently offering debt relief.”

 

“SBA Rolls Out Dedicated Tool for Small Businesses to Connect with CDFIs, Small Asset Lenders Participating in PPP: The U.S. Small Business Administration.” Small Business Administration, 19 June 2020, www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-rolls-out-dedicated-tool-small-businesses-connect-cdfis-small-asset-lenders-participating-ppp?utm_medium=email&utm_source=govdelivery.