CARES Act & FFCRA
RELIEF IS HERE

What That Means For Our Clients

Relief Is Here!

Don’t give up. With the Coronavirus pulling no punches in its relentless attack on our economy, the Government sent a clear and resounding message to the American people, especially small businesses owners – don’t give up. The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was created and passed with bipartisan support and signed into law by President Trump on Friday, March 27th. The 2 trillion-dollar financial stimulus package is an economic lifeline thrown to an economy struggling under the weighty impacts of these unforeseen medical and societal consequences. It provides much needed relief to both small businesses and employees financially impacted by the pandemic. The CARES Act, along with the Families First Coronavirus Response Act, is an injection of life and hope to businesses owners and employees who desperately need to move forward quickly during these difficult times.

With many of our clients directly impacted by the business interruptions caused by the Coronavirus, our hearts go out to you as you’ve had to potentially make difficult decisions that have impacted not only your business, but the lives of your employees and their families. We’re encouraged by the relief being provided by the government and its potential to aid your business and employees. As always, we evaluate each legislative act considering the potential impact it has on helping you and your business. With this in mind, we wanted to highlight a few of the key provisions in the CARES Act and the FFCRA that are potential game-changers for you, our clients.

Employee Retention Credit

This credit takes aim at helping businesses whose operations were suspended to some degree due to government orders – or – helping those businesses whose quarterly gross receipts were 50% or less than the same quarter the previous year. A business only needs to qualify for one of the above two statements for the credit to be applied. The business can receive a maximum of 50% of the wages that qualify, for a maximum amount of $5,000 in tax credits per employee that can be offset by Payroll Taxes. This credit cannot be used along with a Paycheck Protection Loan and can be reduced by the utilization of some credits in the FFCRA. Further, you cannot claim the WOTC credit and the Employee Retention Credit for the same wages.

Paycheck Protection Program

This program provides a massive boost to small businesses and restaurants, hotels, or businesses that fall within the North American Industry Classification System (NAICS) beginning with 72 and is a direct attempt to encourage employers to retain employees. The PPP is designed to allow one of said businesses with < 500 employees to apply for an SBA loan for an amount that is intended to cover 8 weeks of payroll expenses and any additional amounts for making payments towards debt obligations. This 8-week time period can be taken from any set of weeks between February 15, 2020 and June 30, 2020. The amount cannot exceed 250% of their average monthly payroll expenses with a maximum loan amount of $10 million. Things get interesting when discussions begin regarding the repayment – or not – of the loan. Borrowers will be eligible for loan forgiveness if the employers maintain payroll. The loan must be applied for by June 30, 2020.

Emergency Family and Medical Leave Expansion Act (EFMLA) & Emergency Paid Sick Leave Act (EPSLA)

These acts ensure that employees are paid sick leave due to:

  • An employee either being quarantined due to experiencing COVID-19 symptoms (80 hrs. at regular rate of pay) – up to $2,000 in credit.
  • An employee having to care for someone quarantined due to experiencing COVID-19 symptoms (80 hrs. at 2/3 of regular rate of pay) – up to $2,000 in credit.
  • An employee having to leave work to care for a child whose school or care-provider was closed due to COVID-19 – up to $2,000 in credit.

Employers can receive tax credits, which are refundable, and enable the employer to recover 100% of payroll tax for employees’ paid leave.

Payroll Credit for Required Paid Sick Leave

This credit provides a refundable tax credit equal to 100 percent of qualified paid sick leave wages paid by an employer for each calendar quarter. The tax credit is allowed against the tax imposed by Section 3111(a) (the employer portion of Social Security taxes). Qualified sick leave wages are wages required to be paid by the Emergency Paid Sick Leave Act.

The section makes a distinction between qualified sick leave wages paid with respect to employees who must self-isolate, obtain a diagnosis, or comply with a self-isolation recommendation with respect to coronavirus.

For amounts paid to those employees, the amount of qualified sick leave wages taken into account for each employee is capped at $511 per day.

For amounts paid to employees caring for a family member or for a child whose school or place of care has been closed, the amount of qualified sick leave wages taken into account for each employee is capped at $200 per day.

The aggregate number of days taken into account per employee may not exceed the excess of 10 over the aggregate number of days taken into account for all preceding calendar quarters.

Payroll Credit for Required Paid Family Leave

This credit provides a refundable tax credit equal to 100 percent of qualified family leave wages paid by an employer for each calendar quarter. The tax credit is allowed against the tax imposed by Section 3111(a) (the employer portion of Social Security taxes). Qualified family leave wages are wages required to be paid by the Emergency Family and Medical Leave Expansion Act.

The amount of qualified family leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters.

If the credit exceeds the employer’s total liability under Section 3111(a) for all employees for any calendar quarter, the excess credit is refundable to the employer.

These are great programs, and a HIREtech’ian is available and on call to answer any questions you have when it comes to how the CARES Act and FFCRA impact your business.

HIREtech, a Paradigm Company. © 2020 HIREtech