COVID-19 Update August 12, 2020

During our Federal Affairs Committee call for NAPEO this afternoon, unsurprisingly, the majority of the conversation was centered on the recent executive orders issued by the President last weekend. It seems the most concerning issue is the ability for employees to defer the withholding of payroll taxes starting September 1^st through the end of December.

The good news is that Treasury Secretary Steven Mnuchin confirmed in a press conference this morning that Trump’s payroll tax deferral plan would be optional for employers to offer. Technically, he is only delaying the deadline for paying the workers’ share of the Social Security payroll tax. Employers will be ultimately responsible for paying the deferred taxes, according to how the legislation currently reads; however, the order doesn’t say when this money will be due. Thus, the problem would be if your employee opts to defer withholding these Social Security taxes from their paychecks and leaves your employ or becomes incapable of payment, creating a financial burden on your business. In our conversations with the IRS, we have requested guidance on these issues before this plan goes into effect, being that September 1^st is only 19 days away.

Even with the executive orders on the table, Congress hasn’t reentered negotiations since they adjourned last Friday for August Recess. Both parties have come out saying ‘our phones are open,’ yet neither side is willing to make the first move. Perhaps since they can’t get any new stimulus package passed, it will be pushed onto the year-end omnibus bill that normally gets passed in mid to late September. To delay things even further, it’s an election year, and the republican and democratic conventions are coming up in the next few weeks, making it unlikely that these issues will be resolved anytime soon.

In other news, a trial court judge in San Francisco issued a preliminary injunction blocking Uber and Lyft from continuing to classify drivers as independent contractors under California’s employment laws,  meaning that rideshare companies will have to reclassify drivers as W-2 employees. This is important because many verdicts in California tend to roll to the rest of the country eventually. As this decision will likely be held up on appeal, the state’s voters may ultimately decide the fate of these workers. If this passes, drivers will subsequently be entitled to minimum wage, overtime, and other benefits not generally provided to independent contractors. Moreover, there are rumors that both Lyft and Uber are going to stop service altogether in this state until the voters decide, causing both of their stock prices to plummet.

While certain attempts to restrict where employees go on vacation to prevent COVID-19 exposure have some legal limitations, altering your company policy for more latitude in PTO approvals is allowed. Delta is here to help with implementing new vacation travel guidelines as we navigate challenges caused by the Coronavirus pandemic. Please don’t hesitate to contact us with any questions.