As another year comes to a close, we recommend finding time to reflect on 2021…
Happy Friday! We have lots of information to share today after spending several hours on calls and webinars trying to verify the points of the latest stimulus package passed in December. If you have questions on the below information, please reach out to our team at Delta.
The U.S. Small Business Administration (SBA) and Treasury issued guidance Wednesday night for the reconstituted Paycheck Protection Program (PPP) with a March 31, 2021 deadline. The guidance included two interim final rules (IFRs).
- The 82-page IFR“Business Loan Program Temporary Changes; Paycheck Protection Program as Amended” consolidates the rules for PPP forgivable loans for first-time borrowers and outlines changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, P.L. 116-260.
- The 42-page IFR“Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans” lays out the guidelines for new PPP loans to businesses that previously received a PPP loan.
In addition, the SBA released a three-page “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns.” That guidance includes a commitment from the SBA to make at least the first two days of the PPP application window open exclusively to applications from community financial institutions that serve minority- and women-owned businesses.
Our national association, NAPEO walked us through the COVID-19 relief legislation items that directly affect PEOs like us, pointing out the areas that require further detail from the government. For lack of better terms, we will call the original PPP loans, PPP1, and the new round of PPP loans, PPP2. These are the 4 new items that are allowed retroactively to be counted toward forgiveness of both the PPP1 and the PPP2 loans:
- “Covered Operations Expenditures” = clearly includes software and cloud computing expenses related to human resources and accounting. Open as to how broadly this can be interpreted.
- “Covered Property Damage Costs” = costs related to property damage due to public disturbances that occurred during 2020, if not covered by insurance.
- “Covered Supplier Costs” = payments to a supplier pursuant to a contract/purchase order in effect prior to taking out the loan, if expenditures were essential to the recipient’s operations at the time the expenditure was made.
- “Covered Worker Protection Expenditures” = costs to pay for PPE or other investments that would help the borrower comply with governmental guidelines related to COVID-19 between March 1, 2020, and the end of the national emergency declaration.
If you read the first item carefully, you’ll find it includes HR, payroll expenses, and accounting. NAPEO is working to confirm if the PEO fees are covered because they are not listed specifically; however, we interpret it as such. If the SBA adds language for PEOs to these guidelines, PEO fees could potentially be recognized as costs toward forgiveness and accepted by the bank. Additionally, you are now allowed to retroactively include any company-paid group life, dental, vision, disability charges toward the PPP forgiveness. If you have already submitted your forgiveness application for PPP1, you can’t go back and change your application for forgiveness.
This new legislation also allows more flexibility for the time allowed on the PPP forgiveness. Before you could choose between either 8 or 24 weeks, and now you will be allowed to choose any time between 8 -24 weeks to fit the needs of your company.
Eligibility is under 300 employees and already used 100% of your previous PPP1 loan. If you have not taken the PPP1 loan you are still eligible for this second round if you meet the criteria. You must have had at least one quarter in 2020 that had Gross Receipts down at least 25% from the same quarter in 2019. Other than that, the same criteria hold for the application from the original PPP loans. The new application for this loan is supposed to be released today by the SBA. The SBA is supposed to be able to take these applications from your Bank mid next week. if you plan to take out the second round of PPP loans then get with your bank to see when they are expected to be ready to take your application.
Employee Retention Tax Credits. These were not nearly as popular in 2020 because the rule was to do either the PPP or the ERTC, not both. Well, this new legislation allows you to do both! Not only for 2021, but now you can retroactively go back to 2020 and see if you are eligible for these tax credits for employee retention. Please look at the slides on the webinar to review eligibility and the differences between 2020 and 2021 tax credits.
One thing to be clear on, you can NOT take any wages that you designated as forgiveness for the PPP loan and use them toward the ERTC tax credits, so in other works no double-dipping to get tax credits twice on the same payroll dollars. There are some additional features for ERTC like specifically written disaster recovery from hurricanes, as well.
For those of you that use independent contractors, the Department of Labor (DOL) has issued a clarifying definition on what constitutes an independent contractor. The rule is slated to take effect March 8, although its future in the Biden administration remains uncertain.
With the Modified Phase 1 going into effect today for New Orleans, there are so many theories surrounding COVID-19, so we wanted to share some of the facts to off-put the questionable claims out there on the internet. Below are the do’s/don’ts for employers, as well, compiled by our Risk/Safety Manager, Teddy Young.
- Employers can monitor where employees travel – According to the Equal Employment Opportunity Center(“EEOC”), if the CDC or state or local public health officials recommend that people traveling to specific locations remain at home for a certain period of time, employers may ask whether employees have returned from these locations, even if such travel was personal and even prior to an employee exhibiting COVID-19 symptoms.
- Employers can ask employees who travel to quarantine or work remotely upon return – Employers might want to consider including in their Pandemic Policy, employees traveling to a location with a COVID-19 test positivity rate above 10% or with a case rate over 20 per 100,000 in the past 7-days, will require them to self-quarantine or work remotely for at least 5-7 days and/or take a COVID test upon return (this information can be found on the CDC website or simply click here). If you have questions about your current Pandemic Policy or if you need one, Delta Administrative Services can assist; email us at email@example.com
- Employers can administer mandatory testing to employees after the Holidays – Because COVID-19 poses a direct threat to the health of others, administering COVID-19 testing is “job-related and consistent with business necessity,” as required under the Americans with Disabilities Act. As per the EEOC, an employer may administer COVID-19 testing to employees “before initially permitting them to enter the workplace and/or periodically to determine if their presence in the workplace poses a direct threat to others.” However keep in mind, should employers mandate this, they will likely be required to pay any expense associated with the employee testing for COVID-19; this could include travel, fuel, and time. Additionally, employers should ensure that the tests are considered accurate and reliable and not administered in a discriminatory fashion. Employers should also remember that a negative test does not guarantee that the employee does not have or will not develop the virus later.
In conclusion, we hope that the second week of 2021 goes much more smoothly than this one. The disastrous events in DC should remind us that as Americans with so many freedoms, we should also have the decency to treat everyone and their property with respect. Anyone who breaks the law in the name of politics should be held accountable. Too many men and women have given their lives for the sake of our country, and it is a shame to see it so divided. We pray that this year brings everyone peace and joy, keeping in mind the things that matter.
Have a great weekend!