Critical COVID HR Updates from Washington

While the COVID crisis certainly hasn’t passed, businesses are returning to work and some are actually growing. According to a recent study, 60% of employers have hired since March 1. Of those employers who have hired, 46% have hired 10 or more employees. This growth isn’t projected to be temporary, either. Of those employers that have hired since March, 61% expect those hires to stay at least 2 years. The market may be recovering better than our initial hopes. However, some caution is still in order for your business and HR planning. The law firm Hunton Andrews Kurth counts that as of this writing, 4,500 COVID-related complaints have been filed since April 1, 2020. (It may be worth noting that 20% of these were in the state of New York.) The most common of these were centered around civil rights violations, discrimination, and insurance, especially insurance for business interruption coverage. Below are some key HR updates you’ll want to know as we move forward through the pandemic.

HR Updates on tax deferrals:

As you may know by now, the President signed an executive order into effect that would allow employees to start deferring paying their FICA taxes as of Sept 1. However, don’t start including this in your strategic human resources planning just yet. The IRS still needs to provide more guidance on this, as it creates quite a few potential complications. There’s still no word on how or if this money will need to be paid back. Businesses are also struggling with how to allow employees to do this in their payroll management. Will all employees participate, or just some? The Retail Federation and the American Association of Payroll Professionals have both written letters to the IRS asking for more guidance and expressing concerns about how to implement this into a payroll system.

Employers, on the other hand, have already been deferring their FICA taxes since March 27, 2020 and will be able to continue to do so until at least December 31, 2020 (if that’s not extended). The IRS recently let people know that some notices were erroneously sent to businesses about not paying their FICA taxes. If you think your business got one of these notices, it’s best to check in with your payroll services before responding.

Resolutions for relief

The proposed plans on another stimulus won’t be resolved until after the Senate adjourns post- Labor Day.

As for the unemployment boost, the $600 weekly boost to unemployment ended as of July 31, 2020. As of August 1, 2020, it will become (retroactively if necessary) $300 a week. People will only be receiving this $300 boost if states apply for the program and are approved. Currently 32 states have been approved. 17 of the 18 remaining states are in various stages of the approval process. As of this writing, only South Dakota has said they will not be participating in the program.

HR updates on the misclassification of workers

This is an important topic for many reasons. The government is pushing for reform in this area from all sides: federal, departmental, state, and the judicial branches.

One of the first HR updates you need to know is that the department of Labor recently released Bulleting 2020-5, which says that employers must be tracking their staff’s hours worked and compensable time. You are responsible to pay non-exempt employees for all hours worked, even if you did not request or authorize some of that time. This guidance has been put out now to especially address non-exempt workers who are remote. One of the best HR strategies is to put in place a reasonable reporting procedure.  This procedure should allow employees to report their time worked and to request hours. (MP offers time tracking software that can be very helpful for these functions.) You want to make sure you aren’t preventing your workers from being honest about the hours they’ve worked. If you have this in place, you won’t have to be taking on what the DOL calls ‘impractical efforts,’ like checking to see when employees have logged on, etc.

Secondly, in California there have been some measures to reform misclassification of workers. California has recently passed legislation that said that drivers and delivery workers (‘gig workers,’ like those for Uber, Lyft, Grubhub, etc.) are full-time employees who must be paid as such under AB5, the test for classifying exempt and non-exempt workers. When Uber said they’d halt all California operations because it had become an untenable business model, the state created a temporary reprieve that would let Uber and other similar companies run as usual until the matter was resolved better. These HR updates are worth noting even if you’re not an employer based in California, because it could be a sign of things to come. Many states, including Illinois and New York, have similar independent contractor tests to California’s, and they’re also considering legislative steps for this matter. To stay in compliance, it’s important to note that it doesn’t matter if your 1099 workers have signed new hire paperwork as an independent contractor. If they fail the state level test for non-exempt status, then they are indeed an exempt employee who should be paid as such. You’ll be open to litigation, complaints, fines, and more if you don’t pay attention to this matter.

Alternatively, there was one small victory for employers who want more leeway to classify employees as contractors. A recent court case in Hawaii found that a doctor who worked as a contractor was indeed a contractor and should be treated as such, not with the rights of a full-time employee.  

HR updates on PPP loans

The SBA has released yet another Interim Final Rule clarifying PPP loan forgiveness standards. Those who hold owner-employee status must cap their compensation at $20,833. Owners with a less than 5% share hold can use the standard limit of $46,154. Additionally, there will be no forgiveness for expenses paid for subleased office space. You are only entitled to forgiveness on your share of subleased rent and utilities. Home office expenses that are forgivable are limited to what you can deduct on your taxes.

On the legal side, companies should know that there has been quite a bit of activity around fraudulent PPP loan use. People who have blatantly committed fraud, creating fake companies to get these PPP loans, and using them for frivolous expenses like vacations and fancy cars. They’re being arrested and punished for their actions.

Key reminders and tips for better utilizing these HR updates:

• Continue to review your staff manual and employee policies, especially pertaining telecommuting policies.
• Make sure you’re reviewing and updating job descriptions, paying careful attention to correctly classifying people as exempt and non-exempt. This will be important in mitigating risk associated with audits, complaints, and litigation. You may have people who become exempt or non-exempt because their job description and hours have changed due to the circumstances of the pandemic. Consider getting professional HR services (like MP’s) to help you with this task.  
• Stay updated on travel orders that relate to the state (or states) your business operates in.
• Be advised that the CDC recently quietly changed its guidance regarding testing for COVID. Even when employees have 15 or more minutes of close contact with somebody who has COVID, you don’t necessarily need to test if they are not symptomatic or particularly vulnerable. Instead, you can rely on a medical professional’s advice and self-monitor for symptoms. (For nursing homes and long-term care facilities, there are obviously some more stringent requirements.) This change may conflict with your own internal policies or it may be something your employees bring up if they find your internal polices to be too stringent.
• Thus far there have been no formal changes to the FFCRA other than the federal court in New York’s July ruling on the definition of healthcare providers, the work availability requirement, and intermittent leave. Remember that it’s very difficult to deny employees as exempt simply because your workplace has less than 50 people. The DOL is adamant that exempting employees from FFCRA leaves will only be acceptable if the consequences can be documented as dire, like bankruptcy or having to cease operations.