At Pay-Net, our top priority is the safety and well being of our employees, our clients, and the community as a whole. The COVID-19 (Coronavirus) pandemic has affected all of us. To help you during this trying and unprecedented time, we have made some changes to our operations and are also supplying additional resources to answer some of your Coronavirus-related questions.
Consolidated Appropriations Act of 2021 **Added January 2021**
On December 27, 2020, President Donald Trump signed into law the Consolidated Appropriations Act of 2021 (The Act) that includes government funding and a pandemic aid package. The Act comes as the previous relief measures created by Families First Coronavirus Response (FFCRA), CARES and presidential memos were set to expire at the end of 2020. The Act includes several forms of stimulus and support, including extensions and changes to the earlier COVID-related legislation. Below are some pertinent parts of The Act businesses should be aware of.
In March 2020, the FFCRA required employers with fewer than 500 employees to provide specified paid sick leave to employees affected by COVID-19 and provided affected employers with a corresponding employment tax credit. Originally, these provisions were in effect through December 31, 2020.
Here are the updates from The Act:
- Extends payroll tax credit to employers offering the use of FFCRA Emergency Sick Leave and Family Leave through March 31, 2021. The extension is optional, not mandatory. The Employers do not have to offer use of FFCRA Emergency Sick and Family Leave after December 31, 2020. FFCRA Emergency Sick and Family Leave is optional after December 31, 2020.
- If an employer does allow employees to use remaining FFCRA Sick and Family Leave through March 31, 2021, the employer may also claim the corresponding credit.
- The Act does not reset the FFCRA limits for 2021. This means if such amounts were exhausted for an employee in 2020, any leave payments to that employee in 2021 would not qualify for the tax credit.
In California, the FFCRA's deadline is important because California’s Supplemental COVID-19 Paid Sick Leave program was tied to the FFCRA's expiration. In September 2020, the California Legislature enacted AB 1867, which mandated employers with 500 or more employees to provide up to two weeks of supplemental paid sick leave for certain qualifying reasons. AB 1867 stated that the supplemental paid sick leave program expires when the FFCRA does. Because the FFCRA mandate was not extended by the Consolidated Appropriations Act of 2021, it’s probable that California’s AB 1867 will expire when the FFCRA does on December 31, unless California passes additional legislation. Employers should still continue to monitor the Labor Commissioner’s AB 1867 guidance for any agency interpretation on how the FFCRA expiration affects California law. Additionally, A number of local city and county agencies enacted ordinances this year that provided supplemental COVID-19 paid sick leave with their own rules and expiration dates unrelated to state or federal law.
The Act established a "PPP second draw," extending the PPP program and permitting certain small employers and industries to apply for a second forgivable PPP loan. The Act extends the covered period of all PPP loans through March 31, 2021.
Eligibility for a second draw is limited to small businesses with 300 or fewer employees that have sustained a 25 percent revenue loss in any quarter of 2020. Applicable businesses must have used or will use the entire amount of their first PPP loan.
Forgivable expenses are expanded to include:
- Covered operations expenditures
- Supplier costs
- Covered property damage costs
- Investments in facility modifications
- Personal protective equipment to operate safely
Employee retention credits are extended through June 30, 2021 with additional enhancements.
- These changes are applicable to eligible wages paid after December 31, 2020.
- Percentage of applicable wages increased from 50 percent to 70 percent.
- Total applicable wages increased to $10,000 per calendar quarter instead of $10,000 total earnings through December 31, 2021.
- The qualifying wages threshold for “Large Employers” increased from 100 to 500 Employees.
- Employers with 500 or fewer employees can claim an employee retention credit whether the wages are for employees who are performing services or not.
- Adds special rules for receiving a refund via 7200 by limiting the advance refund to employers with less than 500 employees and for amounts not to exceed 70 percent of the average quarterly wages paid in 2019.
- Employers are eligible for the credit of a decline in Gross receipts of less than 80 percent compared to the same period in the prior year. Note, CARES compared the same period in the prior year at a rate of 50 percent.
- Allows employers not in business in 2019 to determine eligibility based on prior quarter.
- Removes prohibition on employers receiving Paycheck Protection or other business interruption loans from claiming the ERC, so employers can take advantage of both options.
The Act has restored Federal supplemental unemployment insurance benefits of $300 per week on top of state benefits paid after December 26, 2020, until March 14, 2021. This creates a combined maximum benefit period of 50 weeks, which was previously set at 39 weeks. It includes a three-week phase out for benefits on claims that haven’t reached the 50-week cap. The Act provides authority to states to waive overpayments made without fault on the part of the individual. Additionally, it limits retroactivity for additional $300 benefit to payments due after December 1, 2020.
Per the August 8 Presidential Memorandum, employees are allowed to defer their portion of social security tax through the end of 2020. The Act has extended the recollection period from April 30, 2021 to December 31, 2021. These deferred taxes must be repaid before January 1, 2022.
At this time, Pay-Net is still open with modified business hours. However, we have made some changes to our daily operating procedures to protect our staff and our clients.
Most of our staff members are now working remotely. However, some staff members are still working at our office, although this may change if government directives require.
Regardless of the physical presence of staff in our offices, payrolls will still be processed, tax payments and filings made, and all other payroll essentials completed in a timely fashion, utilizing the strategies we have developed to cope with such contingencies.
In response to the CA State Governor's stay-at-home order and out of an abundance of caution, Pay-Net has suspended all pickup service until further notice. We are also unable to receive visitors to our office.
SKIPPING PAYROLLS: While our clients are dealing with reduced payroll processing, Pay-Net is automatically skipping payrolls and forcing off tax deposits on your behalf. Please bear this in mind and carefully check dates when entering payroll.
As always, if you have any questions or concerns regarding your payroll services, please let us know. You can still reach us by:E-mail: firstname.lastname@example.org
Phone: 858-268-1000 (Monday – Friday, 9:00 am – 5:00 pm. Please leave a message after hours.)
Businesses of all sizes are facing challenges related to COVID-19. You are most likely concerned with not only your staff's health, but also the health of your business.
Pay-Net is working to stay informed with the ongoing developments with municipal and private sector regulations and closures, new tax laws related to COVID-19, and safety recommendations from the Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO).
In the spirit of these guidelines, we offer:
- Printback payroll service: This service allows you to mitigate any potential interruption of delivery/printing services and to protect yourself and your staff. It also minimizes both fees and exposure related to delivery service and/or in-office pickup.
- Solutions for the new COVID-19 tax regulations: The federal government and several states have recently implemented changes to various tax-related deadlines. Pay-Net offers multiple options for tax payments that may qualify for deferment.
- Assistance with Families First Coronavirus Response Act (FFCRA) paid leave: Effective April 1, 2020, new federal regulations will allow small and midsize employers to take advantage of new payroll tax credits that will reimburse businesses for the cost of providing Coronavirus-related leave to their employees. At this time, Pay-Net is waiting for the IRS guidelines on these credits, but we are preparing our system to be able to properly calculate and report these tax credits.
- Employee Self-Service Kiosk: In a time when many employees are suddenly working remotely, it is a good time to take advantage of our employee self-service kiosk. This online portal allows employees to access pay stubs and W-2s, request changes to demographic information, review their time off balances and so much more. Contact the Operations team (email@example.com) if you are interested in adding this service.
- Support if you need to lay off employees or temporarily close your business: If your business is affected by the Coronavirus, you may need to terminate employees, pay PTO balances, or even temporarily close your business. We understand the difficulties of these times. Please contact us if you need our assistance with final checks or if you will be temporarily shuttering your business.
We realize that there is a lot of uncertainty right now, but we want to offer our promise to you that we are preparing to be as adaptable and effective as possible throughout this ongoing crisis. We are committed to mitigating any potential impact this may have on your business, and look forward to working through this as your trusted partner in payroll.
The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act are two major pieces of legislation that can help small businesses during this time. Each act has multiple components, which can cause confusion among employers. Links to websites with more information on these relief efforts can be found in Resources section below.
Here is a breakdown of the important information for your business and how Pay-Net can help you tackle the associated regulations.
DISCLAIMER: Pay-Net cannot give legal guidance regarding the appropriate usage of the changes in our system. It is our recommendation that employers keep copious, detailed records. Of particular note to our clients using PPP loans: Please ensure you are following your lender’s guidance regarding payroll usage. As loan money from a PPP loan may not be used for FFCRA tax credits, your company will want to pay particular attention to proper financial record keeping.
The Families First Coronavirus Response Act (FFCRA) provided paid sick leave and expanded family and medical leave for COVID-19-related reasons and created the refundable paid sick leave credit and the paid childcare leave credit for eligible employers.
These tax credits will reduce your company's federal payroll tax liability. This will allow you to keep money that would have previously been sent to pay for your federal payroll taxes. Please note: the total tax credit for each payroll cannot reduce federal taxes below $0.00.
Eligible employers will be able to claim these credits based on qualifying leave they provide for work days between April 1, 2020 and December 31, 2020.
For information on employee paid leave, please review the FFCRA Information: Paid Sick Leave and Tax Credits section below.
Under the FFCRA, an employee qualifies for paid sick time and/or paid expanded family and medical leave if the employee is unable to work (or unable to telework) for six different reasons related to COVID-19. These reasons and the duration of leave and calculation of pay for each can be found on the Department of Labor's webpage Families First Coronavirus Response Act: Employee Paid Leave Rights. Please review the guidelines on the DOL's website prior to paying these wages to your employees.
COVID-19 sick leave earning codes, which correspond to the numbered reasons on the DOL website, have been added to your company. Using these codes to pay employees for using this paid sick leave will also allow you to receive the corresponding tax credits.
For specific information regarding these new codes, please review to the COVID-19 Updates email sent by Pay-Net. For additional assistance, please contact our Operations team
Through the FFCRA, you may also claim a tax credit for maintaining insurance for your employees on paid sick or expanded FMLA. The tax credit is limited to qualified health plan expenses and is in addition to the tax credit for sick or leave wages paid to the employee.
The IRS provides answers to frequently asked questions related to these insurance cost tax credits in the section Determining the Amount of Allocable Qualified Health Plan Expenses on the webpage COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQ.
Earning codes to track the health codes have been added to your company. Using these codes will allow you to track these costs and to receive the related tax credits.
For specific information regarding these new codes, please review to the COVID-19 Updates email sent by Pay-Net. For additional assistance, please contact our Operations team.
The programs and initiatives in the Coronavirus Aid, Relief, and Economic Security (CARES) Act were created to provide economic relief to small business and to keep employees on payroll when possible.
IMPORTANT NOTE: When deciding which CARES Act programs your company will pursue, please be aware that some programs are not compatible with each other.
The IRS website states that an employer is not eligible to receive both the Employee Retention Credit and a Small Business Interruption Loan under the Paycheck Protection Program. Your company must choose only one of these programs.
Paycheck Protection Program loan recipients are only able to defer Social Security tax payments until the loan is forgiven. The IRS website states, "Once an employer receives a decision from its lender that its PPP loan is forgiven, the employer is no longer eligible to defer deposit and payment of the employer's share of social security tax due after that date. However, the amount of the deposit and payment of the employer's share of social security tax that was deferred through the date that the PPP loan is forgiven continues to be deferred and will be due on the 'applicable dates' [see webpage for more information on due dates]."
The CARES Act includes the Employee Retention Credit (ERC). This credit is designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of wages, up to $10,000 per employee, paid by an Eligible Employer whose business has been financially impacted by COVID-19. (Please note: the eligible wage cap is $10,000 per employee, which means the tax credit per employee is $5,000.)
Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees' wages by the amount of the credit.
If you are an eligible employer, our system can calculate the tax credits and reduce your federal tax deposit in accordance with the CARES Act. Please note: As is the case with the FFCRA Tax Credit, the total tax credit for each payroll cannot reduce federal taxes below $0.00.
Because this tax credit is based on qualifying factors, it has not been automatically added to your account. If your company qualifies for the Employee Retention Credit, please complete the form provided in the COVID-19 Updates email sent by Pay-Net. For additional assistance, please contact our Operations team.
The Paycheck Protection Program (PPP) provides small businesses with funds to pay payroll costs, benefits, interest on mortgages, rent, and utilities. These funds are in the form of loans that are fully forgiven. However, forgiveness is based on your business maintaining or quickly rehiring employees and maintaining salary levels.
When applying for these loans, you will need various payroll and tax data. Pay-Net has provided payroll reports and quarterly tax returns, which include the data needed to apply.
For assistance retrieving your reports, please contact our Operations team.
You may choose to delay payment of the employer's 6.2% of the Social Security (SS-R) tax for the period beginning March 27, 2020 and ending before January 1, 2021. Payments of the amounts from this deferral period are due:
- December 31, 2021 with respect to 50% of the deferred amount
- December 31, 2022 with respect to the remaining 50%
If you wish to utilize these delayed payments, please review to the COVID-19 Updates email sent by Pay-Net. For additional assistance, please contact our Operations team.
With the various available tax relief credits available through FFCRA and the CARES Act, your company may be eligible for more tax relief credit than the amount available in your payroll process. However, your company is still eligible for this relief credit.
You can use IRS Form 7200 to request an advance payment of the remaining tax credits for qualified sick and qualified family leave wages and the employee retention credit.
The instructions for Form 7200 are available on the IRS website. They outline who may file Form 7200, when and how to file it, and how to complete it line by line.
Currently, the IRS has not provided a means for Pay-Net to submit this form. It must be submitted by the employer. However, we have prepared a report that will provide you with the data used on the form. For more information, please contact our Operations team.Back to Top
We understand that you have a lot of questions at this time. Below are some trusted resources to provide you with much needed information and recommendations.
The Families First Coronavirus Response Act (FFCRA) requires certain employers to provide their employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19.
Families First Coronavirus Response Act: Employee Paid Leave Rights
On this webpage, the Department of Labor breaks down:
- Employers that are covered under FFCRA
- Determining rate of pay for any sick leave used
- Employees who are eligible for leave
- Types of paid sick leave that is available, including paid expanded family and medical leave
- Qualifying reasons for leave
- How to calculate sick leave pay
Department of Labor FFCRA Poster
The Department of Labor (DOL) has released the FFCRA poster. You are required to display DOL posters where your employees can readily observe them. This link will allow you to download the FFCRA poster from the DOL website.
IRS News Release regarding Coronavirus-related paid leave for workers and tax credits for small and midsize businesses
This news release provides information regarding paid sick leave and the associated tax credits under the FFCRA.
COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs
In addition to answers to many frequently asked questions related to the Families First Coronavirus Response Act (which are updated by the IRS to address changes in the law or additional questions as they are raised), this website provides overviews of:
- COVID-19-related tax credits for small and midsize businesses
- Paid sick leave refundable credit
- Paid family leave refundable credit
- Payment of the sick and family leave credit
Department of Labor: Families First Coronavirus Response Act: Questions and Answers
The FFCRA's paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020. This website provides answers regarding the Families First Coronavirus Response Act (FFCRA) and how it may affect your business.
Topics covered on this web page include:
- How to determine if your business has to provide paid sick leave or expanded family and medical leave
- Determining rate of pay for any sick leave used
- Calculating hours worked by a part-time employee for purpose of Act
- Regulations regarding regularly worked overtime hours and their inclusion in sick leave
- Additional answers to employee's questions
Employers severely impacted by COVID-19 may qualify for two new tax credits: Credit for Sick and Family Leave and Employee Retention Credit.
This IRS webpage provides an overview of the credits and their limits.
Although many news stories focus on the economic impact payments for individuals, the Coronavirus Aid, Relief, and Economic Security (CARES) Act includes programs and initiatives for small businesses affected by the Coronavirus.
Through the Small Business Administration (SBA) small businesses, non-profits, and some other employers will be able to get the financial assistance and resources needed to navigate through these difficult times.
Here are various resources to help you navigate the CARES Act.
The U.S. Senate Committee on Small Business & Entrepreneurship provided this guide to help you get started. Resources covered include:
- Paycheck Protection Program Loans
- Small Business Debt Relief Program
- Economic Injury Disaster Loans and Emergency Economic Injury Grants
- Small Business Counseling
- Small Business Contracting
- Small Business Tax Provisions
This IRS news release highlights how to determine if your business qualifies to receive the Employee Retention Credit. It also outlines how the credit is calculated.
The U.S. Small Business Association outlines details of this SBA loan designed to keep your workforce employed during the Coronavirus (COVID-19) crisis, including:
- Loan Information
- Who Can Apply
- Loan Details and Forgiveness
The SBA provides information on this loan advance that will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.
Get more information on this pilot program that enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.
Trying to keep your business open, while protecting your employees and customers can be a daunting task. The resources below provide not only procedural recommendations, but also resources to hep your business survive the financial struggle related to Coronavirus.
The CDC provides guidance for how businesses can:
- Prepare workplaces for a COVID-19 outbreak
- Reduce transmission among employees
- Maintain healthy business operations and a healthy work environment
The SBA wants your small business to survive the economic downturn caused by COVID-19 and the various federal, state, and local regulations related to the current situation. Valuable financial resources on this page include:
- Economic Injury Disaster Loan Program - Get information and apply for this low-interest loan for your small business
- SBA Express Bridge Loans - Discover how an existing relationship with the SBA can allow you to access up to $25,000 with less paperwork
- Guidance for Businesses and Employers - Breakdown of common issues small businesses are facing and guidance on how to prepare
- SBA Products and Resources - Learn how to get access to capital, where to receive exporting assistance, what to expect regarding federal contracts, and what local assistance is available
The Department of Labor has resources to help workers and employers prepare for the Coronavirus. Resource categories include:
- Workplace Safety
- Wages, Hours and Leave
- Unemployment Insurance Flexibilities
- Support for Dislocated Workers and States
- Federal Contractors
OSHA provides information for workers and employers about the evolving Coronavirus outbreak. The information includes links to interim guidance and other resources for preventing exposure to and infection with COVID-19.
This is a downloadable PDF of OSHA Publication 3990, (March 2020), which contains OSHA recommendations, as well as descriptions of mandatory safety and health standards.
Federal employment laws set the minimum requirements that you must follow; however, California employment laws give employees additional rights and benefits under state law. This is also true as it relates to regulations related to COVID-19. Below are extensive CA-related employer resources from the Employment Development Department (EDD), the Department of Industrial Relations (DIR), and the Labor & Workforce Development Agency (LWDA).
The Labor & Workforce Development Agency (LWDA) is trying to reduce confusion and spread awareness through this centralized source.
This website includes information for California employers and workers on numerous COVID-19 topics, including:
- Workplace health and safety guidance and regulations
- California paid sick leave and paid family leave
- Disability and unemployment insurance
- Coronavirus FAQs and benefit guidance
The California Labor & Workforce Development Agency provided this helpful guide that compares CA paid family leave, CA paid sick leave, and FFCRA paid leave. The chart compares the following aspects of the programs:
- Qualifying reasons for leave
- Amount of paid leave
- Wage payment amount
- When leave becomes available
- Employers covered
- Family members for whom care may be provided
The ever-changing employment landscape caused by the Coronavirus makes it diffiuclt to determine which CA employment laws are still in force. The Department of Industrial Relations (DIR) provided answers to frequently asked questions on this topic.
We know you care about your employees. The EDD provides alternatives to layoffs that can help you keep your employees when there is a lack of work or during a financial hardship.
Here are pages with more information on each alternative:
Governor Gavin Newsom issued Executive Order N-31-20, which addressed the California Worker Adjustment and Retraining Notification (WARN) Act and its 60-day notice requirement for closures of establishments. This website includes guidance from the Department of Industrial Relations (DIR), Division of Labor Standards Enforcement (DLSE), and the Employment Development Department (EDD) regarding the Order's conditional suspension of the California WARN Act.
There are multiple programs available to California employees that may be affected by COVID-19. However, it may be confusing for you and your employees to know which resource is best for their situation.
This Labor & Workforce Development chart of benefits outlines the following programs with information and links to file for each:
- Disability Insurance
- Paid Family Leave
- Unemployment Insurance
- Paid Sick Leave
- Workers' Compensation
If your employees have question about California benefits, you can direct them to this page. It provides employees general guidance as to what programs are available and what situations may be applicable to their circumstances.
There is a lot of information circulating in the news and on social media. It may be difficult to decipher all of the data, especially when you may see conflicting reports.
The World Health Organization provides extensive data and recommendations related to the Coronavirus pandemic.
A sample of resources included on this website include:
- Latest updates and announcements from WHO
- Videos explaining everything from dealing with COVID-19 in the workplace to steps to prevent the spread of the virus
- Myth-busting facts in easy-to-download graphics
- Explanations of how and when to wear masks
- Worldwide outbreak statistics
- Answers to your health questions relating to COVID-19
On this website, the CDC provides:
- What you need to know (including symptoms of Coronavirus, recommendations for older adults and those with pre-existing medical conditions, and how to prepare your family)
- Resources for the Community (including travel advisories, community-specific mitigation plans, and guidance for employers, schools, and various organizations)
- Breakdown of Coronavirus cases in the United States
- Latest updates and interim guidelines from the CDC
The CDPH has provided a Coronavirus website geared towards California. It includes: