Effective Strategies for Managing Employee Benefits During the COVID-19 Pandemic
Learn about important considerations for managing sick leave, family leave, unemployment, and SBA loans for employees during the COVID-19 crisis. Understand key points such as eligibility for sick leave, navigating unemployment guidelines, and tips for maximizing SBA loan forgiveness. Explore strategies for different employee categories to effectively handle staffing and financial challenges.
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Prepared for EDN Update March 29, 2020
DISCLAIMER The purpose of this is NOT to provide legal guidance but rather to give mosdos a basic understanding of what questions to ask Talk to your accountant and professionals as well as board members/ballei batim to further explore this The premise of this presentation is that we are all trying to figure out how to pay our staff and not how to get out of paying them (there are certain waivers not mentioned here).
Sick Leave / Family Leave If you closed already but kept essential employees like maintenance staff on, they will be eligible beginning April 1stfor 100% the first two weeks of sick leave if they say they are not feeling well and you continue to have work for them. You will get this reimbursed. If you look at question 24-26 on the Q and A page of the Dept of labor(https://www.dol.gov/agencies/whd/pandemic/ffcra- questions), you will see that the only way this benefit is relevant is if you continue to have work for the employee and he can t work because he is sick or watching children. Make sure to discuss this with your accountant in detail before making a decision. BTW- I suspect many groceries etc will be losing employees for two week beginning April 1stbecause of this law which will essentially slow down whatever is still operating
Unemployment Each state will be making modifications to their unemployment guidelines so it is critical to stay on top of that. It seems like you may be best off sending employees who are not working at all to unemployment BUT there is a very complex formula for the sba loan forgiveness that will get affected by this. See below.
SBA Loan The US Chamber of Commerce released this excellent guide: https://www.uschamber.com/sites/default/files/023595_ comm_corona_virus_smallbiz_loan_final_revised.pdf. It needs to be read carefully. The Federation sent out the graph attached to this email. Here is the key point to keep in mind. To be eligible for loan forgiveness you need to maintain the same staff as before OR if you didn t and laid people off THEY NEED TO BE REHIRED BY JUNE 30TH!
Illustration Category 1- Employees who have zero work now due to school closure- send them to unemployment and they will receive an extra $600 per week above your states allowance from the federal government. Rehire them before June 30th. Category 2- Employees who have some work- continue paying them at the full rate (you may be able to reduce their pay because they are not working full time and then they can collect partial unemployment PLUS they will get the extra $600 from the government- this will vary by state- Thank you Aharon Rubenstein for sharing this tip.) Category 3- Employees who have full amount of work- they should continue working and getting paid. If they claim they can t because they are sick or caring for sick person/child they will be eligible for the sick leave/family leave credit
Illustration Continued. You apply for an sba loan which will equal 2.5 x your average monthly payroll of the past year. You then need to spend those funds in the next 8 weeks on eligible expenses. You get the loan forgiven assuming you spent it on eligible expenses MINUS the sick leave/family leave funds the reduction in your payroll However, only if you rehire any employee that was laid off before June 30thwill the loan be forgiven.
How to figure out what to do Step 1- Calculate what you average monthly payroll was in the past 12 months with parsonage but without QTR and without the payroll taxes= Step 2- Multiply this x 2.5- this is the max loan amount that can be forgiven Step 3- figure out what the following amount adds up to for 8 weeks (these 8 weeks start from the day of the loan): Interest on your mortgage (not principal or escrow) Rent if applicable Payments on utilities- electricity, gas, water, telephone, internet or transportation (business trips not student transportation) Total amount=
Next Step 4- subtract your total in step 3 from your amount in step 2. This is the amount that must be used during these 8 weeks on eligible payroll to get the entire amount forgiven. If you claimed any sick/family leave credit that will not be allowed to be included in the payroll total If you sent employees to unemployment they will not be included in this and they must be rehired before June 30th Only payroll costs plus health care benefits, including insurance premiums, payment of any 401k benefit, payment of state or local tax assessed on the compensation of the employee can be included. Not regular payroll taxes.
To Illustrate Mosad A has an average m0nthly payroll of $150,000 which includes $20k of payroll taxes. Their total loan will be $130k x 2.5= $325k They sent employees to collect unemployment and as a result they are not able to spend the full loan in the 8 weeks on eligible expenses Total Loan $325,000 Interest on mortgage for 8 weeks $40,000 Utilities for 8 weeks $35,000 Total remaining $250,000 Amount of salaries not paid for employees who were sent to unemployment $40,000 Amount remaining on their payroll $220,000 Amount of loan not forgiven $30,000
A bit confusing Unemployment collection can be backdated to the period they lost their job even prior to April 1st The loan formula is focused on the 8 weeks of spending Figuring out what is best for you can be confusing as a result of this.
Once again Every mosad must talk to their accountant/tax advisor before making a decision. I am none of the above and I am only trying to send out what comes my way. Regardless, this is going to be a tedious process for each bookkeeper to work through.
One address for mosdos Many of you have asked if we can just hire one person to do it for all mosdos. Realistically, it will not be humanly possible for one person to process all of this for everyone in the amount of time we want it done. There is a bank with a frum owner and staff who are trying to see if they can get a mainstream process set up for mosdos. Will keep you posted if/when that evolves.
Employee Retention Credit The employee retention credit (SSI Credit) which gives you 50% credit is not available to anyone who takes the sba loan which is why I haven t been talking about it here.
PLEASE! Do not rely on this presentation and speak to your accountant and ballei batim!!! However, there is real money in this that can help us all get through this crisis. Please contact R Eliyahu Stern with any questions, comments or errors - eds@ednnetwork.org.
