The Latest on the Federal COVID-19 Stimulus Package 2.0
On Sunday, December 27, 2020, President Trump signed the second-round of stimulus legislation that allocates $900 billion in economic relief to business and workers in the US. There are several provisions that are key to employers, including continuing the small business loan program, extending tax credits for continued paid sick leave, and offering a variety of other tax and benefit-related provisions. Fisher Phillips, our law firm partner, has provided a summary of the key provisions:
Continuation of the Paycheck Protection Program
The Stimulus 2.0 program makes many critical changes from the previous PPP, including lowering the employee threshold for businesses to 300 employees or fewer (down from 500), and the loan maximum to $2 million (down from $10 million).
Tax Deductibility of Expenses
The first PPP iteration provided that the forgiven amount was tax-free, but the Internal Revenue Service (IRS) ruled that the expenses paid with forgiven PPP loan proceeds were not deductible. Thus, before Stimulus 2.0, the amount of loan proceeds used to cover payroll, if forgiven, would not be deductible. Stimulus 2.0 changes that, clarifying that gross income does not include any amount that would otherwise arise from the forgiveness of the PPP loan. The bill states:
“…no deduction shall be denied or reduced, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by [the loan forgiveness provision that says forgiven PPP loans will not count as income.”
This means that deductions are allowed for deductible expenses paid with forgiven PPP loan proceeds. This provision is effective as of the date of enactment of the CARES Act and applies to second draw PPP loans.
New Allowable Expenses
Stimulus 2.0 expands qualifying expenses for new borrowers and those who have not yet applied for forgiveness, including the following;
The bill also allows loans made under PPP before, on, or after enacting Stimulus 2.0 to be eligible to utilize the expanded forgivable expenses except for borrowers who have already received loan forgiveness.
Second Draw PPP Loans
Section 311 of Stimulus 2.0 provides for second draws of PPP loans for smaller businesses, capping the loan amount at $2 million. Under this section, eligible borrowers must (1) employ not more than 300 employees; (2) have used or will use the full amount of their first PPP; and (3) demonstrate at least a 25% reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter. Borrower applications submitted on or after January 1, 2021, are eligible to utilize the gross receipts from the fourth quarter of 2020. Eligible second draw borrowers also include non-profit organizations, housing co-operatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives.
Second draw loan terms are reduced and calculated up to 2.5X the average monthly payroll costs in the 12 months before the loan application or the calendar year (2019), with maximum loan amounts capped at $2 million. However, Stimulus 2.0 maximizes benefits for borrowers in the restaurant and hospitality industries by calculating loans up to 3.5X average monthly payroll costs. Additionally, the bill re-institutes the waiver of affiliation rules that applied during initial PPP loans for second loan borrowers with multiple locations employing not more than 300 employees per location.
Second draw loan recipients are eligible for loan forgiveness equal to the sum of their payroll costs and expanded allowable expenses, subject to the previous program’s 60%/40% allocation between payroll and non-payroll costs.
Streamlined Applications for Borrowers Under $150K
Stimulus 2.0 provides a streamlined process for loans under $150,000. In fact, such borrowers will not be subject to the required reductions in forgiveness amounts generally imposed by reductions in salaries or headcount by simply certifying that the borrower meets the revenue loss requirements described above on or before the date the entity submits the loan forgiveness application.
No Extension of FFCRA Paid Leave – But Tax Credit Period Extended Through March
The compromise agreement does not extend the paid sick leave and paid family and medical leave requirements of the Families First Coronavirus Response Act (FFCRA), which expires on December 31. Therefore, an employer’s obligation to provide paid leave under the FFCRA will cease at the end of the year.
However, the final legislation does extend the tax credit for both the Emergency Paid Sick Leave and the Emergency Family and Medical Leave under the FFCRA until March 31, 2021. This means that you are not required to provide paid leave under the FFCRA after December 31, 2020. If you choose to voluntarily do so (assuming the employee still has eligible leave remaining), you will be able to obtain a tax credit for those payments until the end of March under the compromise agreement contained in Stimulus 2.0.
In addition, depending on the circumstances of an employee’s leave, it is possible that the employee could be entitled to normal unpaid leave under the FMLA even after the FFCRA expires, if they still have weeks available under the FMLA. You should work with counsel to determine whether any employees out on FFCRA leave may be entitled to regular FMLA unpaid leave after the end of the year.
We will continue to monitor COVID-19 related news and will provide further updates.
COVID-19 Lawsuits on the Rise
Nearly a year into the COVID-19 pandemic, employees continue to file COVID-19-related lawsuits against their employers. According to Jackson Lewis, an astonishing number of COVID-19-related employment complaints filed approaches 1,000. These complaints have to do with the following:
Alleged failure to provide a safe working environment;
Failure to accommodate leave laws or work from home requests;
· Retaliation and whistleblower claims, usually attached to either a workplace safety or leave issue;
· Wage and hour lawsuits arising out of the pandemics’ impact on business operations.
Claims relating to retaliation, discrimination and leave law conflicts dominate COVID-related litigation. Usually, these claims have emerged from the decisions employers have made on which employees were laid off, furloughed or have had their hours reduced. Specifically, claims from employees who are part of a protected class and were furloughed. Additionally, employees have filed claims alleging constructive discharge or retaliation due to an employer’s failure to implement safety measures, or as a result of complaining about inadequate safety measures.
Below or some recent examples of these claims:
These cases are only a few examples of how COVID-19 cases are laying the foundation for prominent legal issues in 2021. However, there are lessons to be learned thus far. The key takeaways:
· Ensure leave and anti-retaliation policies are firmly established and communicated to employees.
· Follow OSHA and CDC guidelines and provide a safe work environment for employees. This includes supplying Personal Protective Equipment (PPE), regularly cleaning and disinfecting workplaces, and appropriately distancing employees to limit exposure. Make sure you are properly documenting and investigating your employee’s safety concerns.
· Document, Document, Document. Timing and documentation are important, especially during the pandemic. When making personnel decisions, such as terminations, lay-off, or demotions, be sure that documentation exists leading up to and through the date the action is taken that demonstrates that the personnel action is unrelated to any protected activity.
California Family Rights Act Expansion
On September 19, 2020, Governor Gavin Newsom signed into law an amendment to California's Family Rights Act (CFRA). This law, which becomes effective January 1, 2021, will bring sweeping changes to small and large employers alike and greatly expand CFRA.
Currently, California employers with 50 or more employees must provide eligible workers with up to 12 weeks of job-protected, unpaid leave under CFRA and the federal Family and Medical Leave Act (FMLA). Additionally, California employers with 20 to 49 workers need to provide only the job-protected baby-bonding leave. The new law will now cover:
· Employers with at least five (5) employees.
· Leave to care for more family members, such as grandparents, grandchildren and siblings, in addition to parents, children, spouses and registered domestic partners.
· 12 weeks of baby-bonding leave for both parents, even if they work for the same employer.
· Leave for certain qualifying reasons related to the active military duty of an employee's spouse, domestic partner, child or parent.
Large employers should be aware that eligibility requirements will change as well. The eligibility requirements for an employee to take CFRA leave will be that the employee:
· has at least 12 months of service with the employer, and
· has at least 1,250 hours of service with the employer during the previous 12-month period.
The requirement that an employee work at a worksite where the employer employs 50 or more employees either at the worksite or within 75 miles of the worksite, has been eliminated. This means that employees previously ineligible, due to working at a small worksite may now be eligible for leave under CFRA. The new law also eliminates the “key employee” provision that previously allowed an employer to deny reinstatement under certain limited circumstances.
Moreover, now that CFRA will require employers to provide time off for employees to care for a various group of family members, CFRA leave will not always run concurrently with FMLA leave. Employees may be eligible to take as much as 24 weeks off under CFRA and the FMLA. For example, an employee could potentially use 12 weeks of CFRA leave to care for a sibling with a serious health condition, and then in the same 12-month period use another 12 weeks of FMLA leave due to their own serious health condition — for a total of 24 weeks of leave within a 12-month period.
This new law represents a shift for California employers. Employers should familiarize themselves with these changes and update their employee handbooks, and leave policies. Further, employers should ensure their staff is trained on how to effectively handle leave requests under CFRA and FMLA.
MINIMUM WAGE INCREASES
State by State
MINIMUM WAGE INCREASES
State by State
Under the Fair Labor Standards Act (FLSA), the federal minimum wage hasn’t changed, since July 2009, when an amendment brought the rate to $7.25 per hour. However, this hasn’t stopped our states and other local areas from establishing their own minimums, most of which are changing annually. In 2021, numerous state and local area minimums will be increasing.
The following minimums will be effective January 1, 2021, unless otherwise indicated.
· Flagstaff: $15.00
California: $13.00 for small companies with 25 employees or less; $14.00 for companies with more than 25 employees.
· Alameda: $15.00 (This will increase on July 1st -rate TBD.)
· Belmont: $15.90
· Berkeley: $16.07 (This will increase on July 1st – rate TBD.)
· Cupertino: $15.65
· Daly City: $15.00
· El Cerrito: $15.61 (This will increase on January 1st – rate TBD.)
· Emeryville: $16.84 (This will increase on July 1st – rate TBD.)
· Fremont: $11.00 (to $13.50 on July 1st) for companies with 25 or fewer employees; $13.50 (to $15.00 on July 1st) for companies with 26 or more employees
· Los Altos: $15.40
· Los Angeles City: $14.25 (to $15.00 on July 1st) for small companies with 25 employees or less; $15.00 for companies with more than 25 employees
· Los Angeles County (unincorporated areas): $14.25 (to $15.00 on July 1st) for small companies with 25 employees or less; $15.00 for companies with more than 25 employees
Malibu: $14.25 (to $15.00 July 1st) for small companies with 25 employees or less; $15.00 for companies with more than 25 employees
· Milpitas: $15.40 (This will increase on July 1st – rate TBD.)
· Mountain View: $16.30
· Novato: $14.00 for small companies with 25 or fewer employees; $15.00 for companies with 26-99 employees; $15.24 for companies with 100 or more employees
· Oakland: $14.36
· Palo Alto: $15.65
· Pasadena:$14.25 (to $15.00 on July 1st) for small companies with 25 employees or less; $15.00 for companies with more than 25 employees (This will increase on January 1st – rate TBD.)
· Redwood: $15.62
· Richmond: $15.62
· San Diego: $14.00
· San Francisco: $16.07 (This will increase on July 1st – rate TBD.)
· San Jose: $15.45
· San Leandro: $15.00 (This will increase on July 1st – rate TBD.)
· San Mateo: $15.62
· Santa Clara: $15.65
· Santa Monica: $14.25 (to $15.00 on July 1st) for small companies with 25 employees or less; $15.00 for companies with more than 25 employees (This will increase on July 1st – rate TBD.)
· Sunnyvale: $16.30
· Denver: $14.77
Connecticut: $12.00 (This will increase to $13.00 on August 1st.)
Florida: $8.56 (This will increase to $10.00 on September 30th.)
· Chicago: $13.50 (This will increase to $14.00 on July 1st) for companies with 20 or fewer employees; $14.00 (This will increase to $15.00 on July 1st) for companies with more than 20 employees
· Cook County (outside of Chicago): $13.00 (This will increase on July 1st – rate TBD.)
· Montgomery County: $13.00 (to $13.50 on July 1st for companies with 10 or fewer employees; $13.25 (to $14.00 on July 1st) for companies with 11-50 employees; $14.00 (to $15.00 on July 1st) for companies with more than 50 employees
· Massachusetts: $13.50
Minnesota: $8.21 for small companies with annual gross revenue less than $500k; $10.08 for large companies with a annual gross revenue of $500k or more
· Minneapolis: $11.75 (to $12.50 on July 1st) for small companies with 100 or fewer employees; $13.25 (to $14.25 on July 1st) for companies with more than 100 employees
Nevada: $8.75 for employees who receive qualifying health benefits, $9.75 for employees who do not receive qualifying health benefits
New Hampshire: $7.25
New Jersey: $12.00
New Mexico: $10.50
· Albuquerque: $9.50 for employees who receive qualifying health benefits, $10.50 for employees who do not receive qualifying health benefits
· Bernalillo County (outside of Albuquerque): $8.35 for employees who receive qualifying health benefits, $9.35 for employees who do not receive qualifying health benefits
· Las Cruces: $10.50
· Santa Fe City & County: $12.10 (This will increase on March 1st – rate TBD.)
New York: $12.50 (December 31st, 2020)
· Fast Food Companies (outside of New York City): $14.50 (December 31st, 2020)
· Nassau, Suffolk and Westchester Counties: $14.00 (December 31st, 2020)
· New York City: $15.00 (December 31st, 2020) for companies with 10 or fewer employees; $15.00 for companies with more than 10 employees
North Carolina: $7.25
North Dakota: $7.25
Ohio: $7.25 for small companies with annual gross revenue less than $323k; $8.80 for large companies with annual gross revenue of $323k or more
Oregon: $12.00 (This will increase to $12.75 on July 1st.)
· Portland Metro: $13.25 (This will increase to $14.50 on July 1st)
· Standard Counties: $12.00 (This will increase to $12.75 on July 1st)
Rhode Island: $10.50
South Carolina: $7.25
South Dakota: $9.45
· SeaTac (Hospitality & Transportation Companies): $16.57 ·
Seattle: $15.00 for employees who receive qualifying health benefits in companies with 500 employees or less; $16.69 for employees who do not receive qualifying health benefits in companies with 500 employees or less; $16.39 $ 16.69 for companies with more than 500 employees.
Washington D.C.: $15.00
West Virginia: $8.75
MINIMUM SALARY FOR OVERTIME EXEMPTION
Governor Newsom signed over 20 new labor and employment bills into law in 2020. Below is a brief summary of key legislations that will become effective on January 1, 2021
AB 685 - Requires employers to provide notice of suspected or confirmed COVID-19 in the workplace within one business day of the notice of potential exposure, effective until January 1, 2023.
SB 1159 – Creates a presumption that an illness or death resulting from COVID-19 has arisen out of and in the course and scope of employment. An employer may dispute the presumption with evidence such as: (1) measures in place to reduce potential transmission of COVID-19 in the employee’s place of employment, (2) the employee’s non-occupational risks of COVID-19 infection, (3) statements made by the employee, and (4) any other evidence normally used to dispute a work-related injury. This law is effective until January 1, 2023.
AB 2537 - Requires acute care hospitals to supply PPE to employees who provide direct patient care, and ensure that employees use PPE. Beginning April 1, 2021, acute care hospitals must maintain a three-month supply of PPE, and provide an inventory of PPE to the Division of Occupational Safety and Health upon request.
BENEFITS AND LEAVES OF ABSENCE
SB 1383 – This law will amend and expand the CFRA in the following ways:
AB 2399 - Expands Family Temporary Disability Insurance (FTDI) program to include absences due to military service of family member.
AB 2992 -Expands leave for victims of domestic violence, sexual assault or stalking to include leave for the victim of any crime that caused physical injury or mental injury with a threat of physical injury.
HARASSMENT, DISCRIMINATION AND RETALIATION PROTECTIONS
AB 2143 - Clarifies when a no-rehire provision in a settlement agreement regarding harassment, sexual assault, or criminal conduct is permitted; requires certain employer documentation.
AB 1947 - Lengthens from six months to one year the statute of limitations for bringing a claim of discriminatory discharge in violation of any law under the jurisdiction of the Labor Commissioner; authorizes attorney’s fees for successful plaintiffs.
AB1963 - Designates Human Resources professionals who work for businesses that employ minors, and employ five or more employees, as mandated child abuse reporters. Such persons must be given mandated reporting training, and a written statement describing their obligations.
AB 2588 - Requires acute care hospitals to reimburse certain training expenses of employees and job applicants.
AB 1281 - Grants another one-year extension (until January 1, 2022) of the exclusion of certain Human Resources data from coverage under the California Consumer Privacy Act.
AB 1864 - Prohibits adverse action against employees who have filed any proceeding under the Consumer Financial Protection law.
WAGE AND HOUR
AB 1512 - Allows employers to require that security guards covered by collective bargaining agreements, and paid at least one dollar more than minimum wage, remain on premises and on call during rest breaks.
AB 1731 – Automates parts of California’s work sharing program.
SB 973 - Requires businesses to report to the Department of Fair Employment Hearing (DFEH) pay data for various categories of employees.
AB 2479 - Allows employer to require that employees in safety-sensitive positions at petroleum facilities covered by collective bargaining agreements, and paid at least 30% more than the state minimum wage, remain on premises and on call during rest breaks.
AB 3372 - Permits any notice or document required to terminate, modify, or release any earnings withholding order for taxes to be served by electronic transmission.
AB 3075 - Requires that corporations register with the state information regarding violations of the wage orders or Labor Code.
SB 1384 - Labor Commissioner will represent financially disabled persons when wage claims are referred to arbitration.
AB 2231 - Lowers threshold for qualifying as a public works project for purposes of the minimum wage.
AB 323 - Extends for one year (until January 1, 2022) the exception from the ABC test for newspaper carriers.
AB 979 - Requires that a publicly traded corporation with a principal executive office in California appoint members of underrepresented communities to the Board of Directors.
LEGISLATION IN OTHER STATES
Legislation in other States
The following is a summary of key legislation that has recently passed.
SB 20-170 - Provides that employees forced to leave work for domestic violence-related safety reasons, may still be eligible for unemployment benefits; expands definitions of family members; permits severance pay to be deducted from unemployment compensation.
SB 19-085 - Prohibits wage discrimination based on sex and gender identity; prohibits employers from seeking an applicant’s salary history and from barring employees from disclosing or discussing their wages. Mandates transparency in wages and advancement and provides damages for non-compliance.
SB 20-205 - This law allows employees to accrue at least one hour of paid sick and safe time leave for every 30 hours they work, up to a maximum of 48 hours per year. *The law will apply to employers with 16 or more employees starting January 1, 2021, and then apply to all employers on January 1, 2022.
P.A. 19-25 - This law establishing a Family and Medical Leave Insurance Program was enacted in 2019. Leaves covered by the program do not begin until January 2022. Employers must, however, begin payroll deductions to fund the program starting January 2021.
SB 288 - Allows rehabilitated individuals to petition the court to restrict and seal certain criminal records, and prohibits the use of an employee’s criminal history information in an action against an employer for the employee’s actions.
SB 443 - Limits the amount of wages that can be garnished for student loan repayment to 15% of garnishee’s weekly disposable earnings.
SB 2638 - Makes changes to documents that an employer may request to verify that an employee is a victim of domestic or sexual violence.
SB 2296 - Establishes the circumstances under which certain independent contractors are not considered employees for purposes of various laws.
SB 68 - Provides the definitions of “employee” and excludes independent contractors from definition of “employment” for the purpose of unemployment benefits.
LD 369 (SP 110) - Entitles employees to accrue one hour of paid leave for every 40 hours worked, up to 40 hours per year, where the employer has more than 10 employees.
12-170 Ch. X - Creates procedures for accruing paid leave, providing notice of the need to use leave, scheduling use of leave, and penalizing denial of paid leave.
Montgomery County Bill 12-19 - Requires certain employers to provide a minimum work week of at least 30 hours for each employee working as a janitor, building cleaner, security officer, concierge, doorperson, handyperson, or building superintendent and performing janitorial services.
HB 4640 - Beginning on January 1, 2021, all private Massachusetts employers must provide covered individuals with paid family and medical leave, funded through a payroll tax.
Minneapolis Ord. No. 2019-00699 - Creates the Freelance Worker Protection Ordinance; requires contracts for service to be set forth in writing and provides an enforcement mechanism for failure to pay a worker as agreed upon in the contract.
St. Louis Ord. No. 71074 - Prohibits employers from basing hiring or promotion decisions on an applicant’s criminal history, unless the employer can demonstrate its relevance to the employment-related decision.
SB 481 (BDR 788) - Establishes requirements for obtaining a certificate of authority for self-funded multiple employer welfare arrangements.
SB 119 - Expands mandatory safety training to include employees performing work at sites primarily used for trade shows, conventions and related activities.
SB 3170 (AB 5145) - Expands employers’ advance notice and severance pay obligations under the Millville Dallas Airmotive Plant Job Loss Notification Act (New Jersey mini-WARN). *Note that the effective date of this law has been extended several times due to the pandemic. It is possible that the current effective date will once again be extended. At this time, the effective date is scheduled for 3/23/2021.
SB 2328 - Enables employees who have chosen direct deposit to receive electronic confirmation of direct deposit in lieu of paper pay stubs. This will be effective 4/5/2021.
Portland Ord. No. 190114 - Prohibits private entities from using facial recognition technology in places of public accommodation.
HB 1407 (SB 744) - Creates a presumption that a worker is an employee, unless either party proves independent contractor status under federal IRS guidelines. Prohibits worker misclassification, providing civil penalties and prohibiting contract awards from public bodies and covered individuals for violations.
HB 874 (SB 160) - Prohibits holding a handheld personal communications device while driving a motor vehicle, subject to several exceptions, including for emergency situations and personnel employed by certain emergency services.
HB 1645 - Prohibits denying employment to a care provider or licensing to an early childhood educator where a background check reveals that the individual has a finding of child abuse or neglect in their record, but has since obtained a certificate of parental improvement, as defined in the new chapter.
Seattle Council Bill No. 119810 - Imposes a local payroll tax on employers doing business within the City of Seattle.
TAX UPDATES 2021
Additional Medicare Tax for Wages in Excess of $200,000,Rate 0.9% is required to be deducted Employers
WITHHOLDING 2020 new brackets depending on your income and filing status (see next page)
2021 Withholding Brackets
For unmarried individuals:
· 10%: Taxable income up to $9,950
· 12%: Income between $9,951 to $40,525
· 22%: Income between $40,526 to $86,375
· 24%: Income between $86,376 to $164,925
· 32%: Income between $164,926 to $209,425
· 35%: Income between $209,426 to $523,600
· 37%: Income $523,601 or more
For heads of household:
· 10%: Taxable income up to $14,200
· 12%: Income between $14,201 to $54,200
· 22%: Income between $54,201 to $86,350
· 24%: Income between $86,351 to $164,900
· 32%: Income between $164,901 to $209,400
· 35%: Income between $209,401 to $523,600
· 37%: Income $523,601 or more
For married individuals filing jointly:
· 10%: Taxable income up to $19,900
· 12%: Income between $19,901 to $81,050
· 22%: Income between $81,051 to $172,750
· 24%: Income between $172,751 to $329,850
· 32%: Income between $329,851 to $418,850
· 35%: Income between $418,851 to $628,300
· 37%: Income $628,301 or more
For married individuals filing separately:
· 10%: Taxable income up to $9,950
· 12%: Income between $9,951 to $40,525
· 22%: Income between $40,526 to $86,375
· 24%: Income between $86,376 to $164,925
· 32%: Income between $164,926 to $209,425
· 35%: Income between $209,426 to $314,150
· 37%: Income $314,151 or more
Need help navigating your HR?
This information is intended to provide an overview of some important employment law updates within the United States. It is not intended to be an exhausted list of legislation and/or legal advice for any specific situation or set of facts. Whenever you are dealing with any employment-related situation it is always a good idea to seek the advice of a ModernHR Human Resources Representative or competent legal counsel.