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Cheat Sheet: COVID-19 Employment Laws

In response to the COVID-19 pandemic, there have been legislative changes that have dramatic and immediate impacts to businesses. To help, SMB leaders navigate the recent updates, we’ve put together this cheat sheet. You’ll find a summary of the new laws along with links to resources to keep you informed on:

  1. Emergency Paid Sick Leave and Extended FMLA
  2. Paycheck Protection Program (PPP) Loan
  3. SOCER Tax Payment Deferral
  4. Employee Retention Credit
  5. Employee Social Security Tax Deferral
  1. Emergency Paid Sick Leave and Extended FMLAThe Families First Coronavirus Response Act (FFCRA) established emergency paid sick leave and expanded paid family leave for those impacted by COVID-19. Employers can receive a payroll credit against federal payroll taxes for emergency leave paid under this program beginning April 1, 2020.

    Government Resource

    U.S. Department of Labor (DOL) – FFCRA FAQs

    Paycor Resources

    Emergency Sick Leave for Childcare: What Employers Need to Know About FFCRA

    Families First Coronavirus Response Act: Tips to Manage Employee Leave Scenarios

    Paycheck Protection Program (PPP): Loan Forgiveness

    Paycor’s PPP Dashboard: Track Your Paycheck Protection Loan Spending

  2. Paycheck Protection Program (PPP)The Coronavirus Aid, Relief and Economic Security Act (CARES) established a forgivable loan program administered by the Small Business Administration that allows eligible employers to receive loans to cover payroll and other costs.

    Government Resource

    Department of Treasury – CARES Act – Assistance for Small Businesses

    Paycor Resources

    Paycheck Protection Program (PPP): What You Need to Know

    How to Apply for a Coronavirus Small Business Loan

  3. SOCER Tax DeferralUnder the CARES Act, organizations have the option to defer the employer portion of 2020 Social Security Taxes to be paid back in two installments to the U.S. Treasury at a later date: 50% due by end of 2021, 50% due by end of 2022.

    Government Resource

    IRS – Deferral of Employment Tax Deposits

    Paycor Resource

    CARES Act: What SMBs Need to Know

     

  4. Employee Retention CreditThe Employee Retention Credit is a provision (of the CARES Act) that provides eligible employers with a refundable tax credit equal to 50 percent of qualified wages. The program has specific rules for qualified wages and eligibility.

    When the employer credit exceeds the available tax liability, form 7200 can be utilized to request the remaining credit amount.

    Government Resource

    IRS – Employee Retention Credit FAQ

  5. Employee Social Security Tax DeferralOn August 28, 2020, the U.S. Treasury Department and Internal Revenue Service issued Notice 2020-65 (Treasury Notice) implementing the Presidential Memorandum issued on Aug. 8, 2020, which allows employers the option to defer withholding and payment of Social Security tax for employees whose wages are below $4,000 biweekly, or equivalent amounts with respect to other pay periods, for wages paid September 1 through Dec. 31, 2020.

    IRS – Employee Social Security Tax Deferral https://www.irs.gov/pub/irs-drop/n-20-65.pdf

Can Employers Leverage Multiple Programs?

The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid Relief and Economic Security Act (CARES Act) contain four distinct programs aimed at providing relief to employers impacted by COVID-19:

  • EPL: Emergency Paid Leave payroll tax credit for small employers (FFCRA; Sec 7001, et seq);
  • PPP: Paycheck Protection Program (CARES Act, Sections 1101, et seq);
  • Deferral: Delayed Payment of 2020 Payroll Taxes (CARES Act, Section 2302);
  • ERC: Employee Retention Credit (CARES Act, Section 2301).

Not all programs may be used by all employers. Participation in one program may restrict eligibility for others.

Can the programs be utilized together?

  EPL  PPP  Deferral  ERC 
EPL Yes** Yes Yes
PPP Yes** Yes No
Deferral Yes Yes Yes
ERC Yes No Yes

Employers should consult the specific legislative and administrative guidance for each program to determine if they are eligible. In general:

In general:

  • If an eligible employer elects to defer tax payments under the CARES Act and take the Employee Retention Credit, the tax will be deferred first then the credit will be applied towards the remaining federal payroll tax liability.
  • If an eligible employer receives a PPP loan, they cannot take the Employee Retention Credit.
  • If an eligible employer receives a payroll tax credit for Emergency Sick or Family Medical Leave under FFCRA, they may apply for a PPP loan but may not include emergency leave amounts as part of the PPP loan’s payroll cost calculation.*

* Section 1102 of the CARES Act specifically excludes amounts paid under the Families First emergency paid leave program from the definition of “payroll costs” for PPP loan purposes.

How Paycor Can Help

We’re keeping our clients aware of changes and automatically updating our products every day with the latest tax, compliance and federal, state and local relief programs. Contact our team today to learn how we can support your business through this time.

We’re also publishing expert advice and timely information to help SMB leaders navigate the COVID-19 public health emergency. Visit Paycor’s Coronavirus Support Center for more.