Options available if you make the decision to close or limit hours and staff
As we continue to monitor the government response to the COVID-19 crisis, it is our goal to keep you up to date. With more and more states making firm closure rules and the ADA’s recommendations to postpone elective procedures, we are hearing from many clients that they are choosing to close or limit staff and patients in the office.
With these adjustments needing to be made, the most frequent questions we are receiving are related to staff. In this blog, we want to give you more thoughts on this issue and update you on the potential House bill.
Staff and Office Closure Options
If you make the decision to close or limit hours and staff, here are the options for you and your employees:
- No matter the direction you choose to proceed, we highly recommend you contact your state unemployment agency to prepare to furlough staff. Most state unemployment websites also have a FAQ page on COVID-19 and their response. It appears that staff should qualify for immediate benefits even if they will be employed when the office re-opens. Call to find out your process and timing for payments to staff.
- Typically, having unemployment claims increases your unemployment rate of each staff member’s initial $7,000 to $9,000 in wages in the following year. While this is a small price to pay compared to staff wages, we also feel that it is very possible this could be addressed in the Relief Bill (discussed below).
- While we are recommending owners to contact their state unemployment agency for facts and guidance, it is ultimately the staff’s responsibility to contact unemployment agency for their benefits.
- If you choose not to refer staff directly to unemployment, you can allow all staff to use their accrued sick and vacation time for pay. After all accrued sick/vacation time is utilized they can apply for unemployment.
- If you are choosing to continue full pay, take it one payroll at a time. Communicate to employees that they will receive the next payroll and then the business will re-assess. This presents its own set of challenges, since essential office staff needed for emergencies would have to work while other employees would be not working and get full pay. Remember also that staff members still employed are not eligible for unemployment.
- You should not allow staff to bring children to the office so they can continue to work. Because of health concerns, this should not be an option under any circumstance.
We understand that this is a decision that will be unique to each office. You must make what you feel is the best decision for your business and your staff. Remember, once business resumes, you can always help staff out with additional time off or bonuses. However, without a solid timeframe, we do not recommend making firm promises at this time.
Brought to you by CEDR Solutions.
Staff With Symptoms or Confirmation of Illness
As this virus continues to spread, it is inevitable that some of our offices will have staff members infected or become in contact with an individual that tests positive. As you navigate these waters, here are some thoughts:
- You can legally send an employee home if they are showing any signs of the virus. If these measures are taken, document the signs and whom it was reported by.
- We hope employees are responsible enough to self-report, but if they do not, you must be careful asking direct questions about an employee’s health. If an employee states they are sick and cannot come in, you want to have a note from their physician stating their inability to come back to work. In this situation, the employer may have to assume this is related to the Coronavirus unless stated specifically by the physician that it is another issue. If this is the case, then currently, the employee is only eligible to start using sick and/or vacation days.
Updates on the House Relief Bill
As of today, March 17, 2020, the Senate has not passed the Relief Bill that was passed by the House. Because of this, we still do not know what the exact effect of this bill will be. Although ever-changing, we wanted to clarify what we know about the House bill as it is today:
- For all employers with less than 500 employees, there is no requirement for pay for the first 14 days of an employee being out due to them self or a family member testing positive for the virus, or to take care of children that are home from school. What does apply is that the employer must allow the employee to use normal accrued PTO or sick pay, but nothing else. If the employee doesn’t want to use PTO or sick pay then they don’t have to, but you also can’t force them to work under these circumstances.
- After 14 days, if you have less than 500 employees but more than 50, you are required to pay two-thirds of their average pay for up to 12 weeks if the employee has been diagnosed with the Coronavirus. If you have less than 50 employees and you feel that paying this would cause a “viability issue,” you can exempt yourself from this. Clearly, for businesses smaller than 50, continuing to pay staff with no incoming revenue causes a viability issue.
- With the bill as written, we do not know exactly how the employer tax credits will be applied. We know they will be rolled out on future payroll tax returns, which means they are likely to be paid back over time instead of an immediate payback. We are also not 100% clear whether these credits will apply to those companies who fall into the requirements of having to pay the two-thirds salary requirements, or the ones that elect to do that even if it was optional.
We do believe that if you chose to pay your staff, you should consider only paying two-thirds of their average pay as this may be the extent of the tax credit received.
- Under the bill, we believe independent contractors will be able to apply for tax credits at year end for lost earnings.
We understand that one of the underlying issues is that practice owners are having to make immediate decisions about how to treat staff without having the Relief Bill that is expected and promised. For this reason, state unemployment remains as the best option for limiting the dollars out of your pocket while allowing the staff to get some relief. Once a bill is passed, we will communicate with you the requirements and benefits as soon as possible.
Once again, CWA is here for you and will continue to be a resource through this time. Please continue to check our webpage for updates on the market and additional recourse from our partners.
Our team is here to help. Visit our COVID-19 Resources Page or consult with a member of our team about your situation today.
Cain Watters is a Registered Investment Advisor. Cain Watters only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Request Form ADV Part 2A for a complete description of Cain Watters investment advisory services. Diversification does not ensure a profit and may not protect against loss in declining markets. Past performance is not an indicator of future results.
