New Guidance on Employees – updated March 27, 2020
We are not employment law or HR experts. We have never claimed to be. But if you wake up and see your neighbor’s house burning down, do you sit back and watch because you’re “not a fireman?” (maybe it depends on which neighbor 😉)
This post is not intended to be a comprehensive FAQ on all employee-related issues. A few sources we have been turning to for clarifying advice, which we recommend to you, are:
Additionally, we have been reading the text of the actual bills that have been passed recently, searching for relevant guidance related to your practice.
Emergency Family Medical Leave and Paid Sick Leave
Recently the DOL clarified legislation that came out in bill H.R. 6201 regarding required sick leave and emergency medical leave. Officially, if your office is closed due to COVID-19 reasons, you do not have to pay your employees the 14-day sick leave, nor emergency medical leave (EFMLA). Here is what you should do:
- Do not fire your employees (as has been our consistent advice). It may be difficult to ask for and expect loyalty from them if you abandon them now.
- Pay your employees for actual work performed, actual hours worked (consistent advice). Don’t pay them beyond this and don’t invent work to keep them after you’ve closed; if you have promised to pay them beyond hours worked, consider revising that promise. They should all be eligible for unemployment benefits.
- Tell your employees to go apply for unemployment insurance (consistent advice)
When your office reopens and you are seeing patients again, the paid sick leave and EFMLA benefits may apply to you and some of your employees, if they are eligible. We will help you deal with those one-off cases as they come up…after you are open for business again!
What other action should you take regarding your employees?
- Stay connected to your team. Call them, text, Zoom, etc. Be their friend and look out for them.
- If they have PTO (sick or vacation time) saved up, you’ll have to negotiate with them when they cash this in. Hopefully they can save and use it later.
If you provide health insurance for your employees, do not stop paying the premiums. This would be a bad time to cut people off health insurance benefits. If the employee is responsible for paying a portion of their premium, you should continue to collect that portion of the premium from the employee. If they cannot afford to pay their portion, we recommend you work out a deal with them for you to pay and for them to reimburse you once they start working again.
Unemployment Benefits – Should I, the doctor, apply?
The new bill – H.R. 748 or the “CARES Act” – has many provisions to bolster and increase unemployment benefits. To determine the exact amount of benefits, each individual should apply through his or her state unemployment department, as we have been saying consistently for the past week.
Should you, the doctor, apply for unemployment benefits? Each state will handle this differently and each case will be handled differently. We don’t know if you will be approved by your state or not; however, we don’t think it would hurt to apply.
What if I already terminated my employees?
We know of some doctors who panicked and fired all their employees immediately. Others acted on bad advice given in a webinar sponsored by a large dental CPA firm. Regardless of why you did it, if you went against our advice and terminated your employees, we recommend hiring them back as soon as possible (undoing what you did). Depending on what steps you took to terminate them, this may be as simple as a phone call to say, “just kidding.” You may have to grovel, beg forgiveness, or whatever.
Regardless of what you need to do, having employees who are not working will not cost you anything. Wanting to open your office again and not having any employees will cost you a lot!
Other FAQs regarding employees (published 4/1/2020)
Should I fire my employees?
No. As we’ve said from the beginning you are going to want a business to come back to when this virus storm blows over. Instruct your employees to file for unemployment. We see no reason to legally terminate or to lay them off. You are not required to pay employees if they are not working for you.
What if we don’t reduce our employees’ hours until after April 1st?
No problem. Pay your employees for actual hours worked. Have them file for unemployment based on reduced hours, when that happens.
Should I continue paying my employees even after I am closed?
We don’t recommend you pay your employees after you’re closed, unless they have meaningful, profitable work to do (e.g. collect money from insurance). You don’t know how long you will be closed; we don’t recommend you expend funds indefinitely; as such, we recommend you start saving funds today and let your employees start collecting unemployment benefits.
Can I move salaried employees to hourly now that they are only working part-time?
Yes. We don’t see any reason you cannot do this, and it makes sense considering hours worked may be scarce and sporadic. Communicate effectively with the employee what you’re doing and why. Explain that once you’re back operating at full capacity you will revisit moving her back to salary.
Can I pay my employees even if they don’t qualify for new EFMLA & Paid Sick Leave?
Yes, you can pay your employees whatever you want. However, if you don’t have work for them to do because your office is closed, you are not required to pay them the new Emergency Family Medical Leave or Emergency Paid Sick Leave.
If I pay my employees even though I don’t need to, will that be reimbursable through the payroll tax credit?
No. You will not receive the payroll tax credit if you pay them the new EFMLA & Emergency Paid Sick Leave when they don’t qualify for it (i.e. there is no work for them to be doing in your office). When your office opens again and you have your staff come back to the office, only then, if they get sick or need to stay home with a kid/family member will you need to pay them these wages and therefore get the payroll tax credit.
What if my office is partially open seeing emergencies only? What should I do and tell my employees?
Have your employees work whatever hours they need to in order to see emergency patients or do normal tasks if applicable. If your office is heading towards a shutdown (majority of practices in America), we recommend employing only the necessary staff to help treat patients; send the rest of the team to collect unemployment. Have staff who did work file for unemployment each week based on the hours they did work, and wages earned.
Can I prepay my employees for 1 month of their salary on their next payroll?
Yes, although we advise not to. Would you pay them in advance when the office is open? If not, then why do it now? Also, these wages will not be reimbursed for payroll tax credits. Consider paying an advance to employees, and work with them on a way to pay this back when the office opens.
If I fired my employees, am I required to pay out accrued vacation?
Yes, accrued vacation (PTO) is a liability you owe your employees. If you haven’t paid them out already, call your employee and “rehire” them. Tell them they still have all their accrued vacation and they can use it anytime they want now or when the office opens back up.
Should I apply for Unemployment for myself? (Spouse, kids)?
Yes – for you and your spouse (if they are on payroll). No for kids. We are unsure if you will receive benefits; however, you are paying unemployment taxes as an employee of your S-Corp.
Does the extra $600 per week of unemployment come from the state, or do we need to apply somewhere else as well?
States pay unemployment benefits, including the $600 per week allotted by the federal government in the CARES Act. Employers pay “premiums” into the state unemployment insurance trust fund through payroll taxes. Employers do not pay the actual benefits when approved by the state.
Will my Unemployment rate go up?
Possibly. However, this is not a reason not to apply as the additional tax will cost a fraction of the benefits your employees will receive. At this point in time we do not know if there will be a forgiveness of unemployment tax or grace period for employers whose employees go on unemployment during this crisis.
My employees aren’t working, I haven’t officially laid anyone off. Do I need to pay out accrued PTO benefits?
No, you are not required unless the employee asks to have you pay them out.
Can I still employ my employees at very reduced hours and they still get unemployment benefits?
All states have different unemployment laws; however, the consensus thought is yes, they will still be eligible for some benefits.
What amount is going be sent by check from the government to my employees and when? What are the income limits in order to get that check?
If they have filed a tax return in 2018 or 2019 each adult will get $1,200 mailed to them. Additionally, each child claimed on their return will get $500. This benefit starts to “phase out” if a single taxpayer makes over $75,000, Head of Household taxpayer makes over $112,500, and a married couple makes over $150,000. It is unclear exactly when the checks will be mailed, however no additional form will be needed. If the taxpayer has included a direct deposit bank account for refunds, the funds will be direct deposited.
If your employee has not filed a tax return because they were not required to, more guidance will come; however, the IRS says they will need to file a simple tax return. They are also working on a way for taxpayers to setup their bank account with the IRS to get a direct deposit instead of a paper check. Check the following link for more updates as they become available:
Will my 2019 tax refund include the new rebate checks from the CARES act?
No, these will be mailed separately or direct deposited into bank accounts.
We told our employees to file for unemployment and we received a letter in the mail today from the Workforce Commission. Are we going to be financially responsible for providing their unemployment?
No. The state unemployment department will pay their benefits.
My state requires that I file for unemployment for my team. I need my state UI account number and my last quarterly UI report. Where can I find this info?
Go to your MyPay portal and search for the last quarter’s reports. The quarterly unemployment report is a state report and will contain the 2-letter abbreviation for your state. For example, in Texas look for the TX – C-3 form (Employer’s Quarterly Report) and use the “Account Number” at the top of the report.
We will provide further updates and information as we have it. If you have any questions, recommendations or helpful information, please email us at firstname.lastname@example.org.
PFG Advisory Team