by Carolyn Kick | Apr 30, 2021 | Compliance
In a recent announcement from the IRS and the Treasury Department, the American Rescue Plan (ARP) is issuing tax credits to help small businesses, including providing paid leave for employees receiving COVID-19 vaccinations.
Eligible employers (businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers) can receive a tax credit for providing paid time off for any employees receiving and/or recovering from the COVID-19 vaccine.
“This new information is a shot in the arm for struggling small employers who are working hard to keep their businesses going while also watching out for the health of their employees,” said IRS Commissioner Chuck Rettig. “Our work on this issue is part of a larger effort by the IRS to assist the nation recover from the pandemic.”
Small, midsize, and specific government employers are now able to claim refundable tax under the American Rescue Plan Act of 2021 (ARP). These refundable tax credits reimburse employers for the expenses of providing paid sick and family leave to their employees due to COVID-19. This includes any paid leave taken by employees to receive and/or recover from COVID-19 vaccinations. The ARP tax credits are available for leave from April 1, 2021 – September 30, 2021 and are available to any eligible employer that provides sick and family leave.
The ARP tax credits are against the employer’s share of the Medicare tax and they are refundable. This means that eligible employers are entitled to payment of the full amount of the credits as long as it exceeds their share of the Medicare tax.
Eligible employers can keep the federal employment taxes that they otherwise would have deposited in anticipation of claiming the credits on the Form 94. This includes federal income tax withheld from employees, the employees’ share of social security and Medicare taxes, and the eligible employer’s share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible. For eligible employers that do not have enough federal employment taxes set aside for deposit to cover amounts provided as paid sick and family leave wages, the eligible employer may request an advance of the credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19.
by Carolyn Kick | Apr 30, 2021 | Compliance
Small, midsize, and specific government employers are now able to claim refundable tax under the American Rescue Plan Act of 2021 (ARP). These refundable tax credits reimburse employers for the expenses of providing paid sick and family leave to their employees due to COVID-19. This includes any paid leave taken by employees to receive and/or recover from COVID-19 vaccinations. The ARP tax credits are available for leave from April 1, 2021 – September 30, 2021 and are available to any eligible employer that provides sick and family leave. Below is the information you need to know about eligibility and how employers can claim the credit.
Eligible Employers
Any business with fewer than 500 employees, including tax-exempt organizations, is considered an eligible employer. This also included government employers, with the exception of the federal government and any agency of the federal government not described in section 501(c)(1) of the Internal Revenue Code.
Employers deemed eligible are entitled to tax credits for wages paid to employees for leave taken due to COVID-19. This includes leave taken to receive and/or recover from COVID–19 vaccinations. The ARP tax credits are available for wages paid for leave from April 1, 2021 – September 30, 2021.
Tax Credits Amounts
The ARP tax credits are against the employer’s share of the Medicare tax and they are refundable. This means that eligible employers are entitled to payment of the full amount of the credits as long as it exceeds their share of the Medicare tax.
The credit amount for sick leave is equal to the sick leave wages paid for COVID-19 related reasons for up to two weeks (80 hours), limited to $511 per day and $5,110 in the aggregate, at 100 percent of the employee’s regular rate of pay. The credit amount for paid family leave wages is equal to the family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at 2/3rds of the employee’s regular rate of pay.
Claiming the Credit
To claim credits, eligible employers must report their total paid sick and family leave wages for each quarter on their federal employment tax return, usually Form 941, Employer’s Quarterly Federal Tax Return. Form 941 is used by most employers to report income tax and social security and Medicare taxes withheld from employee wages, as well as the employer’s own share of social security and Medicare taxes.
Eligible employers can keep the federal employment taxes that they otherwise would have deposited in anticipation of claiming the credits on the Form 94. This includes federal income tax withheld from employees, the employees’ share of social security and Medicare taxes, and the eligible employer’s share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible.
For eligible employers that do not have enough federal employment taxes set aside for deposit to cover amounts provided as paid sick and family leave wages, the eligible employer may request an advance of the credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19. The eligible employer will account for the amounts received as an advance when it files its Form 941, Employer’s Quarterly Federal Tax Return, for the relevant quarter.
by Carolyn Kick | Apr 23, 2021 | Compliance
Violations of the Fair Labor Standards Act (FLSA) now come with harsher penalties. According to a recent announcement by the US Department of Labor (DOL), when negotiating settlements with employers in violation of the law, they will return to a policy of seeking “double damages.”
Typically the DOL will first attempt to reach a voluntary settlement when an investigation has determined that an employer is in violation of the FLSA. In part with agreeing to pay future wages in accordance with the FLSA, the settlement usually includes paying back wages for two years prior. That said, during the Obama administration, the DOA also sought liquidated damages in the amount equal to the unpaid wages due. These “double damages,” in most instances, effectively doubled the back wages to the employees that were entitled. Under the Trump administration, however, it was announced that in many instances the DOL would not assess any pre-litigation liquidated damages.
Now, the DOL is turning back yet again under the Biden administration. In a bulletin released on April 9th of 2021, the DOL announced that it will in fact return to assessing pre-litigation liquidation damages during any investigations provided that the designated Regional Solicitor (RSOL) agrees with the request. Alternatively, if the RSOL determines the matter to be not appropriate for litigation or the employer under investigation presents credible evidence of a good-faith defense, the DOL will not assess liquidated damages.
by Carolyn Kick | Mar 26, 2021 | Compliance, COVID-19 Resources
The COVID-19 Pandemic, which began over a year ago, has changed the workplace in many ways. Some of these changes have been for the better, such as reduced office space overhead for employers. Other changes have been for the worse, like employee isolation, mental illness, and low team morale.
One alarming trend that has been shown in recent reports is that employee fraud, waste and abuse have increased during the COVID-19 Pandemic.
In this post, we’ll discuss this trend in detail. Specifically, we’ll cover:
- Reports show employee fraud, waste, and abuse have increased during COVID
- How This Trent Relates to the Fraud Triangle
- What Employers can do to Combat this Trend
Reports Show Employee Fraud, Waste, and Abuse have Increased During COVID
A recent report by the risk mitigation technology firm Oversight reveals that instances of employee fraud, waste, and abuse have increased during the pandemic. This report specifically describes such instances in terms of spending and purchasing.
According to the report, overall purchasing activity has decreased during the pandemic. This is probably due to reduced revenue and uncertainty about the future of many industries as a result of the world-altering year of 2020. However, the report also found that:
- Spending risk has nearly tripled in the last year. A comparison between 2019 and 2020 shows travel and expenses decreased by 55%, but violation rate increased by 29%.
- Out-of-pocket expenses that are considered to be “risky” have increased. Starting in March of 2020, they increased as high as 120% of what they were before the pandemic. One potential explanation for this spike is that many workers had to pay to set up virtual workspaces out-of-pocket. Reimbursements for this type of expenses are complex and inherently carry a lot of risk.
- Two other risky expense categories are “miscellaneous” and “mail/phone orders.” These two expense categories accounted for a greater portion of overall spending in 2020. The potential issues with these categories are obvious when considering the vagueness of expenses that are classified as “miscellaneous” and the ease of abuse with expenses classified as “mail/phone orders.”
Although the report we’ve referenced in this post only discusses financial abuse in terms of purchasing and expenses, it’s easy to consider how other forms of business fraud, waste, and abuse may have increased during the last year. In the following section, we’ll explore these causes.
How This Trend Relates to the Fraud Triangle
Organizational behavior experts have historically explained workplace fraud, waste, and abuse in terms of the “Fraud Triangle.” The Fraud Triangle presents three factors that heavily influence whether an employee will engage in behavior that could be considered fraudulent, wasteful, or abusive. The three elements in the fraud triangle are:
- Opportunity
- Pressure
- Rationalization
Let’s take a moment to consider each of these elements as they relate to working remotely during the pandemic. For the purposes of this section, we’ll refer to “fraud, waste, and abuse” simply as, “fraud.”
Opportunity
Employees are more likely to engage in fraud when the there are many opportunities to do so. Generally speaking, whenever there is less supervision over employees, there will be more opportunities for fraud. Fewer interactions with management and supervisors may cause an employee to feel like they will be able to get away with fraud more easily.
This presents a problematic dilemma for employers in the era of remote workers. With employees potentially scattered all over the country, how can an employer properly make sure employees are not wasting resources or participating in other abusive or fraudulent behavior?
Pressure
As we’ve explained in recent posts, employees are experiencing more stress now than ever before. This is especially true for younger workers who are working remotely. Uncertainty about the future can be a primary cause for this stress.
If employees feel worried about the future, those feelings will likely coincide with feelings of added pressure to care for themselves and their families. The fear of being laid off or experiencing other employment hardships could cause employees to make rash decisions to engage in fraud to help them mitigate perceived financial risk.
Rationalization
The third and final element of the fraud triangle is rationalization. Just like fear of an uncertain future can make an employee feel added pressure to commit fraud, the same fear could make them try to rationalize their fraudulent decisions.
For example, consider an employee who uses company money to purchase a personal item. The employee might say to themselves, “This has been a hard year for me and my family. I’ve had bad luck. I deserve this item. It’ll help me be a better employee in the long run, so it’s no big deal that I spent company money on it.”
What Employers Can Do to Combat This Trend
After reading the previous sections about the fraud triangle and trends related to fraud, waste, and abuse trends in the workplace, you may find yourself concerned about the status of your workforce. Managing these unique and unprecedented circumstances is no easy task. Consider the following tips:
- Make sure you are regularly checking in with your employees, especially if they are working remotely. Every employee should have a short phone call or virtual meeting with their immediate supervisor at least once a week, if not more. The more often they touch base with you about their projects and other priorities, the less likely they will be to seize an opportunity for fraud.
- Do everything you can to reduce stress for your employees. Talk with your company’s health care provider and your HR staff to make sure mental health options are available for your employees. Provide perks such as gym reimbursement or exercise incentives to help your employees relieve stress in healthy ways. Doing so will reduce the chances of employees committing fraud due to pressure or rationalization.
- Don’t be afraid to consider installing monitoring software on your employees’ computers to catch certain types of fraud, waste, or abuse. However, you’ll want to be fully transparent about this practice. If you decide to implement a new software to help the company reduce fraud, make sure employees are involved in that decision process and help them understand how it is for the good of the company.
Key Takeaways
The COVID-19 pandemic has created opportunities, pressure, and rationalization for employees in the modern workplace to commit acts of fraud, waste, and abuse. Data provided by leading risk mitigation firms shows that this is certainly the case for purchasing fraud. A thoughtful consideration of the “Fraud Triangle” makes it easy to see how other aspects of fraud are more common now as well.
To help reduce the chances of fraud in their workplace, employers should consider doing the following:
- Make sure you are regularly checking in with your employees.
- Do everything you can to reduce stress for your employees.
- Don’t be afraid to consider installing monitoring software on your employees’ computers to catch certain types of fraud, waste, or abuse. However, involve your employees in this process.
by Carolyn Kick | Mar 12, 2021 | Compliance, COVID-19 Resources
The $1.9 billion relief bill, known as the American Rescue Plan, has passed Congress and will
head to President Joe Biden for a signature. Highlights of the bill include extended
unemployment benefits, direct checks to individuals and more.
While some of the bill was changed during its time in the Senate, it’s largely similar to the
initial version passed by the House. However, some key provisions, such as a higher minimum
wage, were scrapped amid efforts to pass the bill swiftly.
This article outlines the most relevant provisions included in the bill.
SMALL BUSINESS ASSISTANCE
The bill invests billions toward small business assistance. Here is the current funding
breakdown:
-Emergency Injury Disaster Loan program: $15 billion
-New grant program for bars and restaurants, specifically: $28 billion
-Paycheck Protection Program: $7.25 billion
DIRECT PAYMENTS
Just like the two other COVID-19 relief bills passed during the pandemic, this version also
features direct payments to Americans. This time around, eligible recipients can expect
$1,400 per person ($2,800 for couples), including adult dependents—a family of four could
receive up to $5,600.
However, payment parameters are stricter this time around than with the previous direct
payment. The full amount will go to individuals earning under $75,000 (or $150,000 for
couples), with payments cut off entirely for individuals earning over $80,000 (or $160,000 for
couples). Individuals earning an amount between those figures will receive a reduced sum.
UNEMPLOYMENT AID
The bill extends two previously established pandemic unemployment assistance efforts: the Pandemic
Unemployment Assistance Program and the Pandemic Emergency Unemployment Compensation
program. Unemployed gig workers, freelancers, contractors and others who previously qualified for aid
will continue to be eligible under these programs. The financial assistance provided by these two
programs is currently set to expire in mid-March, which pressured legislators to act quickly.
The bill also provides for enhanced unemployment assistance payments of $300 per week. Under the bill,
these programs and their financial aid are extended through Sept. 6.
HOUSING ASSISTANCE
The bill sets aside billions in financial aid to homeowners and renters. Here is the funding breakdown:
-Aid for emergency rental assistance: $22 billion
-Aid for mortgages, utilities and property taxes: $10 billion
-Aid to states and localities to help individuals at risk of becoming homeless: $5 billion
EMERGENCY PAID LEAVE
The Families First Coronavirus Response Act (FFCRA), signed into law on March 18, 2020, required certain
employers to provide employees with paid sick leave or expanded family and medical leave for specified
reasons related to COVID-19. That requirement expired Dec. 31, 2020.
The American Rescue Plan maintains the status quo, in that it does not require employers to offer leave
under the FFCRA framework. However, the bill does provide tax credits for employers that voluntarily
provide leave under the FFCRA framework through the end of September 2021.
AID TO SCHOOLS AND CHILD CARE
A significant portion of the relief bill involves aid to states, including schools and child care facilities:
-Aid for getting K-12 schools ready for in-person learning: $125 billion
-Money may be used for purchasing protective equipment, improving ventilation systems
and hiring support staff. However, 20% of the money schools receive must be used to
address pandemic learning loss—for example, extending learning time into the summer.
-Aid for colleges: $40 billion
Institutions will be required to spend at least 50% of their allocated funds on emergency
financial aid grants to students.
-Child care provider assistance: $39 billion
-Funds may be used for payroll, rent, protective equipment and other expenses.
TAX CREDITS
The relief bill provides an overhaul of the child tax credit for the 2021 tax year. The bill increases the
amount of the credit to $3,000 for each child under the age of 18 and $3,600 for children under the age
of 6. The credit will also become fully refundable, meaning low-income individuals would receive the
benefit.
The bill also expands the earned income tax credit for individuals without children. The maximum credit
will be nearly tripled, and eligibility will be expanded as well.
HEALTH INSURANCE
The bill subsidizes private health insurance premiums for unemployed workers through the Consolidated
Omnibus Budget Reconciliation Act (COBRA). The provision allows individuals eligible for COBRA insurance
coverage to maintain their employer-sponsored coverage after losing employment without having to pay
any portion of the premiums through the end of September 2021.
Additionally, the bill invests nearly $35 billion in premium subsidy increases for those who buy coverage
on the ACA Marketplace. The bill increases the subsidies provided to currently eligible individuals, and
removes the 400% federal poverty level cap (equal to approximately $51,000 for an individual) on subsidy
eligibility.
AID TO STATES, LOCAL GOVERNMENTS, TRIBES AND TERRITORIES
The bill provides billions in financial assistance to states, local governments, tribes and territories. Here is
the current funding breakdown:
-Aid to state and local governments: $325.5 billion
-Aid to tribes and territories: $24.5 billion
-Creation of the Coronavirus Capital Projects Fund, to carry out capital projects directly enabling
work, education and health monitoring: $10 billion
WHAT’S NOT IN THE BILL
A minimum wage hike of $15 per hour—one of the most discussed provisions from the initial bill—has
been removed from the final version due to strict rules governing budget bills in the Senate. Some
Democrats have suggested this provision may be considered as a standalone bill, but any movement on
that front remains to be seen.
Additionally, the bill does not include an extension of the eviction moratorium, which is set to expire on
March 31, or an expansion of mandated paid sick and family and medical leave. While neither were
included in the original House bill, these were popular provisions contained within one of the previous
bills.
SUMMARY
While there are many complex provisions in this nearly $2 trillion relief bill, Launchways is here to help
employers make sense of everything. Reach out with questions about how this new bill may affect your
organization.
by Carolyn Kick | Feb 22, 2021 | Compliance
Businesses were already expected to acclimate to rapidly changing regulations and workforce demands, and the COVID pandemic has heightened those expectations even more. This has led many business owners to wonder what additional changes are on the horizon. The recent change in presidential administration has also led many employers to consider how prepared their organization is for impending legislation.
In this post, we’ll cover some anticipated changes employers may encounter over the next two years in the worlds of labor and employment. The specific changes that we’ll discuss include:
- Expanded Occupational Health and Safety Administration (OSHA) Enforcement
- Federal Minimum Wage Increases
- Labor Management Reporting Disclosure Act Persuader Rules
- Expanded Equal Employment Opportunity Commission (EEOC) Reporting Requirements
- Temporary OSHA COVID Rules and Guidance
- Paid Sick Leave Changes
- Removal of Key Trump Regulations
- Return to the Obama-era FLSA White-Collar Exemption
Expanded OSHA Enforcement
Under Trump’s presidency, the number of OSHA audits, inspections, penalties, and overall enforcement personnel decreased from year to year. As is the case for many Trump-era regulations, this trend is likely to reverse under President Biden. You can expect Biden to direct OSHA to hire more enforcement personnel, and to conduct more inspections. With more inspections, you can expect OSHA to be handing out more penalties as well. These increased inspections will be related to COVID as well as other occupational safety concerns.
Federal Minimum Wage Increases
President Biden has long been a proponent of a higher federal minimum wage – specifically $15/hr. This increase, which would more than double the current $7.25 federal minimum wage, will face an uphill battle of legislation. However, incremental increases over the next several years may be agreed on through a compromise across party lines, so employers should start preparing for this very real possibility.
Another minimum wage order that Biden has already issued is to direct his administration to start working on a $15 minimum wage for all employees of federal contractors. His plan is to implement this executive order within the first 100 days of his presidency. Examples of such contractors include cleaning and food service employees.
Labor Management Reporting Disclosure Act Persuader Rules
Towards the end of the Obama Administration, the Department of Labor revised the Labor Management Reporting Disclosure Act (LMRDA) “persuader” disclosure rules. Although these revisions never took effect, their intention was to broaden the scope of companies and individuals that had to file LMRDA disclosure paperwork. This would have removed the “advice” exception, which held that consultants or attorneys who only provided advice to employers (not directly persuading them) were not required to file disclosures under the LMRDA. Biden is very likely to try to make this revision again and reinstate the revised persuader rules.
Expanded EEOC Reporting Requirements
Your organization should begin preparing to track and report on wage and salary data based on race and gender. The EEOC under President Biden will most likely implement new reporting requirements to improve pay equality in the United States.
Temporary OSHA COVID Rules
One of President Biden’s first executive orders, which he signed on January 21, 2021, was to direct OSHA to provide new guidance to employers to help them improve workplace safety during the ongoing COVID-19 Pandemic. OSHA responded quickly to this order and issued new guidance on January 29, 2021.
This guidance can be summarized into the following themes:
- Hazard assessments
- Measures to limit the spread of COVID-19
- Isolation or separation measures of infected workers from the workplace (physical distancing, installing barriers, or staying home)
- Use of personal protective equipment
- Improvements in ventilation, hygiene, and sanitation measures
- Industry specific guidelines.
Paid Sick Leave Changes
Biden has long been an advocate of 12 weeks of annual paid family and medical leave. However, experts are skeptical about the feasibility of such legislation. Last year, Congress approved two weeks of paid emergency FMLA leave. This new paid leave might push some Republican senators to warm to the idea of providing further paid leave.
Removal of Key Trump Regulations
Since day one of his administration, President Biden has been rolling back or removing some key Trump regulations. Examples include:
- Withdrawing Trump-era Department of Labor opinion letters on the topics of tip pooling and employee classification.
- Freezing the independent contractor rule. Under this rule, it was easy for employers to classify “gig economy” workers as independent contractors.
- The Department of Labor under President Biden will most likely roll back Trump’s tip pooling regulations and revert back to the former rules. The former rules do not allow “back-of-the-house” workers, like restaurant kitchen staff for example, to participate in tip pools.
Return to the Obama-era FLSA White-Collar Exemption
Under President Obama’s Fair Labor Standards Act regulations (FLSA), the salary below which workers are entitled to overtime was raised to $47,476. Trump lowered this amount back down to $35,308. Employers can expect that during the Biden Administration, this amount will increase back up to Obama levels, or potentially even higher.
Key Takeaways
Employers can expect many changes over the next two years in the worlds of employment and labor. Most of these changes are a result of the recent change in presidential administration. President Biden will be reversing many of the regulations and executive orders that President Trump put in place. Many of these changes will bring back Obama-era regulations, although there will be some differences.
The most important changes that employers can expect fit into these categories:
- Expanded Occupational Health and Safety Administration (OSHA) Enforcement
- Federal Minimum Wage Increases
- Labor Management Reporting Disclosure Act Persuader Rules
- Expanded Equal Employment Opportunity Commission (EEOC) Reporting Requirements
- Temporary OSHA COVID Rules and Guidance
- Paid Sick Leave Changes
- Removal of Key Trump Regulations
- Return to the Obama-era FLSA White-Collar Exemption
