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Emergency Sick and Family Leave

Regarding H.R. 6201, if an employee has kids, and if they have access to other child care options, are they still eligible for the Emergency Sick and Family Leave?

Yes, the fact that school has closed for a child under the age of 18 is what qualifies the employee for the sick pay.

Do you think the Pennsylvania governor’s closure of business would qualify under Criteria #1 for paid sick leave?

Yes, this closure will meet the qualifications of Paid Sick Leave.

Is the Medicare portion of employer portion of social security tax included in the "Refundable Tax Credit Offsets"?

Yes, per the final bill, the following are employer taxes are included: Section 3111(a) – 6.2% employer portion of social security tax, Section 3221(a) – Railroad retirement payroll taxes, Section 3111(b) – 1.45% Employer portion of Medicare tax.

What does the enactment date mean? Will this be applied retroactively?

The legislation is not retroactive. The provisions will apply on April 1 and they will expire on December 31, 2020.

If the employer is a health care provider or an emergency responder, does the Emergency Sick and Family Leave not apply?

Currently, they are not considered excluded for purposes of qualified employees. The bill does have a section that allows the Secretary of Labor the authority to issue regulations that would exclude this group, however, no such regulations have been issued at this time. Additionally, if regulations are passed, they would allow the employer to elect out, it would not be an automatic exclusion.

Please explain what the “pro rata amount of expenses paid in maintaining a qualified health plan related to sick leave payments” is and how that operationalizes?

This includes the amounts paid or incurred by the employer to provide and maintain a group health plan but only to the extent that these amounts are excluded from gross income of the employee. The bill currently is somewhat vague on how to allocate these. It simply states that “Except otherwise provided by the Secretary, such allocation shall be treated as properly made if made on the basis of being pro rata among covered employees and pro rata on the basis of periods of coverage (relative to the time periods of leave to which such wages relate).”

Are tax credits refundable or nonrefundable?

They are refundable.

Half of my workforce is telecommuting, where do I post the Employee Rights poster?

Employers are required to post the notice in a highly visible location at your company.
For employees who are remote you can:
- Send it directly to the employee via email
- Send it to the employee via direct mail
- Post it on the home page of your intranet
- Post it on the home page of your external website

NOTE: Not required to share with employees who are currently furloughed/laid off. You do need to share with any new hires that you've brought on during this period.

Are small business owners requried to post the employee rights notice?

Yes. All employers covered by the emergency paid sick leave and expanded family and medical leave act are required to post the notice.

We closed business operations prior to the Families First Coronavirus Response Act being signed, can our employees still qualify for the paid leave?

The paid leave under the FFCRA cannot be applied retroactively.

Can I require employee(s) to provide documentation to prove that their leave was due to COVID-19?

Some laws already restrict employers from asking employees for supporting documentation. Be sure to understand your state and local sick leave laws.

The CDC has provided interim guidance and advises that employers should not require documentation for employees who are sick with COVID-19 to confirm their illness or in order to return to work.
Healthcare provider offices and medical facilities are under intense pressure and may be too busy to provide the return to work notice.

NOTE: Any information that is provided must remain confidential and cannot be maintained in the employee’s personnel file –the documentation must be kept separate.

Am I requried to pay my employees if I shut down my business in the middle of the week?

For employees who are classified as non-exempt, you are required to pay them for actual hours worked during the day(s) leading up to the closure.

NOTE: Some states have laws that may apply that require employers to pay their employees for a certain number of hours if they report to work and are sent home before the end of their shift.

For employees who are classified as exempt, they generally must be paid for their full salary for any work performed in a workweek, regardless of the number of hours worked.

IRA Funding Deadline

Does the Treasury’s extension of the April 15 tax return deadline allow for additional time to make a 2019 IRA contribution?

Yes, the IRS has confirmed in a Q&A on its website that the extension of the tax filing deadline to July 15 will also allow taxpayers to make a 2019 contribution to an IRA up until July 15, 2020.

HSA Funding Deadline

Does the Treasury’s extension of the April 15 tax return deadline allow for additional time to make a 2019 Health Savings Account (HSA) contribution?

Yes, the IRS has confirmed in a Q&A on its website that the extension of the tax filing deadline to July 15 will also allow taxpayers to make a 2019 contribution to an HSA up until July 15, 2020.

Coronavirus Stimulus Package

For the rebate checks that will be paid under the third proposed bill, can you clarify the details including timing and how money will be received?

All individuals will be eligible to receive a check of up to $1,200. This check will depend on filing status and Adjusted Gross Income (AGI) on your most recently filed tax return (2018/2019). The money will be sent via direct deposit if that information is listed on the return. If not, a check will be mailed. Payments are expected to be sent out during April or May 2020. This is an advancement of a credit that will be calculated on the taxpayer’s 2020 return. If more is owed to the taxpayer at that time, an additional credit will be applied to the 2020 tax return. If recomputed and the credit is lower, pending further guidance, it potentially will not need to be repaid.

Unemployment Compensation

Are my employees eligible for unemployment compensation?

Employees are eligible for unemployment compensation due to the following conditions:
- If the company temporarily closes or goes out of business because of COVID-19
- Employee hours are reduced as a result of COVID-19
- The employee has been instructed to quarantine or self-isolate, or if they live or work in a state or area that is under a government mitigation effort
- If the employer requested the employee not report to work because the employer feels the employee might get or spread COVID-19

What is my responsibility as the employer with regard to informing my employees about unemployment compensation?

Employers in all 50 states are required to notify their employees of the availability to apply for unemployment compensation upon separation, regardless of the reason for separation.

Additionally employers are required to provide the employee with at least two ways the employee can file for unemployment compensation.

Examples: website address, phone number, office address

What does the CARES Act mean for unemployment compensation?

The CARES Act Includes:
1. Tax relief
2. Loan provisions
3. Temporary “Pandemic Unemployment Assistance”
a. Offers unemployment compensation to individuals not otherwise eligible
- Self-employed, independent contracts, etc.
b. Increased unemployment compensation by $600 per week for up to 4 months for those in the pandemic program

Should I apply for “regular” Unemployment Compensation (UC) vs. Pandemic Unemployment Assistance (PUA)?

You should file for regular UC if you have an employer and:
1. you have been laid off, or
2. your hours have been reduced through no fault of your own, or
3. you cannot work because a medical or public official has directed you to quarantine or self-isolate because of COVID-19 exposure, symptoms or a positive diagnosis, or
4. you are caring for someone who is suspected of having or has tested positive for COVID-19.

You should file for PUA if you are illegible for regular UC because you have lost income due to COVID-19 and:
1. are self-employed, or
2. are seeking part-time work, or
3. lack sufficient work history, or
4. have exhausted all rights to regular UC or extended benefits.

Am I eligble for Pandemic Unemployment Assistance (PUA)?

PUA provides up to 39 weeks of benefits to covered individuals who are not eligible for regular UC and who are otherwise able and available to work except that they are unemployed, partially employed, or because of any one of the following COVID-19-related reasons:

1. You have been diagnosed with or are experiencing symptoms of COVID-19 and are seeking a medical diagnosis
2. A member of your household has been diagnosed with COVID-19
3. You are providing care for a family member or a member of your household who has been diagnosed with COVID-19
4. Your child or other person in the household for whom you are the primary caregiver is unable to attend school or another facility that is closed due to the COVID-19 pandemic, and that school or facility care is required for you to work
5. You are unable to reach your place of employment because of a quarantine or stay-at-home order due to the COVID-19 pandemic
6. You are unable to reach your place of employment because you have been advised by a health care provider to self-isolate or quarantine because you are positive for or may have had exposure to someone who has or is suspected of having COVID-19
7. You were scheduled to start a new job and do not have an existing job or are unable to reach the job as a direct result of the COVID-19 pandemic
8. You have become the breadwinner/major supporter for a household because the head of your household has died as a direct result of COVID-19
9. You had to quit your job due to being diagnosed with COVID-19 and being unable to perform your work duties
10. Your place of employment is closed as a direct result of the COVID-19 pandemic

What does it mean to be self-employed?

​Federal guidelines for PUA define "self-employed individuals" as those whose primary reliance for income is on the performance of services in the individual's own business or on the individual's own farm. For the purposes of PUA, "self-employed" includes independent contractors, gig economy workers, and workers for certain religious entities.

In Pennsylvania, the determination of whether you are an "employee" or an "independent contractor" depends on the conditions of your work, not on what your employer tells you or how your employer has classified you. To be considered an independent contractor, both of the following must be shown to the satisfaction of the department:

· The individual has been and will continue to be free from control or direction over the performance of the services involved, both under the contract of service and in fact, and
· As to such services, the individual is customarily engaged in an independently established trade, occupation, profession or business.

If an individual performs services in the construction industry, the Construction Workplace Misclassification Act (Act 72), imposes additional criteria that must be met for the individual to be recognized as an independent contractor. Under Act 72, all of the following requirements must be satisfied:

· The individual has a written contract to perform the services,
· The individual is free from control or direction over the performance of the services involved both under the contract of service and in fact, and
· As to such services, the individual is customarily engaged in an independently established trade, occupation, profession or business.

What documentation is necessary to show previous employment or self-employment?

​Acceptable documentation of proof of employment or self-employment can include, but is not limited to:
· copies of recent paycheck stubs,
· bank receipts showing deposits,
· 1099s,
· billing notices provided to your customers,
· recent advertisements for your business or services,
· statements from recent customers,
· current business licenses, ledger, contracts, invoices; and/or
· building leases

Acceptable documentation of wages can include but is not limited to tax returns, paycheck stubs, bank receipts, ledgers, contracts, invoices, and/or billing statements.

Paycheck Protection Program

Are private equity owned companies eligible for PPP?

The Paycheck Protection Program is available to companies with 500 or fewer employees (excluding independent contractors). When calculating number of employees, business affiliates must be aggregated. This approach will prevent many private equity owned companies from tapping into PPP. PEG owned companies too big for PPP may be able to seek relief through another part of the CARES Act, the Exchange Stabilization Fund, which allows for a special purpose vehicle to make loans into the small to medium-size marketplace. Contact Scott Kimmel at to discuss your private equity owned company’s specific needs and eligibility.

Are PPP loans obtained by nonprofits subject to the Uniform Guidance single audit requirements?

No. On May 5, 2020, the Small Business Administration confirmed to the AICPA’s Governmental Audit Quality Center that PPP loans made to nonprofits will not be subject to single audit. However, the SBA did confirm that Economic Injury Disaster Loans (EIDL) made to nonprofits are federal financial assistance subject to Uniform Guidance single audit requirements.

Retirement Savings Accounts: RMD Waiver & Hardship Withdraw

What is a required minimum distribution (RMD) and what does the CARES Act do with respect to RMDs?

In general terms, an RMD is the amount that the IRS requires owners of certain retirement accounts to withdraw from their retirement account on an annual basis at designated ages (generally over 70 years old). In most cases, the full amount of the RMD is subject to income tax at ordinary rates. The CARES Act waives the requirement for owners to withdraw those RMDs for the 2020 tax year. Owners may still take voluntary distributions, including Qualified Charitable Distributions.

What are the benefits of not taking an RMD in 2020?

The rationale behind waiving the RMD requirement is that the 2020 RMD is calculated based on the account value on December 31, 2019 – a point in time when markets were high. However, the RMD is now required to be withdrawn during a time when markets are low. Waiving the RMD for 2020 gives retirement account owners the option to leave funds invested in the market and thereby avoid selling securities at depressed values to satisfy the RMD and give their investments time to recover. Additionally, by not taking an RMD in 2020, the account owner’s income tax liability for 2020 may be reduced.

For RMDs, what types of accounts does this impact?

It covers RMDs from defined contribution plans including 401(k)s, 401(a)s, 403(a)s, 403(b)s, Governmental 457(b)s, SEP IRAs, SIMPLE IRAs and Traditional IRAs. The RMD is waived for the retirement account owner, as well as beneficiaries of qualified plans or IRAs. The Act does not include waiver of required distributions from defined benefit plans.

How does the RMD waiver impact inherited IRAs?

1. Beneficiaries of inherited IRAs from decedents dying on or before December 31, 2019 may skip the 2020 RMD if they are using a “stretch payout.”
2. Beneficiaries of inherited IRAs being withdrawn under a 5-year payout may skip the 2020 RMD and get an extra year.
3. Beneficiaries of IRAs inherited from decedents dying on or after January 1, 2020 that are subject to the new 10-year payout rule under the Secure Act, do not get an extra year since those beneficiaries are not required to take RMDs.
4. An RMD already taken from an inherited IRA may NOT be rolled back into the inherited IRA, unless the sole beneficiary is the surviving spouse of the deceased owner.

What if I already took my RMD?

1. If you took your RMD between February 1, 2020 and May 15, 2020, you may be able to put it back in your account provided you do so by July 15, 2020 (per IRS Notice 2020-23) and have not done any other tax-free rollovers in the 12 months prior to the date 2020 RMD was withdrawn. This extension of the 60 day rule is automatic.
2. If you took your RMD in January 2020, you may not put it back in your account as the 60 day deadline has now passed and the extension granted in Notice 2020-23 does not apply to RMDs taken in January 2020.
3. Alternatively, if you are otherwise not able to put your RMD back, you may be able to characterize the RMD as a corona virus related hardship withdraw provided you otherwise qualify for such a withdrawal. Corona virus related hardship withdraws can be made anytime between January 1, 2020 and December 31, 2020. The RMD can then be paid back to the retirement account as a tax-free “plan-to-plan” transfer.
4. An RMD already taken from an inherited IRA may NOT be rolled back into the inherited IRA, unless the sole beneficiary is the surviving spouse of the deceased owner.

What if I turned 70 ½ in 2019 and did not take my 2019 RMD in 2019?

You may skip both the 2019 RMD required to be taken by April 1, 2020 AND the 2020 RMD.

With respect to employer sponsored plans, such as 401(k)s and 403(b)s, what if anything should I do if I want to waive my 2020 RMD?

You should contact your plan administrator to determine the policy for your specific plan with respect to waiving or rolling back your 2020 RMD. While most employer plans are following the CARES Act provisions, they are not required to do so. Thus, the rules may vary from plan to plan. NOTE: This does not apply to IRAs.

What is a coronavirus related hardship withdraw?

Any distribution from an eligible retirement plan (example, traditional IRA or 401(k)) made between January 1, 2020 and December 31, 2020 to an eligible individual. The withdrawal may be up to $100,000. The 10% penalty for early withdraw does not apply to such a withdrawal.

For coronavirus related hardship withdraw, who is an eligible individual?

An eligible individual is anyone:
1. Who has been diagnosed with SARS-CoV-2 or COVID-19 by test approved by CDC
2. Whose spouse or dependent has been diagnosed
3. Who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease,
4. Who is unable to work due to lack of child care due to such virus or disease,
5. Who owns a business that has closed or reduced hours due to such virus or disease
6. Who meets other factors as determined by the Secretary of the Treasury

How do I prove my eligibility for this?

A taxpayer may “self-certify” that they satisfy any one or more of the above criteria for eligibility.

Is the coronavirus related hardship withdrawal subject to income tax?

Yes, to the extent the withdrawal is not put back in the retirement plan, the withdrawal is subject to income tax at ordinary income tax rates. By default, the withdrawal is taxed ratably in each of the next three tax years beginning in 2020. A taxpayer has the option of recognizing 100% of the withdrawal as income in 2020.

How long does a taxpayer have to pay back the withdrawal?

The withdrawal must be paid back within three years following the date of the distribution in order to avoid income tax. The withdrawal may be paid back at any time and any increments within the three years.

How does the withdraw impact my income tax returns over the next three years?

The amount of the withdrawal is subject to income tax ratably in each of the next three years beginning with 2020 to the extent the withdrawal is not paid back to the retirement plan.

Scenario #1 – Pay back 100% of the withdrawal in 2022
1. 2020 – tax due on 1/3 of the withdrawal
2. 2021 – tax due on 1/3 of the withdrawal
3. 2022 – 100% paid back; no tax due; amended returns required to obtain refunds amounts paid in 2020 and 2021 tax years.

Scenario #2 – Pay back the withdrawal ratably in each of next three years
1. 2020 – no tax due – 1/3 payment offsets the 1/3 that is taxable
2. 2021 – no tax due – 1/3 payment offsets the 1/3 that is taxable
3. 2022 – no tax due – 1/3 payment offsets the 1/3 that is taxable

How is the repayment treated for this type of withdraw?

The repayment is treated as a direct plan-to-plan transfer. The repayment is not an eligible rollover distribution. This means that the corona virus related withdrawal is not subject to the “one rollover in a 12 month period” rule. Thus, if a taxpayer needs to withdraw amounts in excess of the $100,000, they can do so but that amount will not receive the special treatment of a coronavirus related withdraw. Accordingly, an excess withdraw would have to be put back in the retirement plan within 60 days (assuming no other distributions have been received within the past 12 months) or be subject to tax.

If I made a withdrawal in January of 2020 can it be treated as a coronavirus related hardship withdraw?

Yes. Because these provisions were retroactive to January 1, 2020, a withdrawal made at any time in 2020 could be treated as a corona-virus related hardship withdraw provided you meet other eligibility requirements above.

Employer Sponsored Retirement Plan Loans

What are the expanded provisions related to loans?

Up to $100,000 (not more than the vested balanced) may be borrowed from employer sponsored plans such as 401(k)s and 403(b)s that offer the option of taking out a loan. The increased loan amount is granted for loans taken through September 23, 2020 (180 days from date of CARES Act enactment). Loans can still be taken after September 23, 2020, but those loans will be subject to the $50,000 limitation and other related rules pre-Cares Act.

Who is eligible?

An eligible individual is defined and proven the same as for a hardship withdraw above.

When must the loan be repaid?

The loan must be repaid within 5 years.

Is there an extension of loan repayment date in 2020 for certain loans?

With respect to plan loans to qualified individuals that are outstanding on or after March 27, 2020, any loan repayment dates scheduled from March 27, 2020 through December 31, 2020 may be delayed for one year.

PPP Loan Forgiveness

On the PPP loan application, the loan amount was calculated based on an incorrect payroll number. I received my loan for the amount I applied for, but now I am concerned that I received too much. What should I do?

With the rush to apply for PPP funds and the lack of clarity at the time of application, it is understandable how this could happen. We suggest contacting your lender to ask them for guidance. In the meantime, segregate or otherwise track the “excess funds” in case you need to return them.

Are payments to independent contractors includable as payroll expenses?

No. Only payroll to employees are includable as payroll expenses. Independent contractors can file for their own PPP loan.

I see Transportation Costs are an approved use of PPP funds. How are Transportation Costs defined?

As of today, we have not seen specific guidance on this item. Our suggestion is to calculate your forgiveness before including any amounts for Transportation Costs.

I am a nonprofit. The salary for one of my employees is paid by a grant. Can I include this employee’s salary in payroll costs for PPP purposes?

Yes. As we read the guidance, you would be able to include this employee’s salary, as long as you are paying them directly through your normal payroll process (they receive a payroll check from you with the appropriate payroll taxes incurred and they are included on your payroll tax filings).

The monies received from the grant is simply a revenue source for your organization and does not negate your payment of their salary.

How do Families First Coronavirus Response Act (FFCRA) credits impact my PPP loan?

Qualified sick and family leave wages that qualify for a credit under FFCRA should be excluded from payroll costs for purposes of PPP forgiveness.

I understand that I must restore all my employee headcount by the end of the covered period to avoid a reduction in my forgiveness. I also understand that if I do not restore headcount by the end of my covered period, I have until June 30to restore my FTEs. But what if my covered period ends after June 30, 2020? Do I get extra time to restore headcount?

No. If your eight-week covered period ends June 30, 2020 or after, you must restore your FTE headcount by June 30, 2020 to avoid the penalty related to headcount reduction (Haircut for Reduction in Headcount).

What amounts will be eligible for PPP loan forgiveness for self-employed individuals?

The amount of the loan forgiveness will depend on the amount spent during the eight-week period on:

•Payroll costs as defined by the interim rule (does not include benefits for owners)
•Owner compensation replacement (limited to 8/52 of 2019 net profit and excluding any qualified sick or family leave equivalent amount for which a credit was claimed under FFCRA)
•Interest payments on mortgage obligations for real/personal property incurred before February 15, 2020
•Rent payments on lease agreements in force before February 15, 2020
•Utility payments under service agreements dated before February 15, 2020
**Note that for interest, rent and utility payments, the amounts must be deductible on Form 1040 Schedule C

Are S Corp shareholders considered employees or self-employed individuals?

For companies applying for PPP loans, any shareholders who are also active in the business and receiving a paycheck are considered employees. For loan forgiveness, you should include their payroll (up to the cap of $15,385 for the eight-week covered period) and their company paid portion of group health insurance, 401(k) match and employer portion of state unemployment taxes.

What if we contribute to profit sharing for our employees for 2019 and our payment is typically due later this year. Can we pay and deduct this during the covered period and include this as a payroll cost?

More guidance is needed on this point, but our initial interpretation is that the cost, if related to 2019, would not be allowable, as it is not incurred during the covered period.

How do we interpret “incurred and paid” for qualified expenses?

We are awaiting guidance on “incurred and paid.” However, the PPP funds cover an eight-week period, so you will most likely need to prorate items such as interest, rent and utilities. Remember, utilities should follow service date and rent and interest should represent the eight weeks of expense.

These expenses should be supported by the necessary documentation, including loan and rent agreements and utility bills.

What Type of Documentation Can I Expect My Lender to Request to Verify My Forgiveness?

We expect lenders will require the following:

•Borrower certification required by Section 1106(e)(3) of the Act
•The Paycheck Protection Program Application Form (SBA Form 2483), along with any supporting documentation submitted with the application
•2019 Form 1040 Schedule C, for those borrowers without employees
•Schedule showing detail of how loan proceeds were utilized
•Supporting documentation for gross payroll –payroll Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll records (from borrower payroll processing service)
•Evidence of rent, mortgage insurance and utilities amounts. These may include bank statements, cancelled checks and/or statements from service providers. Copies of leases and/or mortgage statements may also be required.

* Note that lenders may request additional information at their discretion.

I understand that there is now an option for me to extend my PPP Covered Period to 24 weeks. But can I end my covered period early – for example at the end of 10 weeks? I just need one more pay period!

The PPP Flexibility Act currently only provides the option to extend the Covered Period to 24 weeks. Options for early filing have not been specifically provided for in the Act.

Is it better for me to stay with the eight-week Covered Period or extend my Covered Period to 24 weeks? What are the pros and cons?

If you have been able to plan and use your PPP funds within the eight-week period, filing your application for loan forgiveness based upon this original Covered Period is still an option. However, consider switching to the 24-week Covered Period if:

1. You have not met the required 60% payroll test.
2. You have not spent all of the loan proceeds on qualified items (both payroll and
non-payroll) but you would be able to if you extend the Covered Period to 24 weeks.
3. Some of the expenses you are counting in your loan forgiveness are not clearly defined in the guidance and you have a concern that either the lender or SBA could challenge them.
4. You need extra time to restore FTE headcount or salary/wages.
5. You prefer to file for forgiveness based on payroll alone to cut down the administrative burden associated with tracking and supporting the non-payroll items.

My business is in the hospitality industry. I am currently restricted from operating at 100% due to the guidelines in place. I am not sure when I will be back at 100%. How does this provide any relief to me regarding FTEs and PPP forgiveness?

Yes. If you are able to document an inability to return to the same level of business activity as compared to before February 15, 2020, due to compliance with requirements established or guidance issued by the HHS, CDC or OSHA during the period March 1, 2020 through December 31, 2020, you will be exempt from the FTE reduction in forgiveness.

Examples of compliance requirements include maintenance of standards for sanitation, social distancing or any other worker or customer safety requirement related to COVID-19.

With the COVID concerns and schedule changes, many of my employees are cancelling their summer vacations. I am concerned that we may have a significant portion of our workforce using up their vacation time as we get into late November and December. Can I require employees to use a certain percentage of their vacation time by end of summer?

As an employer, you want to encourage your employees to make use of their vacation time to refresh and recharge. In that regard, it is appropriate to introduce guidelines encouraging your workforce to utilize their earned vacation time. Review prior year usage trends and compare them to the current year. If usage is trailing historical averages, you can encourage employees to utilize a percentage of earned time by a specific date (for instance, 50 percent by end of August).

If you believe your employees are nervous about taking time off, leaders in the company should lead by example and share their own plans to take time off to unplug and recharge.

Remind team members of your specific policies for vacation time approval and usage. Finally, make sure your policies are up to date and support your message.

I received PPP funds and called my employees back. However, my business is not in full swing yet. Can I require my employees to take PTO if they are not busy?

If you received PPP funds, it is within the spirit of the Act that they should be used to pay the employees you called back even if you don’t have work for them to do.

The intent of the PPP loan is to keep people employed and reduce the strain on the unemployment system.

Employees should not be required to take PTO as that would be viewed as punitive. However, you can encourage use of PTO banked by certain deadlines as outlined in the previous FAQ.

I furloughed a large portion of my workforce at the beginning of the pandemic. While I have brought a portion of my team back, there are several employees that I would prefer not to rehire. Is it possible for me to terminate them for cause and would this impact my PPP forgiveness calculation?

Employees that are terminated for cause can be excluded from your PPP loan forgiveness FTE count and do not impact your forgiveness calculation.

Termination criteria should be documented and applied consistently across your workforce.

Document your selection process by tenure, seniority, performance and skills. Additionally, as you develop your recall plan you can use criteria ranking for the options listed above and rank employees further by evaluating additional criteria such as their attendance, work quality, experience level, skills, etc. in order to have substantial documentation that illustrates your decision-making process for not recalling all employees.

What documentation is required to support the non-payroll allowable expenses (mortgage interest, rent, utilities) on the PPP application?

1. Mortgage interest: Copy of lender amortization schedules and receipts or cancelled checks; or lender account statements from February 2020 and the months of the Covered Period though one month after the end of the Covered Period verifying interest amounts and eligible payments.

2. Rent/Lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered period verifying eligible payments.

3. Utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks or account statements verifying those eligible payments.

What documentation is the borrower required to maintain but NOT submit?

Each borrower should maintain a completed PPP Schedule A Worksheet or its equivalent and the following:

1. Documentation supporting each individual employee in Table 1 and Table 2, including support for the “Salary/Hourly Wage Reduction” calculation.
2. Documentation regarding any employee job offers and refusals, firing for cause, voluntary resignations and written requests by any employee for reduction in work schedule.
3. Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.”
4. You must also maintain your PPP Loan Application, documentation supporting your certifications as to the necessity of the loan request and eligibility for PPP loan.

All must be maintained in your files for six years after the date the loan is forgiven or repaid in full.

Workforce Reinstatement

How do we manage employee expectations upon their return to work?

Conducting a pre-return to work survey with your employees will give you insight into their comfort level around returning to work along with an opportunity to inquire if given the option, where would they prefer to work? Continue telecommuting, return to the office or a combination of the two.

When you begin communicating with your employees, do your best to provide enough detail in order to create a visual of what it’s going to look like to help employees make the transition. Will they have scheduled and staggered times of arrival, or alternating shifts or in office work days, temperature checks, limited people in the building, single point of entry, not permitted to leave and come back, etc.

Who is the main building contact and who should they call if they have questions?

Are businesses required to approve or supply a particular type of mask for our employees and customers?

No. Employers are also not required to purchase masks from any particular vendor but must provide masks and employees are required to wear them while in the building and among colleagues and customers.

Masks obtained or made by employees or customers in accordance with PA Department of Health guidance is sufficient. In place of a mask, bandanas, scarves or other face coverings are sufficient.

I have an employee who has shared with HR that they have anxiety and covering their mouth and nose may lead to a panic attack or other serious medical condition.

An employee is not required to wear a mask under certain circumstances, such as if they have a medical condition, if it impedes their vision or if it would prevent them from operating equipment or executing a task safely.

Are employees who work outdoors, such as landscapers or waste management workers, required to wear a mask?

Yes. The only exception would be if wearing a mask would make it unsafe to operate equipment or to execute a task, if it impedes their vision or if they have a medical condition.

What should we do if a patron does not have a mask, do we refuse entry into our building?

The PA Department of Health recommends that businesses provide masks for customers who may not have a mask and consider distributing flyers reminding customers of the Secretary of Health’s Order along with “how to” instructions outlining how to make them or even posting what face covering is acceptable (bandana, scarf, etc.).

•Per CDC guidance, children under the age of two are exempt from the masking requirement.
•Individuals with a medical condition who cannot wear a mask may enter and are not required to provide documentation of their medical condition.

What if an employee refuses to wear a mask?

The PA Department of Health does not tell employers how to manage situations where an employee refuses to wear a mask.

However, the department does dictate that all employees of life-sustaining businesses must wear a mask in the workplace, with the exclusion of those with a medical condition, if a mask causes safety concerns or while sequestered alone in a room or unshared personal office.

If we can maintain social distancing, are masks still mandatory?

Yes, masks are still mandatory. Individuals that work or are in group settings are at risk and masks should be worn at all times.

You are not required to wear a mask if you are driving alone or with a family member from the same household.

We are developing a plan for when we are able to reopen our business. Do you have recommendations on where we can find Personal Protective Equipment (PPE) and thermometers?

We recommend that you start with your current office supply vendor to see what they have available for you. Many are offering cleaning supplies, hand sanitizer, Plexiglas shields for reception desks, and some are even offering thermometers.

Pennsylvania COVID_19 PPE & Supplies Business-2-Business (B2B) Interchange Directory

I received PPP funds and my business isn’t open, do I have to pay my employees to stay home?

This is within the spirit of the Act and the Payroll Protection Program. The intent is to keep people employed, reduce the strain on the unemployment system and have people in place when businesses are ready and permitted to reopen.

In the interim consider finding creative ways to give employees work, whether it’s on different jobs, developing and typing updated policies and procedures, participating in virtual learning/training, cleaning or painting your business in preparation to fully open or adopting shifts or rolling schedules.

Establish clear expectations with your workforce. Clearly explain and document expectations and what they are working on or how they are spending their time. This will allow you to track and document performance.

What if my business is dependent on other industries that are not fully functioning yet and I only have enough work available to bring back part of my workforce?

There is the potential for a mathematical reduction of the amount that is forgiven, both due to a diminished payroll spend during the eight weeks as well as the FTE retention haircut that is part of the Act.

There is a June 30 restoration component, which if successful could remove the impact of the FTE haircut. However, you may still have a diminished payroll spend.

Can I utilize PPP funds to pay bonuses or pay increases?

Nothing in the current guidance prohibits increasing pay or offering one-time discretionary bonuses. We recommend that any pay increases or discretionary bonuses given during the covered period are thoroughly documented. Outline your methodology and note the time period that the pay increase or bonus relates to. Is it a permanent pay increase or only temporary during the eight-week period?

For example, you can give your employees a $2.00 per hour pay increase during the eight-week time period or pay a one-time $1,000 discretionary “return to work” or “thank you” bonus.
Ensure that it’s a fact pattern that you feel comfortable supporting and that it’s fair, reasonable and equitable. Clearly document the business case around your decision-making process.

Can we retroactively pay our employees when we bring them back to maximize FTEs?

No, doing so would jeopardize the employee’s unemployment compensation and may be viewed as fraud since the employee was collecting unemployment compensation and didn’t report those wages.
Instead of retroactive pay perhaps consider some other type of discretionary bonus or base pay increase.

Who notifies the Department of Labor and Industry when an employee returns to work and goes off unemployment?

The employee is responsible for filing their bi-weekly claim. When there is overlap between returning to work and receiving unemployment compensation, the employee will record earned wages to the Department of Labor and Industry and their unemployment will be adjusted accordingly. Once the employee is fully reinstated they will no longer file a bi-weekly claim for unemployment compensation.

Do PPP loans cover paid sick leave?

Yes,PPP loans cover payroll costs, which includes costs for employee vacation, parental, family, medical and sick leave. However, the CARES Act excludes qualified sick and family leave wages for which a credit is allowed under the Families First Coronavirus Response Act (FFCRA).

When you bring your employees back after receiving your PPP loan you may find that some may not be able to return due to school or daycare closures and therefore will need to take advantage of the leave offered under FFCRA. You will be eligible for the tax credits for those programs.

In order to utilize PPP funds, you may consider making those employees' compensation whole by paying the remaining 1/3 of unpaid compensation under FFCRA.

We received notice that we are approved for PPP funds. What should we do if an employee resigns or refuses to return to work?

Thorough documentation is encouraged to show your good faith efforts to adhere to the requirements of the PPP loan:

•Recommended that you recall your employees in writing to begin your documentation methods.
•If an employee resigns, obtain a resignation letter via email or mail noting their last day of employment.
•If an employee is not responding to phone calls to be recalled to work, document the dates and times that you attempted to contact the employee along with notes if you left a voicemail.
•Send a recall notice letter to the employee’s residence along with a return receipt notice for documentation. The recall notice should include the expected date of return along with a period of time to respond to the recall notice.

What if my payroll cycle doesn’t fall precisely in between the eight-week covered period?

The guidance from the SBA is “costs incurred and payments made” within the eight-week period will be forgiven.

For example, what if your covered eight-week period starts in the middle of your pay cycle. One week is prior to the effective date of the PPP funds and the second week falls within the eight-week period. Per the existing guidance, you can only count one week towards your PPP loan forgiveness.

Conversely, if your eight-week loan period ends on June 13 and your payroll pay date is on June 15, what do you do? Again, per guidance available today you can only use payments made during your eight-week period; therefore, since the payment was made outside of the loan period it cannot be counted toward loan forgiveness.

Until further guidance is released, we encourage borrowers to follow the guidance that is available at this time and only use PPP funds for costs incurred and paid during the eight-week period. You can always consult with your bank to see if there is a way that you can capture those payments, such as a special payroll.

My business was awarded a PPP loan and we have recalled our employees; however, I have two employees that refuse to return to work. Does that mean we are no longer eligible for full forgiveness?

According to the updated guidance from the Small Business Administration (SBA), employers who demonstrate a “good-faith” effort to bring back laid-off employees onto their payroll, even if an employee declines the offer, are eligible for full forgiveness.

The employer should provide the recall notice to the employees in writing and document an employee’s failure to return. The employer is also required to notify the Pennsylvania Department of Labor and Industry by submitting Form UC-1921, Refusal of Suitable Work form within seven days for those employees that are collecting unemployment insurance.

My PA county has moved into the Yellow Phase, do I have to bring all of my employees back or can some still telecommute?

Per Governor Wolf’s guidelines issued on May 4, anyone who has been teleworking is encouraged to continue to do so.

For more information about guidelines, view this PDF:

I operate a business that is unable to adhere to the social distancing guidelines at this time – what should I do?

Businesses serving the public that inherently involve close contact with customers, and therefore cannot attain social distancing, are not permitted to conduct in-person operations until the county where the business is located transitions to the Green Phase, when the building safety and business safety orders are lifted.

I’m concerned about some of my employees and their ability to cope with the stress of everything. What can I do to help?

Employee Assistance Program (EAP)
Community Resources:
• Dial 2-1-1
• 1 (800) 273-8255 – National Suicide Prévention Lifeline
• National Suicide and Crisis Hotlines
• Contact the Crisis Text Line by texting PA to 741-741
• Pennsylvania Suicide and Crisis Hotlines
• Lancaster Crisis intervention line: 717-394-2631
• United Way:

We have an employee who started showing signs of illness while at work; we sent the employee home immediately. How do we go about notifying other employees who may have been in contact with this employee?

Identify employees that were in close contact with the employee
• Utilize a contact tracing tool to track exposure
• Identify those who had contact with the employee 48 hours prior to symptoms starting and up until the employee was isolated
• Identify those who were within six feet of the infected person for more than 10 minutes

Immediately notify those who were exposed while maintaining confidentially, and encourage them to follow exposure procedures.

Those without significant exposure are recommended to self-monitor for symptoms for 14 days.

If symptoms develop, the employee should notify their designated worksite contact and supervisor immediately, and must stay home.

Can you share what some of your clients are doing to prepare for reopening?

• Continuing to telework
• Implementing flexible work arrangements and policies to incorporate appropriate work-life balance
• Assigning arrival times with a single point of entry into the building
• Staggering work shifts
• Not allowing employees to leave the building and come back during the workday
• Spreading out workstations, every other cubicle with dividers in between
• Installing Plexiglas barriers at counters and reception desk
• Only allowing one person in the elevator at a time
• Onsite cleaning crew to clean and disinfect surfaces regularly throughout the day
• Allowing only one person to use the restroom at a time, with an “occupied” sign to indicate use
• No outside visitors or onsite client visits
• Installing roof-covered picnic tables for outside eating that can also be used for meeting space on nice days

We have a lunchroom where employees congregate, eat lunch, get coffee, etc. Should we allow employees to use it?

Per the guidelines that were issued by the president, the recommendation is to close common areas where employees are likely to congregate and interact, or enforce moderate social distancing protocols.

You may be able to create adequate social distancing in large lunch or break rooms.

Recommend that employees bring a packed lunch in an insulated cooler to avoid keeping food in a common area refrigerator.

Should employees bring their own coffee and utensils, etc.?

Implement ½ day shifts that end around lunch and start just after lunch.

Our business is in a large office building with multiple elevators. How should we manage employee usage?

Depending on the number of people coming and going, you may want to assign an existing employee or hire someone to manage social distancing while employees are waiting and to limit the number of people in the elevator at a time. Perhaps have an elevator attendant who is responsible for designating where riders stand and is the only person to push the buttons.

Post signs that outline elevator use protocols including passenger limits and place floor markers to indicate where passengers should stand to maintain safe distances.

Implement a regular elevator cleaning processes, and ensure regular disinfecting of high-touch surfaces, such as hand rails and buttons.

We’ve made a lot of changes to policies in our employee handbook as it relates to COVID-19. Should we have our employees sign a new acknowledgement form?

A great time to redistribute the updated employee handbook is upon the return of your workforce or if you’ve remained open, as soon as you are finished with the updates. Obtain a signed acknowledgement form from each employee to affirm that they’ve read and understand the revised policies and procedures.

Communicate the reason behind what you are implementing and/or the changes that were made. Are the policies or procedures permanent or temporary?

We had to furlough 80% of our workforce. How do we regain their trust and confidence as we bring them back to work?

Employees returning to work may exhibit one or more of the following job-related behaviors:
• Exhilaration, enthusiasm and high motivation, desire to please or impress
• Fear or anxiety, lack of confidence, withdrawal or isolation, problems with memory or focus
• Increased sensitivity to constructive performance feedback, difficulty getting along with others
• Sarcasm, cynicism or anger; performance problems related to erosion of skills, distraction, fatigue

Developing a thorough change management strategy will be helpful as you plan your return and set expectations with your returning workforce. Try to anticipate what may make your employees feel anxious or areas that they will have questions about. Maintain regular, open and honest communication. Validate feelings and provide reassurance about the value that they bring to the company.

Utilize various platforms to maintain communication, such as verbal, email, video conference calls, intranet and print materials distributed and posted.