CARES ACT – New Law Helps Coronavirus-hit Employers, Workers – April 2020
THE $2 TRILLION Coronavirus Aid, Relief, and Economic Security (CARES) Act stimulus law has a number of provisions that employers and their workers need to know about and can take advantage of during this crisis.
The CARES Act aims to help workers and employers weather the outbreak by:
• Extending unemployment benefits.
• Requiring health plans to cover COVID-19-related costs.
• Providing Small Business Administration (SBA) emergency loans.
• Providing emergency loans for mid-sized and large companies.
Parts of the CARES Act will likely benefit your organization and employees in some way. Here’s what you need to know:
The CARES Act extends unemployment insurance benefits to workers, as long as they lost their jobs due to the outbreak.
Unemployment benefits under the CARES Act also apply to furloughed employees.
Workers in California will be able to collect both state unemployment and federal unemployment through the new law.
Under existing state law, workers who have lost their jobs can already receive regular unemployment benefits of between $40 and $450 per week, depending on their highest-earning quarter in a 12-month period beginning and ending before they apply for benefits with the state Employment Development Department. These benefits can last for up to 26 weeks.
The Pandemic Emergency Compensation program funded by the new law will provide an additional $600 per week on top of state unemployment benefits, through July 31.
The law extends state-level unemployment by an additional 13 weeks. For example, whereas most of California’s unemployment benefits last 26 weeks, the bill extends state benefits to 39 weeks.
The extended benefits will last through Dec. 31.
Health plan changes
Under the CARES Act, employer-sponsored group health plans must provide for covered workers – without cost-sharing or out-of-pocket expenses – the cost of COVID-19 testing, treatment and vaccinations when and if they become available.
In response to the Coronavirus (COVID-19) pandemic, small business owners are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.
This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. This loan advance will not have to be repaid.
This program is for any small business with fewer than 500 employees (including sole proprietorships, independent contractors and self-employed persons) as well as private non-profit organizations affected by COVID-19. You can find more information here.
And the law’s Paycheck Protection Program offers 1% interest loans to businesses with fewer than 500 workers. Borrowers who don’t lay off workers in the next eight weeks will have their loans forgiven, along with the interest. These loans are designed to provide a direct incentive for small businesses to keep their workers on the payroll. If small businesses maintain payroll through this economic crisis, some of the borrowed money via the PPP can be forgiven – the funds will be available through June 30. Act fast.
Under the new law, the Secretary of the Treasury is authorized to implement financial assistance programs that specifically target mid-size employers with between 500 and 10,000 employees.
Loans would not have an annualized interest rate higher than 2% and principal and interest would not be due and payable for at least six months after the loan is made. But unlike loans under the PPP, these are not forgivable.
IRS Extends Deadline to Supply ACA Forms to Employees
The extension on distributing Forms 1095-B or 1095-C to employees is automatic. Employers don’t have to request it, said Edward Fensholt, J.D., senior vice president and director of compliance services at Lockton, a benefits brokerage, and consultancy based in Kansas City, Mo. “As a result of this automatic 30-day extension, [a different] 30-day extension that would normally be available upon a showing of good cause is not available.
That is, the March 2 deadline is now a hard deadline,” he explained. Despite the extended deadline, the IRS is encouraging employers to furnish these forms to employees as soon as they are able.
IRS Filing Deadlines Not Extended
The due dates for filing 2017 information returns with the IRS, however, were not extended. The due dates to file information returns with the IRS
Feb. 28 for paper filers.
April 2 for electronic filers.
“Employers filing at least 250 Forms 1095-C with the IRS must do so electronically unless they obtain a waiver from the IRS,” Fensholt noted.
“Employers may obtain an automatic 30-day extension from the deadlines for filing with the IRS by submitting Form 8809 on or before those deadlines.”
Top 10 Laws and Regulations for 2019
EVERY YEAR comes with new laws and regulations that affect employers. It pays to stay on top of all the few requirements, so we are here to help you understand those that are most likely to affect your business. The following are the top 10 laws, regulations and trends that you need to know about going into 2019.
1. Sexual harassment training
Existing state law requires employers with 50 or more workers to provide at least two hours of sexual harassment training to supervisors every two years. SB 1343 changes this by requiring employers with five or more employees to provide all employees with at least one hour by Jan. 1, 2020. Training must be held every two years. Also, employers with five or more workers must provide (or continue to provide) two hours of the biennial supervisory training.
2. Data privacy
Companies that collect data on their customers online should start gearing up in 2019 for the Jan. 1, 2020 implementation of the California Consumer Privacy Act of 2018, which is the state’s version of the European Union’s General Data Protection Regulation.
The law applies to businesses that:
• Have annual gross revenues in excess of $25 million,
• Annually buy, receive for their own commercial purposes, or sell or share for commercial purposes, the personal information of 50,000 or more consumers, households or devices, and/or
• Derive 50% or more of their annual revenues from selling consumers’ personal information.
3. Independent contractors
While this legal development happened in 2018, now is a good time to go over it. In May 2018, the California Supreme Court handed down a decision that rewrites the state’s independent contractor law. In its decision in Dynamex Operations West, Inc. vs. Superior Court, the court rejected a test that’s been used for more than a decade in favor of a more rigid three-factor approach, often called the “ABC” test.
Employers now must be able to answer ‘yes’ to the following if they want to classify someone as an independent contractor:
• The worker is free from the control and direction of the hirer in relation to the performance of the work, both under the contract and in fact;
• The worker performs work that is outside the usual course of the hirer’s business; and
• The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hirer.
The second prong of the test is the sentence that really changes the game. Now, if you hire a worker to do anything that is central to your business’s offerings, you must classify them as an employee.
4. Electronic submission of Form 300A
In November 2018, Cal/OSHA issued an emergency regulation that required California employers with more than 250 workers to submit Form 300A data covering calendar year 2017 by Dec. 31, 2018. The new regulation was designed to put California’s regulations in line with those of Federal OSHA.
This year, affected employers will be required to submit their prior year Form 300A data by March 2. The law applies to:
• Employers with 250 or more employees, and
• Employers with 20 to 249 employees in high-risk sectors.
5. Harassment non-disclosure
This law, which took effect Jan. 1, 2019, bars California employers from entering into settlement agreements that prevent the disclosure of information regarding:
• Acts of sexual assault;
• Acts of sexual harassment;
• Acts of workplace sexual harassment;
• Acts of workplace sex discrimination;
• The failure to prevent acts of workplace sexual harassment or sex discrimination; and
• Retaliation against a person for reporting sexual harassment or sex discrimination
6. New tiered minimum wage
On Jan. 1, 2019, the state minimum wage increased, depending on employer size, to:
• $11 per hour for employers with 25 or fewer workers.
• $12 an hour for employers with 26 or more workers.
7. Overtime laws
The U.S. Department of Labor plans to propose new regulations governing overtime exemptions from the Fair Labor Standards Act in March 2019.
The DOL is aiming to update FLSA regulations that set a salary threshold below which employees must be paid overtime. Today, it remains at $23,660, after the Obama administration unsuccessfully attempted to raise it to $47,476. President Trump’s DOL is expected to propose a threshold somewhere between $32,000 and $35,000.
8. Accommodating lactating mothers
A new law for 2019 brings California statute into conformity with federal law that requires employers to provide a location other than a bathroom for a lactating mother to express milk.
9. New bar for harassment liability
A California Appeals Court ruling in 2018 set a new standard for what constitutes harassment in the workplace in a case that concerned a correctional officer at a prison who was mocked about his speech impediment on numerous occasions by co-workers.
The significance of the case for employers is that even teasing and sporadic verbal harassment can be enough to create a hostile work environment and, hence, liability. This year, reduce the chances of liability by having an antiharassment policy. Include training and make sure there are steps for reporting harassment, a mechanism for investigating it, and that the ramifications for harassers are clear. Look for the Division of Occupational Safety and Health to release its proposed indoor heat illness regulations in the first quarter, with possible implementation by the summer.
Draft rules that have been floated so far would apply the standard to indoor work areas where temperatures equal or exceed 82 degrees. All of the provisions would apply to workplaces where it’s at least 92 degrees.
Under draft rules, those employers would have to:
• Provide cool-down areas at all times.
• Encourage and allow employees to take preventative cool- down rests when they feel the need to protect themselves.
• Implement control measures like:
– Engineering controls
– Isolating employees from heat
– Using air conditioning, cooling fans, cooling-mist fans, and natural ventilation
WORKER’S COMP – Most Common Audit Mistakes: What to Look For
No company owner wants to undergo a workers’ compensation audit, but they are a fact of life if you run a business and have employees.
Unfortunately, many audits don’t go smoothly and sometimes your insurer may make mistakes. Missouri-based Workers’ Compensation Consultants, which helps employers through the audit process, recently listed the 10 most common audit mistakes insurers make.
The list highlights a common problem and how you can detect the mistakes. Insurance companies allow you to review the audit with your broker. If you have received an audit bill that is obviously overstated, you should contact us.
Here are the things to look for when reviewing an audit by your insurance company:
Wrong class code – Misapplication of job classifications occurs in many audits. With hundreds of job classes to choose from, mistakes can happen. Talk to us and review your old policies to see if any of your class codes have
X-Mod is changed – After your insurer finishes the audit, it will use the information to calculate your premium. When that happens, it has to include your X-Mod to get the right rate. But sometimes the insurer may use an incorrect X-Mod.
Subcontractors are counted – Sometimes insurers will include subcontractors as employees, which results in a new audit bill to account for the additional “employees.”
But if they are genuine subcontractors, they should not be counted. Often, uninsured contractors will be included as employees. Make sure to use insured contractors only.
Disappearing credits – Most policies will have some sort of premium credits or other modifiers. Sometimes during audits, the insurer will remove them when recalculating the premium they think you owe. Watch out for missing credits and other modifiers if you get an audit bill, like:
Audit worksheets missing – If the auditor fails to provide you with audit worksheets, which are used do compile your payroll and other audit information, you should ask to check their work.
They will provide you with the information you need to carry out such a check.
Your rates changed – The rates you are charged at the beginning of your policy period must remain the same for the entire period. If your base rates have changed, the insurer may have made a mistake.
Separation of payroll – Depending on your industry, you may or may not be able to split your employees’ payroll between job classifications (like cabinet installers and sheetrock hangers). This is a pinch point when errors can occur. If the auditor says you are not allowed to split job classifications even though you have in the past, your audit may be in error.
Unexpected large premium due – If you get a significant bill for your insurance company after your audit, the auditor may have made mistakes, particularly if you know that your employment has remained relatively stable and you’ve had no significant claims, if any. If it seems out of whack, call us.
Payroll data doesn’t match – If there is a discrepancy between your payroll data and what you see on the audit, a mistake may have been made. Try to match the payroll on the audit with that generated from your accountant. If the insurer made a mistake, you could end up paying for phantom payroll numbers.
No physical audit – There are three types of audits:
Phone audit, and
Physical auditThe mail and phone audits are prone to errors, since neither you nor your staff likely have any experience in premium auditing. If you have a big bill after a mail or phone audit, mistakes could have been made.
Update to the Health Savings Account (HSA) Family Maximum for 2018
This guidance modifies the annual limit for health savings accounts (HSAs) for individuals with family coverage under an HDHP. Specifically, this guidance allows health savings account holders to again treat the 2018 limit as $6,900.
As background, on May 4, 2017, the IRS set the maximum HSA contribution for family coverage for 2018 at $6,900. On March 2, 2018, Tax Reform legislation reduced the limit to $6,850 for HSA account holders with family coverage under HDHPs. Due to administrative and financial burdens that outweigh any tax benefit associated with an unreduced HSA limit, the Treasury Department and the IRS have determined it is in the best interest to allow account holders to continue to treat $6,900 as the HSA contribution maximum for 2018.