KMS CARES Act Webinar
Kansas Manufacturing Solutions hosted a webinar on April 3, 2020. The objective of the webinar was to provide guidance to Kansas manufacturers about the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The agenda consisted of:
- Conor McGrath, Senior Policy Advisor, and Christiana Reasor, Corresondent for the Labor Portfolio from Senator Moran's office, provided an overview of the CARES Act.
- Sarah Haymaker, Deputy Director of the Wichita SBA Office, talked about SBA loans including the Paycheck Protection Program(PPP).
- Karen Glickstein, Managing Principal & Attorney at Law with Jackson Lewis, helped answer attendee's questions.
- Want to help manufacture critical needs supplies? We talked about the national Supplier Survey list.
Link to the video replay of the webinar: REPLAY
(The video is housed in a private KMS video library. In order to access the video, you will need to register. Name and email address only)
Download the presentation: CARES ACT Overview Webinar
If you have a question for Senator Moran, please contact Alex Richard, State Director of Senator Moran's Office at 913.605.8170 or Alex_Richard@moran.senate.gov
For COVID-19 manufacturing resources, visit the KMS COVID-19 Manufacturing Resource webpage.
Can you manufacture critical needs supplies? Click HERE to help.
A list of questions and answers from the webinar will be listed below in the afternoon of 4.7.2020 or morning of 4.8.20. If you have additional questions, please email info@wearekms.com and we will attempt to have them answered for you.
(The materials presented in this webinar and on this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to your particular issue or problem. Participation in this webinar does not create a client relationship between the participant and our presenters. The opinions expressed in this webinar are the opinions of the individual presenters and may not reflect the opinions of the presenter’s company or KMS.)
Could you please stress SBA.GOV and not SBA.ORG
For sure. Great point, since the .org site has links for "SBA loans". Please be cautious of email phishing and potentially fraudulent websites and schemes.
If you offer someone different working hours (night shift vs. day shift) to aid in childcare are they required to take that or can they say no and we are required to pay them under FFCRA?
The regulations suggest that employer and employee work together to make teleworking "work", even if at odd hours. That said, if you have an employee who really is caring for a child 10-12 hours a day, it may be difficult to have the individual "work" another 8 hours, since presumably the individual will have to sleep at some point. The same result would occur if we are talking about "esssential work that is not "teleworking" and involves in person work. Difficult to provide any more concrete answer without specifics.
I am concerned that there is an unintentional mixing of CARES and Family First. 80 hours of Paid Sick leave is discussed under Family First - Correct? And applies to companies <500 employees.
80 hours of sick leave is part of FFCRA, which does apply for employers under 500 employees.
Re the <50 employees Paid Leave Exemption; our understanding is that the exemption applies only for leaave taken due to "Care of Child due to School or Daycare closure". For the other triggering events (symptoms of Covid 19; caring for Covid 19 sick family member) the <50 e/e's exemption is not available. Is this correct?
Yes. The DOL website notes "Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern."
We have an employee's significant other that is being tested for COVID-19. The employee went to the dr that said to stay off work until the results come in. Do we pay the Sick Pay Leave while we are waiting for the results.
I believe so. The employee would likely fall under provision 2 of the Paid Sick Leave "has been advised by a health care provider to self-quarantine related to COVID-19;"
What employees are covered and what period would their employment have to be. I have a former employee who cannot find a job and has exhausted his unemployment already. Is there any relief for these type people?
Probably not, especially if they were unemployed prior to the April 1 effective date.
When School is normally not in session would people still be able to claim #5
That is a good question--it is not clear at this point, although the intent of the law would suggest that it would apply, at least for those children who are too young for self-care and would have been in some kind of camp or day care setting when school ended.
Could care for a child include grandchild?
It can if the grandparents stand "in loco parentus" --which means "in place of the parents". This is the same definition used in the regular FMLA
If you are a business with less than 50 employees, can you claim exemption for extended FMLA component only? What is the process for requesting the exemption?
A small business is exempt from certain paid sick leave and expanded family and medical leave requirements if providing an employee such leave would jeopardize the viability of the business as a going concern. This means a small business is exempt from mandated paid sick leave or expanded family and medical leave requirements only if the: employer employs fewer than 50 employees; leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and an authorized officer of the business has determined that at least one of the three conditions exists. 1.The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity; 2. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or 3. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
Are healthcare premiums paid included in the loan forgiveness amount?
Once an eligible small business or contractor receives the loan, they may use it for the following:
- Payroll costs
- Costs related to the continuation of group health-care benefits during periods of paid sick, medical, or family leave and insurance premiums
- Employee’s salaries, commissions, or similar compensation
- Payments of interest on any mortgage obligations (not including prepayment fees or payment of principal on the mortgage itself)
- Rent (including rents under a lease agreement)
- Utilities
- Interest on any other debt obligations that were incurred before the relevant covered period
Notably, the SBA will fully forgive all loans under the PPP provided three requirements are met:
- Loans are used exclusively for their intended purposes (see bullet points directly above)
- Loans are used to offset no more than eight weeks (the maximum amount of time payroll expenses would be fully offset) of eligible payroll expenses
- Businesses retain employees at salary levels comparable to before the crisis
If an employee has a child over 18 that has special needs and the child's adult day care has been shut down, does that employee qualify for the paid family medical leave or emergency sick pay?
It appears they qualify. The Department of Labor (DOL)Provides direction for administration of the Emergency Paid Sick Leave Act (EPSLA), which requires that certain employers provide up to 80 hours of paid sick leave to employees who need to take leave from work for certain specified reasons related to COVID-19. These reasons may include the following: the employee is caring for his or her son or daughter whose school or place of care is closed or whose child care provider is unavailable for reasons related to COVID-19.
The DOL provides that the definition of son or daughter" "is your own child, which includes your biological, adopted, or foster child, your stepchild, a legal ward, or a child for whom you are standing in loco parentis-someone with day-to-day responsibilities to care for or financially support a child…" The guidance also provides that a "son or daughter" is also "an adult son or daughter (i.e., one who is 18 years of age or older), who (1) has a mental or physical disability, and (2) is incapable of self-care because of that disability."
What constitutes the inability for someone to not telework? Is it as simple as someone having to home school kids due to COVID-19 and thus, I don't have time to work, therefore the person is covered by the Emergency FMLA? The ability to telework is what appears squishy/interpretative.
Ability to telework technically is that the job can be performed at home. Many employees may have to work intermittently to mix child care and work duties. Some employees may still be eliglbe for EMFLA because even if the job could be performed at home, child care responsibilities make it impossible to work. Note that the regulations encourage flexibility on the part of both employee and employer, including intermittent work days (i.e., maybe work for four hours throughout the day and take 4 hours of intermittent EMFLA to cover the other 4 hours of work day).
What if someone has been exposed to a partner/spouse who was exposed to a person who has been confirmed to have COVID-19? Because of this "possible" exposure the company has asked the employee to do a 14-day quarantine. So they are not being advised by a health care provider (or reason #2). is that 14-day period covered or not covered by Emergency Sick Leave? There are no presenting symptoms.
I do not believe the Emergency Paid Sick Leave would apply here since the quarantine directive is not coming from a governmental entity or a medical provider.
My company is an S CORP, LLC , I am SELF EMPLOYED. Can I file for unemployment?
The CARES Act dramatically expands unemployment insurance. The CARES Act includes a new program called Pandemic Unemployment Assistance (PUA), which expands benefits to workers who were previously ineligible. Unemployment assistance will now extend to self-employed workers, including independent contractors, freelancers, farmers and gig workers. Self-employed workers with a limited liability company (LLC) or S corporation qualify.
Can furloughed employees apply for unemployment? Is it better for the employee to be "laid off" or "furloughed"?
Yes. Furloughed employees may apply for unemployment. Many people use the two terms interchangeably, although furlough tends to envision a shorter period with a more definite return to work date. Employers should check with their insurance brokers regarding whether individuals on "furlough" or "layoff" remain eligible for benefits and/or whether a COBRA qualifying event has occurred.
Employee self quarantine a couple of weeks not because of virus but Dr suggestion for immune, use CARE act first or Unemployment
If employee is self-quarantining due to medical condition, employee would likely fall under the Paid Sick Leave provisions of the FFCRA (which is different thant the CARES Act). Employee should not be fired because of the medical diagnosis.
Essential business employees wanting to take sick leave or self-quarantine themselves. Employers obligations to this. Thanks!
If employee is eligible for leave under te terms of the FFCRA (for example, doctor has directed to self-quarantine or individual is seeking medical diagnosis), leave must be given. If individual is just "scared" to come to work Paid Sick Leave would not apply, but employer should consider whether leave under regular FMLA is appropriate if employer is required to provide FMLA and individual qualifies based on length of service, etc.
Has a grace period been granted for the full implementation of paid sick leave and FMLA? I heard we have until 4/17/2020?
There is technically a two week grace period while employers figure out how to handle prior to investiagation of an allegation, but if you have an employee who is eligible for leave during the next two weeks, you should provide it. You may have to prove that you were attempting to comply with the regulation.
How do we get an "official" approval for an exemption under the FFCRA for a business w/ less than 50 employees?
No "official" approval being given now. You should maintain the documentation referenced in the DOL Regs. These have bee changing so I would recommend reviewingthe regulation for the current interpretation. In general the regs provide that the employer should not send documentation to the USDOL, but should prepare documentation explaining that one of the applicable criteria has been met. An employer should only use the small business exemption based upon good faith and a carefully made determination that it qualifies. Any documentation prepared in support of the election must be retained for at least four years.
Please explain the first 10 days unpaid and where it is located for the employee to read? thank you...
The first 10 days of EFMLA is unpaid. Here is a poster that you must display in a visible location at your business. POSTER
What about employees that we send home sick. They are not tested. Do we still pay them two weeks under the CARE Act?
Employees are eligible for the two weeks of paid sick leave under FFCRA if they meet any of the criteria in the statute. So, if Employer sends employee home due to coronavirus symptoms and the individual is seeking medical treatment related to coronavirus--the employee may be eligible. If the employee is sent home because he or she has a broken leg, would not be eligible.
I'm having difficulty finding clear information on a furlough versus a layoff and I know it was mentioned in the webinar today. If an employer does an unpaid furlough : 1. Will employees lose their health insurance? (receive COBRA notification?) 2. Will the employees other benefits stop accruing? (for example, accrued vacation) If an employee were subject to a layoff under our current health insurance plan the coverage would extend to the end of the month and they would receive COBRA notification. The other benefits would stop accruing under a layoff as well.
If an employee is furloughed, they are taking a forced, unpaid leave of absence — but they are still an employee. If they are laid off, the employment relationship with the company is over.
1: Many employers electing to furlough their employees may choose to continue employee health benefits during the furlough period. Whether this is possible depends on the company’s benefit plans, so you should consult your company’s plan documents and plan administrator concerning coverage options. If an employee ceases to meet specified eligibility requirements (such as minimum expected hours for a month or week), they may cease to be eligible for group insurance benefits, including health insurance, subject to the plan’s provisions governing continuation of coverage during leaves of absence and temporary layoffs. If an employee ceases to be eligible for health insurance benefits, the employee generally would be entitled to continue that coverage pursuant to COBRA.
2: Generally, there is no legal requirement that paid time off benefits provided under an employer policy continue to accrue during a furlough period. However, employers should review their policies to ensure that accruals will not be required from a contractual perspective if the employer wants accruals to cease. In the case of paid sick leave mandated by state or local law, most laws require accrual only based on hours worked and, therefore, likely do not require additional accruals while an employee is on furlough
I've been told that furlough and layoff are the same thing. Can you discuss the legal differences?
The two terms are often used interchangeably. Furlough is often used in a union context when there is an expected return to work date. In general, furloughs imply coming back to work with more certainty than layoffs. With a furlough, the employee is still an employee of the company. With a layoff, the employee is officially separated from the company. The two terms have different implications for benefits.
SBA EIDL apps with the $10K expedited disbursement launched Monday. So far it doesn't appear the disbursements have been made. When will applicants starting getting the disbursements?
The expectation is 3 days. However, with the surge of applications on day one, there may be a delay in distribution initially.
Is it better to leave employees on the payroll and continue paying insurance while letting them stay home because we are getting assistance better for everyone than laying them off or furlough them? (Tele work is not an option. If we lay off will the unemployment funds affect our experience rating?)
This question is difficult to answer without knowing more specifics about your operation. I don't think anyone knows at this stage how experience ratings will be affected. If you layoff individuals, it may well be a COBRA qualifying event. If furlough, depending on your plan, you may be able to continue insurance with you paying all premiums and being reimbursed later. I would suggest speaking with your insurance broker as to the particulars of your specific plan.
Right now we are running as usual and have not been overly affected by COVID-19. That could change quickly for us, so can we start the application process now or must we wait until we can absolutely show the need.
Yes. Start the application process immediately. There is no cost to submit applications for these loans. (Their may be a small fee from the bank for a PPP application). The approval process takes some time. You can accept the entire loan amount, part of the approved loan amount, or none of the approved loan.
I have employees that are quitting to avoid the virus, does that disqualify us for the PPP?
You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
What portion is forgiven under the paycheck protection program?
The loan amount is determined entirely off of an estimated monthly payroll cost (average monthly payroll costs X 2.5). The forgiveness component takes into account the actual 8-week period from loan origination and includes payroll costs, rent, utilities and other interest payments. Not more than 25% of the loan forgiveness amount may be used for nonpayroll costs if you’re seeking 100% forgiveness. The main objective of the PPP loan is to keep employees paid and insured.
What if we had hired more employees since the first of the year...can we include the increase in our average payroll in calculating the loan amount?
What if you have new employees started after Jan 1, 2020?
Part time vs Full Time - Both okay?
The amount is equal to 2.5 times your average monthly payroll costs for the past 12 months not to exceed $10 million.
So can I pay under the PPP instead of FFCR if the employee is off?
Yes, the PPP covers payroll costs, which include employee benefits such as costs for parental, family, medical, or sick leave. However, it is worth noting that the CARES Act expressly excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (FFCRA) (Public Law 116–127)
We are applying for a PPP loan, can we also apply for a EIDL loan and a loan under Title IV of the Cares Act?
The programs available under Title IV will be entirely new and are separate from the federally-guaranteed loans offered by the Small Business Administration under Title I of the CARES Act.
Our guidance is that a small business can apply for both the EIDL and the PPP programs. Economic Injury Disaster Loans (EIDL) are to be used for working capital, fixed debts, payroll, accounts payable and other bills. This loan is a 3.75% interest, 30-year term, 12-month payment deferral. (Interest accrues during this time). This loan is provided by the SBA. No lender is involved. You can apply online at www.sba.gov/disaster. The PPP program is for payroll, related benefits, mortgage interest, utilities, lease payments, and other loan interest. For this loan, you go through a third party lender. If you get an EIDL and PPP, you cannot use them for the same purpose – use the PPP first for qualified expenses to maximize benefits.
What goes into calculating the total amount for the PPP loan given variation in payroll over the last 12 months
Aggregate payroll costs from the last 12 months for employees. Calculate average monthly payroll costs. (divide aggregrate by 12) Multiply the average monthly payroll costs by 2.5. The maximum amount you are allowed to borrow under PPP is the lessor of $10M or 2.5 times your payroll costs.
Payroll costs for you include.
- Compensation to employees (whose principal place of residence is in the United States) in the form of salary, wages, commissions, or similar compensation
- Cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips)
- Payment for vacation, parental, family, medical, or sick leave.
- Allowance for separate or dismissal
- Payment of employee benefits consisting of group health care coverage, including insurance premiums, and retirement
- Payment of state and local taxes assessed on compensation of employees
Re: PPP and Families First Act coordination of benefits: If you take the payroll credit under FFA, you must reduce the applicable wages from the PPP wages eligible for loan forgiveness.
Businesses which receive a loan under the new Paycheck Protection Program are not eligible for the payroll tax credit.
I saw that KS is at 16 weeks of unemployment right now. Do we expect that to go up due to the rising number of unemployed people?
Difficult to say what will happen. Congress has extended the period of time for unemployment benefits through the CARES Act. The PUEC provision provides for an additional 13 weeks of unemployment benefits for individuals who have exhausted benefits they are otherwise entitled to under state law.
Please clarify under PPP, that payroll costs covered do not include federal withholding, medicare, and social security? So those should not be included in the maximum loan calculation or request for forgiveness? And by that I mean these taxes withheld from employees checks, not the amount the company pays
Under the Act, payroll costs are calculated on a gross basis without regard to (i.e., not including subtractions or additions based on) federal taxes imposed or withheld, such as the employee’s and employer’s share of Federal Insurance Contributions Act (FICA) and income taxes required to be withheld from employees. As a result, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by the employer, but payroll costs do not include the employer’s share of payroll tax. For example, an employee who earned $4,000 per month in gross wages, from which $500 in federal taxes was withheld, would count as $4,000 in payroll costs. The employee would receive $3,500, and $500 would be paid to the federal government. However, the employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from payroll costs under the statute
Can you take emergency paid sick leave if you are already out on FMLA two weeks prior to April 1st?
If they are an eligible employee, they are entitled to paid sick leave under the Emergency Paid Sick Leave Act regardless of how much leave they have taken under the FMLA. However, if the employer was covered by the FMLA prior to April 1, 2020, the employee's eligibility for expanded family and medical leave depends on how much leave they have already taken during the 12-month period that the employer uses for FMLA leave. The employee may take a total of 12 workweeks for FMLA or expanded family and medical leave reasons during a 12-month period.
My employee becomes ill with COVID-19 symptoms and decides to quarantine themselves for two weeks, and then return to work. If they do not seek a medical diagnosis or the advice of a health care provider, can they get paid for those two weeks under the FFCRA?
Generally no. If they become ill with COVID-19 symptoms, they may take paid sick leave under the FFCRA only to seek a medical diagnosis or if a health care provider otherwise advises them to self-quarantine. They may not take paid sick leave under the FFCRA if they unilaterally decide to self-quarantine for an illness without medical advice, even if they have COVID-19 symptoms.
On PPP, is interest due on the forgiven portion of the PPP loan? If I have $100,000 forgiven, do I still owe interest on that?
No, if the full principal of the PPP loan is forgiven, the borrower is not responsible for the interest accrued in the 8-week covered period. Any portion of the loan that is not forgiven will carry an interest rate of 1.0% and is due to be paid back within two years. However, payments for the first six months can be deferred, although interest is accuring.
COVID-19 RESOURCES FOR MANUFACTURERS