Q: What do we do if employees ask for layoffs so they can claim unemployment, just because they do not want to work or are afraid (not related to them being sick or any of their family members)?
A: If there is work to be done, then employees should work for as long as possible. It is vitally important to the economy.
Q: How much information should be disclosed to our employees re: CARES Act provisions, specifically those detailed in the Emergency Family & Medical Leave Expansion Act and the Emergency Paid Sick Leave Act?
A: I believe it is important to be as honest and informative as possible. Clayco has always been very transparent. Transparency makes your employees feel safe and valued. Regarding EFMLA and other benefit programs, employers should assist employees with seeking any available benefits to the degree that the employer has the capability.
Q: Are companies allowed to apply for both the Paycheck Protection Program and the Emergency Injury Disaster Loan?
A: YES – The PPP authorizes up to $349 billion in forgivable loans to small businesses to prevent more layoffs and allow companies keep their employees on the payroll during the COVID-19 pandemic. The EIDL can give business owners fast relief through emergency grants up to $10,000 that do not have to be paid back. But unlike the PPP, which is entirely forgivable if you meet requirements, you will have to back any remainder of an EIDL loan, minus the grant.
Q: Are contractors who are subject to a collective bargaining agreement responsible for FFCRA benefits for union employees?
A: Title IV also provides for relief to certain eligible midsize businesses with between 500 and 10,000 employees. Entities accepting such relief must agree to certain conditions regarding outsourcing and maintaining headcount levels. Recipients must also agree not to abrogate any existing collective bargaining agreement during the term of the loan and for two years thereafter and must remain neutral in any union effort to organize its employees during the term of the loan.
Q: What is the best way to track Payroll related spending and future Post-PPP reporting requirements?
A: Here are the best options:
Make sure each category has its own account in the accounting general ledger. Tracking will be time-specific from the date of initiation until the end of the crisis. By having a detail by account it will be easy to track the total cost in each category. BUT the qualified compensation will need to be adjusted as there is a $100k limit per person. Each company should track the costs this way and then have their accountant/tax accountant prepare the reconciliation for them.
IF using an outside payroll service it can provide this information with the from and to dates applicable.
IF a company does not have a sophisticated accounting system (some may just provide information to a CPA who prepares financial statements and tax returns) then they should begin tracking outside of the financial statements. Probably the easiest solution is an Excel spreadsheet. Have a column for each category and then record payments by line item complete with amount, description, and date of the transaction. Again provide to their accountant for the final reconciliation.
Q: After PPP and all the Fed programs are done, should we be looking at our Retained Earnings as a source of ‘emergency funds’? And if so, what % of RE should we designate for these emergency funds?
A: Retained earnings are not important right now. The focus should be on cash for the foreseeable future. Designate a portion of your cash for emergencies.