During our second COVID-19 Town Hall on March 31, 2020, our Chief ERISA Geek David LeFevre shared Families First Coronavirus Response Act (FFCRA) developments and guidance on the recently enacted Coronavirus Aid, Relief, and Economic Security Act (CARES Act). We also brought on our first guest, Lance LeFevre, contributing attorney to ERISAfire, to talk about possible workers' compensation implications of the COVID-19 crisis.
ERISAfire COVID-19 Town Hall - Week 2
March 31, 2020
CARES Act Tax Credits
What is the Employee Retention Tax Credit?
The Employee Retention Tax Credit is a payroll tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2012, and before January 1, 2021. It is a refundable credit, meaning that if an employer has more in credits than payroll taxes, Treasury writes the employer a check for the difference.
What employers are eligible for the Employee Retention Credit?
Employers, including tax-exempt organizations, are eligible for the credit if they operate business during the 2020 calendar year and fall within one of the following two categories:
The employer had a full or partial suspension of the operation of its trade or business during any calendar quarter because of governmental orders limiting commerce, travel, or group meetings due to COVID-19, or
The employer had a significant decline in gross receipts. A significant decline in receipts begins on the first day of the calendar quarter where the employer’s gross receipts are less than 50% of its gross receipts from 2019. The significant decline ends on the first day of the calendar quarter following the calendar quarter where gross receipts are more than 80% of its gross receipts from the same calendar quarter in 2019.
What are qualified wages?
For employers with fewer than 100 full-time employees during 2019, qualified wages are generally wages (up to $10,000 per employee) paid to employees, and the wages count for the credit regardless of whether those employees worked or not!
For employers with more than 100 employees on average during 2019, the credit is allowed only for wages (up to $10,000 per employee) paid to employees who did not work during the calendar quarter.
Other Compliance and Risk Management Issues
Has the DOL extended the filing deadline for Forms 5500?
Yes, but not for calendar year Forms 5500, which are still due July 31, 2020.
The CARES Act did expand ERISA Section 518 "Authority to postpone certain deadlines by reason of Presidentially declared disaster" to include "a public health emergency declared by the Secretary of Health and Human Services," and the Department of Labor has delivered.
Both retirement and welfare plan Forms 5500 due between April 30 and June 30 have had their deadlines extended to July 15. Employers don't need to apply for this extension; it's automatic. Employers with calendar year ERISA plans, however, are out of luck: those are still due July 31.
What are the possible workers' compensation implications of the COVID-19 crisis?
Think law enforcement, healthcare workers, grocery store clerks—anyone who is likely to be exposed due to his or her job. Whether or not contracting the novel coronavirus or coming down with COVID-19 is a compensable injury under workers compensation depends on a state's work comp statute is written and how judges have interpreted it. While there are many layers to this issue, the bottom line is that it’s probably time for employers to talk with their risk managers and work comp brokers about the potential for compensable work comp injury claims.