Coronavirus Updates for Employers - What if I don't get a PPP loan?

Good afternoon and welcome. Thank you to those of you joining us live, and thank you to those of you watching the recording after the fact. Today is April 9th, 2020, and we are talking about all of the updates related to the coronavirus. Well, not all of them because that would take much longer than an hour, but we are bringing you this week's installment of what's new related to all of the new acronym soup we have, FFCRA, PPP, EPSL, all that fun stuff. So I'm excited for you to join me today. We're going to do our best to boil some of these key concepts down into easily consumable pieces of information for you and your team. My name is Matt Vaity. I'm the CEO of ERG Payroll and HR. And first, I wanted to know, we talked about Zoom meetings last week, and does anybody else kind of have the same Zoom meeting philosophy where audio only, you kind of look like I do right now? I'm wearing shorts and a t-shirt and running shoes, but if the video is on, I'm putting on a collared shirt and trying to make sure I've got the right lighting and all that good stuff. I'm sure some of you out there can relate, and working from home has been an interesting challenge and phenomenon. And some folks don't even care if the video's on. They're still, they're still doing that left picture. So kudos to you guys, and thank you all so much once again for joining us today. But today we're going to get into a lot of different things, but I'll urge you all, it's a time to be positive leaders on our teams and in our our communities. And I do not think that any of us are going to get ahead by complaining about our circumstances, by, by leading with negative thoughts, actions, words towards others. And so, I am hoping that each of you on this phone are going to take a positive piece of information away from this and lead your team in a fashion that helps to grow them, helps to grow your organization, helps to build your community so that we can emerge stronger than before. And I'm honored today to be joined by Teresina Maxwell. Once again, my name is Matt Beatty. I'm the CEO of ERG Payroll and HR. If you want to see— hear a little bit more of a bio on me, I'll reference our prior recording webinar several times throughout this webinar. But if you go to our YouTube channel or to our website, you can find those recordings. This is our 4th recording and since the— FFCRA went live a couple weeks ago. I think we've been one of the more proactive in delivering information. It's something that our team has done a fantastic job, and I'm just the mouthpiece out here delivering it to you all with the great folks like Amanda, Karen, Jason, and Olivia and all the others on the ERG team putting together, refining information and giving it to me to deliver to you. And Teresina Maxwell is somebody I'm— I'm grateful to know, I'm grateful to call a friend and business counterpart at this point. She works with— she works for Clarus Partners, Clarus Solutions. I'm going to recommend you check out their website several times. We're going to talk about what they do in just a moment. It's claruscredits.com. But she works with state and local departments of development to bring negotiated incentive packages that help folks to really optimize tax credits for their business. Over the course of her career, she's helped clients capture millions of dollars in tax credits benefits and incentives, particularly through the Work Opportunity Tax Credit program. She's a former senior manager at Ernst Young, has been the Director of Credits and Incentives at Clarus Partners, and now the Chief Operating Officer at Clarus Solutions. And she is just incredibly sharp with this stuff, and that's why you're going to hear her talking for the bulk of this webinar and not me. So I'll hand it over to you in just a moment, Teresina, but I'm going to keep going on some of the— intro here. So Clara Solutions, once again, you can check out their website here at WOTChero, W-O-T-C-H-E-R-O.com. They advise clients on how to capitalize on employment tax credits. This is something I've been familiar with for, ugh, I'm gonna date myself a little bit here, going on decades with this, but working Opportunity Tax Credits are probably one of the more underutilized tax credits. These aren't specific to our current circumstance. They're tax credits that you can get for hiring all year round. And they're really a federal tax incentive program that's meant to help get people to work that are hard to employ. So, Teresina, I've taken you off mute. I'll allow you to expound on what Klaris does any further if you'd like, and then we'll start to move through some of the content for today.

Sure. Thanks, Matt. And really, I'm grateful to be here with you and with everyone on this call. Like Matt said, it's just interesting times. Congress obviously is trying to help us all get through this in the best way possible, which are these recent laws that we'll talk through. But yeah, as an organization, Clare Solutions, my background, I am a corporate tax attorney. I don't actually practice law anymore, but me and the CEO, Brent Johnson, who's a CPA, started trying to help businesses that were in the small to midsize range get these tax credits. When I was at Ernst Young, we would help large corporations take advantage of these tax credits. You can imagine they, you know, they'd say, hey, unless it's gonna be over $1 million, don't even talk to me. But they only employ about 40% of the people who actually qualify for this tax credit. So really our vision is to help small to midsize companies take advantage of these same programs that large companies do and figure out a way to do it as seamlessly as possible. So that's— we started— we do a lot with the Work Opportunity Tax Credit, but we're also here just to answer questions and help in any way that we can as we go through some of these other tax credits today.

Awesome. Thanks, Teresina. And I'm going to step back a slide here because somebody's already chatted in and reminded me of my normal disclaimer I throw out here at the beginning, and that's that I will try to answer some of these chats while Terracina is speaking so that we can answer some things live if they're— it's easily chatable, if you will, like the simple yes answer I just gave in the chat. If you are joining and watching the recording or if you submit something and I don't respond, please take down our email addresses. And that's the first thing somebody just asked was, will we be able to get these slides, which will obviously have our email addresses on them? And the answer is yes. We'll send out a follow-up to this tomorrow morning, which will be April 10th. At the end. They'll have a recording of this webinar along with the slides, along with a link to a Dropbox that I'm going to reference several times throughout this conversation that just— we're just compiling a bunch of templates and information into this Dropbox that suit most of the circumstances that we're going to cover today and have covered on the previous 3 webinars. So once again, we're not going to hit on Q&A today, live Q&A during the session. So drop your questions to us at email. I've been trying really hard to answer everybody's emails and questions. If I know the answers, right? And so, or guiding people to resources that can be helpful. So, I see some of you out there that I've corresponded with over email and haven't had the opportunity to meet. I hope that when we can give a real handshake, that'll happen one of these days for you folks that are local here in South Carolina. And which bears mentioning that our good friend, Terracina, is not local here in South Carolina. She's out of Ohio. So, I'll give you all that, like, go make a friend in another state while you've got to communicate with everybody over online anyway. We did a happy hour with a bunch of friends from all over the country last week, and it was a lot of fun just to reconnect with people if we're going to do a Zoom meeting anyway. So, all right, so here's what we're going to go through. PPP updates, pretty minimal. We're— if you're looking for information related to PPP, I'm going to defer you back to the prior webinar. We're going to talk about what's new there, current status, and where we're going with that. We're going to focus more— and this agenda is probably not a proper reflection on the other employer tax credits available to you if you don't go the PPP route. That will be the bulk of this conversation today. I'm going to get into some of the FFCRA credits and updates there, how you can get the credits that will be due to you if your employees file for emergency paid sick leave or emergency FMLA. And as usual, I'm going to touch on a couple of the FAQs that are coming into our office all week and just the common things people are asking. And so we are providing We're providing daily updates on our website. You will see new content, multiple articles being posted every day. Once again, the ERG team is doing a tremendous job keeping up with this stuff. So go to ergparole.com and subscribe, and you'll get those updates daily. And I apologize, we never under any other circumstance would be sending daily emails, but that's just where we're at right now. So let's talk about the Paycheck Protection Program, and Teresina and I are going to kind of tag team this. We're going to talk about quick overview of what it is. I think everybody on this phone at this point probably knows what the PPP loans are and what they are. But like I said, we're going to transition a little bit more into some other options if you don't get the PPP. What else is out there? Probably some less glamorized components of this. The Paycheck Protection Program is pretty simple, and I'll let Teresina fill me in here after I go through this. But it's basically part of this CARES Act, as you've seen it, that was passed a couple weeks back, week and a half back. It is $350 billion in small business loans. Loans that are mostly forgivable. And, you know, I heard a podcast I was listening to this morning where they were joking that it's got more loopholes than any other IRS regulation out there. So to say they're forgivable, we give you the same disclaimer we give you last week, and that's if you need a loan, take a loan. If you're taking it because you think it's a grant, don't forget that it is very loosely termed at this point, and there are a lot of ways for the SBA to get out of paying back these loans, or excuse me, from forgiving these loans. Just proceed with caution on the PPP loans. And I know most of us are going out and applying for them regardless of sort of the extent of the need. We all have demands put on our businesses based on this economic crisis, and pretty much everybody on this line could validate the need for this loan. But I'd say proceed with caution when it comes to spending if you're one of these companies where, you know, you're not in sort of dire need to have this loan. But the purpose is ultimately to keep people employed by funding payroll and essential operating expenses for 8 weeks from the time you get that loan. And so really, they're viewing this as a possible long— or excuse me, short-term crisis in the pandemic, people being shut down all around the country. Most places were being told to stay home. And so what can we do in that circumstance? Well, we've got to put a jolt into the economy. These forgivable loans, this $350 billion, is meant to do that. And since last week, they have opened up— I'm putting air quotes around the applications because what I'm actually finding is most of the applications people are filling out are just forms that are putting you in line until the real application process gets worked out. I was talking to somebody this morning. I told them I probably talked to 150, 200 small business owners that have applied, and he was the first person I had talked to that loan— or that application had actually been approved. And so be patient, understand that this was a quickly thrown together package. It is something that the banks, the, you know, your CPA, your HR company, whoever it might be, we're all learning this stuff in real time and while the SBA makes it up on the fly. So lots going on there, but also at the same time not a lot in the perspective that it's moving slow and patience is a virtue in this standpoint. Teresina, what else would you have to add to that piece?

No, I would agree with you. I was just talking actually to one of our clients this morning who was at— you apply through this through a bank. And he was asking me, hey, does it make sense for me to apply at multiple banks to kind of see if I can get in faster? Which was an interesting thought. But really, I think that's just going to slow it down in the long run. So I would not encourage that. One of the other questions that I've come up against a lot, and I'm not sure how many of you are in, in this category, but this is limited, as Matt has explained before, to the 500-employee mark. But the SBA has given further guidance on this, that there are certain industries that the SBA says are small size regardless of the number of employees. If your industry has a revenue number or something like that, they will include you as being eligible for this loan. So I would say that some of those nuances, we're getting more understanding around them. The other thing that I've heard recently, I heard Nancy Pelosi talking that they are considering putting more money into this program where it's not so much a first-come, first-served but they help maybe some of the folks who, for whatever reason, weren't fast enough or didn't have the chance to get it, and they come up with a different way. It's not going to be $350 billion. I think what she said was closer to like $200 billion or something. It was still a lot of money, but that would be in the next iteration or future bills that would be passed. So yeah, I'm sure we'll continue to have updates on, on this piece here.

Yeah, it's a big-time hurry up and wait situation because it's almost— there's this panic being caused by lots of folks in the market saying, oh, if you don't get your application in within the first 36 hours, you might not get any of the money. But yet, you know, the applications aren't even moving yet at this point. So it's a bit of a bizarre situation. Definitely say to make sure if you need this to get your hat in the ring and make sure it's something that you're doing. Also understand that it's not going to happen tomorrow. So you're going to have to make alternate plans for your business until, you know, at least for weeks, I would imagine. All right. So let's talk about a less talked about component of all of this, and that's the Employee Retention Credit. And this is something that I think even personally from my perspective, I have not nearly the understanding of this that Terracina has. So I'm so excited to hear her go through this as we're preparing the slides and going through it. I was getting more excited excited because I know that there are people out there who are just like, look, the PPP sounds great in theory, but going back to being concerned about, hey, will it be forgiven? Will I get in line fast enough? Will I get it? What are my other options? You know, we talked about the EIDL a little bit in the past, and I'll tell you, we're going to talk less about that because just the nature of what we do, we're a payroll and HR company. Most people come to us for guidance around those particular things. That's a loan, and there is a forgivable component of it, and that's probably the only thing to mention moving back a piece, if you will, is the, the getting a lot of questions about, hey, if I apply for that EIDL and I get that $10,000 forgivable component, does that impact my PPP loan? And the way that that is, uh, being explained today is that if you were to get a $10,000 forgivable loan from EIDL and you had a $15,000 PPP eligibility, then yes, that $10,000 would come off of that and leave you only eligible for $5,000, is how we've been explained. So Lots to go over there, but I'm gonna, I'm gonna hand it back to you, Terracina, and let you get into the Employee Retention Credit and what this is and what it means to business owners.

And one of the reasons why it's important to talk through this is with the PPP loan, it's a great program. Like Matt's been saying, hey, this is first-come, first-served. There are going to be a lot of people who either don't qualify for it or aren't able to get it. And there is then this Employee Retention Credit, which we'll talk through, and it really is an either/or. So if you're not able to get the loan or you decide that's not the right path for your business where you are right now, you can then take advantage of this Employee Retention Credit. And really, this— the purpose of this, I always like to talk about like what's the intent of Congress for putting this tax credit in place. It really is to try to keep employees on company's payroll. And so it's a refundable tax credit, and it is up to 50% of wages for the employees. So the way that this works— Matt, I'm going to have you turn it. There you go. So up front, I just want to articulate there are some nuances to this, and we're going to talk through the nuances, but it is in some fashion available to all employers regardless of size, including tax-exempt organizations. There are some size components to this, and like I said, we're going to get into it, but really employers should be looking at this tax credit if they're not taking advantage of the PPP. The two exceptions written up there is state and local governments and small businesses. Like I said, that take the SBA loan aren't going to be able to qualify for this. But to qualify, the employer has to meet one of two tests. So an employer is eligible if the business is fully or partially suspended due to orders from an appropriate government authority. And so during this time, you think about a restaurant or some sort of food service that people come into the restaurant, right? And as we have complete— in a lot of states, I actually don't know if you have it in South Carolina, but in a lot of states we have the stay-at-home orders. In Ohio, we're not going out. Everybody's closed down. And so in that case, even if the business were to stay open and deliver, deliver food or have people come for pickup or if their operation has been in some way impacted by orders from an appropriate government authority, then they would qualify for this retention tax credit. The other way— so even if maybe some of these orders aren't impacting your business at all, that people are able to continue to do their work from home or, you know, go into the office or whatever it is, June 27th, there's a shower in Aiken. If you have some sort of significant decline in gross receipts, you're also going to be able to qualify for this. And a significant decline, they did actually define that. And so what you're looking at is if you have gross receipts in Q2 that are 50% below the comparable— quarter in 2019, then you're going to qualify for this. So under that second bullet there, it is going to be looking quarter over quarter. Do you have a significant difference this year, 2020, than what your gross receipts were in 2019? And if so, then you're going to be able to qualify for this tax credit. So what is the credit calculation? How do we go about doing this? Like I said at the beginning, it's 50% of qualified wages. We're going to define what wages are qualified in a second, but it's paid to an employee capped at $10,000. So any wages starting March 13th through the end of this year that are paid to an employee, it's going to be 50% of that. If they do get more than $10,000 between now and the end of the year, it is capped at that $10,000. So it would be a maximum of $5,000 per qualified employee of tax credit that is a refundable tax credit. This is where it gets a little bit interesting, what these qualified wages are. First of all, it does include the cash payments that you typically think of when you think of wages, but it also includes the portion that the employer pays for the healthcare that they provide. So that can be included in that $10,000 number to obtain the tax credit. But the qualified wages also— there's this part where it does matter the number of full-time employees that you had during 2019. So I know with the Paycheck Protection Program, there's an employment threshold. It's like 500, and full and part-time people qualify. And there's all kinds of nuances to whether or not a company qualifies, meets that threshold for the Payroll Protection Program. The threshold for the Employee Retention Credit is 100 employees, full-time employees. And again, you can still get it if you're over 100 employees, but but the wages are different, and we'll walk through that in a second. But a full-time employee is defined as if you calculate out— it's the same calculation as you determine for the Affordable Care Act. So, you know, there are different numbers in that that matter, you know, 50 employees or more or less, you fall into different categories. It's that same calculation, which I believe is 32 hours per week considered is considered a full-time employee, and then whether or not you had 100 full-time employees matters— impacts the amount of tax credit that you're able to take through this tax credit. So on the next slide— go ahead and switch it, Matt— on the next slide, you'll see that if you had an average of less than 100 employees during 2019, for purposes of this tax credit, it makes it the easiest. So all wages paid to the employee during that quarter, again capped at the $10,000, but all wages are going to qualify for the tax credit. This does include whether or not they're working. It's just anything that you've paid to employee. Now, Matt, you did put some qualifiers in here, which I'm glad. And Matt, actually, I don't know if you want to take this on or talk this through, but if they got paid those leave wages under the FFCRA, those wages won't qualify. So just— there are some nuances the way that these get put together as far as the two acts that recently came out. But if you're paying somebody and there was no sick leave paid to them,— then you would be able to take that— take a tax credit on them. Interestingly enough, also the WOTC is noted on there. We help people with the Work Opportunity Tax Credit. That's the WOTC. The wages that you would get for WOTC would not also count for these wages. But we've been helping our clients go through the nuances of that to make sure that they maximize both credits if they're available to that. So Matt, I don't know if you have something you want to add to that.

No, I mean, you think about it from— it's like one of these sort of common sense double dips when you look at it on paper of, okay, look, if I already got— I'm getting a credit back for these paid sick leave wages, so why would I get another credit on top of it? And now I will say, I'm assuming that most payroll companies are going to be like us and that they're creating a separate pay code in their system system that is hard-coded to these leaves. So when you go to do— to get these credits, you're going to have a report that's going to isolate those wages and make it where it's simple to take them out anyhow. So yeah, once again, think through it. Very straightforward. You're already getting that money reimbursed to you against your federal taxes. Why would you also get it reimbursed again?

And so those are— that's for all companies that employ, again, an average of less than 100 employees during 2019. Now for those companies that employed more than 100 employees during 2019, you can still take this credit. However, it is only for those wages that are paid to an employee who doesn't actually work, who is not actually performing work. So if you keep them on payroll, they're not actually performing work, they— but you're still choosing to pay them. Even if you're more than 100 employees, you are going to qualify and you will be able to get a reimbursable credit credit for the amount that you're paying those employees up to $10,000. So that is the nuance here that anybody, no matter the size, can take the tax credit. However, if you're less than 100 employees, you know, with— you know, keep in mind that there are these nuances to it. But for the most part, it's all employees, whether or not they're working, if you're paying them, if they're working full-time, even while you're paying them, then you get the tax credit. If it's more than 100 employees, it's only if they are not working but you continue to pay them that you are eligible for that tax credit. So that's a little bit of a nuance. If you fall into that marker where you're close to 100 employees, or maybe you are over 100 employees and there's some confusion on that, please reach out or ask a question. We can talk that through as well. So how do you then get payment for this tax credit? Well, there is the immediate reimbursement by reducing the amount of payroll taxes held from your employees' wages. This, again, you'd be working with Matt to— or your payroll company, but Matt and his team are all over this, helping companies to take advantage of this as we go through this. So yeah, so there's the immediate reduction of the amount of payroll taxes paid, and then any excess. So if you end up having somebody that, you know, they max out and they have $5,000 that you should be reimbursed, but you haven't had to pay that much, or you haven't— you haven't been able to reduce the payroll taxes that much over the course of a quarter, when you file your 941, any remainder on top of that would be reimbursed to you at that time. And so that's where the reimbursement comes in. Really, Congress is trying to put money in the hands of the employers as quickly as possible, which is why they allow it— the reduction of the payroll taxes immediately, or, you know, bimonthly, or however often you pay those. And then at the end of the quarter, then you get to true it up then as well.. And if you do have more tax credit than you have tax liability, you will be reimbursed that amount. So that's a little bit about the Employee Retention Credit. There are nuances to this, you know, obviously Matt and his team just being— it runs through the payroll company or your payroll credit. So Matt and his team are helping with this. If you have questions just about, hey, how do we keep track of which employees How does this work? You know, obviously I can help answer any of those questions as well.

Awesome. Thanks, Terracina. And that is a fantastic option. And like I said, probably underutilized, at least from a visibility perspective, if you are not going to go after the PPP loan. So I'm going to— we're going to talk about a bunch more stuff here in just a moment as it relates to updates for the FFCRA, which is really going to expand on what you were just talking about. I think we're going to see a lot of similarities between how we get compensated, reimbursed for any of these tax credits as it applies against our federal payroll tax liabilities. But I did just want to stop and say, hey, if you have not been to our site, you can see this is a screenshot of our homepage. We have all of these FAQs, all the resources we're going to be talking about, all the updates. Traffic has kind of gone through the roof, and it's really become a destination of of a place for you to go to get everything you need for COVID-19. And you'll all be getting access to this Dropbox after the fact. We've put remote work resources in there, layoff templates, forms, guides, recordings of these webinars, things related to unemployment in different states, all kinds of stuff in there. Feel free to share that with anybody you think will find value in it. And I will continue to say, I mean, once again, there are many of you on this line that I've had, you know, try to help as best I can as it relates to guidance about these these things as time permits, and I'm happy to do so. So if you're watching this recording and you've got a question about the FFCRA or the PPP loan and even to some extent some of the other components going beyond that and the employment tax credit— tax credits, then please reach out and I'll do my best to answer and our team will do our best to answer. We've been helping folks as much as humanly possible. So let's talk briefly. Now, if you are not familiar with the FFCRA, if I continue to say that acronym and you have no idea what I'm talking about, you need to rewind back to webinar number 1, which is on our YouTube channel or in this Dropbox you're going to get tomorrow, the recording, and just get yourself familiar with what the Emergency Family and Medical Leave Expansion Act are, EFMLA, as I probably said it 16 times on here, working off of the assumption that I see a lot of familiar names on here. And, and so I'm not going to go into do EPSL and all that. But what I did want to touch on is we've got a little bit of clarity. Probably the one question I get the most is, okay, how do I afford this? So, all right, great. Somebody just came in, 3 people just came in and requested EFMLA or EPSL. I can't afford that. How do I pay for it? What's refundable? How do I claim the credit? We're getting more and more guidance every day from the IRS. I'll give you a guess whether or not there's a form. Do you think there's a form for this? Of course there's a form for this. Come on, it's the IRS. So there's information about what is refundable. It's getting more clear now. How do I claim the credit? And what if I don't have enough? This is sort of the common question, even though I haven't seen anybody actually come up against this yet. What if I don't have enough federal tax liability to offset paying somebody emergency paid sick leave? So The net of it is you can get a fully refundable tax credit equal to the required paid sick leave that you are going to pay somebody. So that includes not only their wages, but anything that you would owe towards the employer portion of health insurance as well. And so that includes their wages and the federal— how do you claim the credit is applying that against your federal tax liability for that pay period. So once again, now if I've got somebody who needs 40 hours for the week of emergency paid sick leave, I owe them $5 or $250, let's say, and now I can directly reduce my federal taxes that pay period by that amount. And once again, in many circumstances, your payroll company will either automate or handle this for you.. And that should also include, as mentioned, the employer portion of health. And that's how we claim the credit. Now, what if you don't have enough? So what if you owe, you know, $5,000 in emergency paid sick leave and you've only got $3,000 in taxes on that particular payroll? Well, you're going to be able to file that against future taxes as well. So even if you were to say it can go up against your next 941, so this quarter's 941, if I was— I can apply that against the next payroll. If I'm still not going to have enough, I can complete what's called a Form 7200 to request a reimbursement for that amount as well. And so this is going back to what our initial guidance was that we're going to have some way for a fast reimbursement. And I've uploaded that Form 7200 along with an explanation into the Dropbox as well. And so, getting that question a lot, once again, do I have to pay this person if they come in and request this time off? Just had this conversation earlier, you know, Joe, he and his wife are both working from home and their child is out of school. "do I need to pay them or do I need to pay him even though he has a spouse home as well and he's come in and requested EFMLA?" As long as he has the proper documentation and has come in and requested it in the proper way, then you're— it's not up to you to decipher whether or not his wife should be watching his child or he should be watching his child. He's provided the appropriate documentation and also requested it in the proper fashion. So that's just one question related to those credits I'm getting a lot. But let's get into some of the other Q&A. The— what is the difference between a furlough and a layoff? So I'm going to bust through several FAQs now for the rest of this. These are going to cover everything from getting reimbursed on those tax credits to furloughs versus layoffs to just once again the stuff that people are calling our office, phones ringing off the hook all day. These are the things people are asking. This one is really important because people are trying to decide, should I furlough or should I lay my staff off? First, you should note that the language used when sending employees home for a period of time is less important than communicating your actual intent. So if it's a temporary layoff or furlough, you know, sometimes that's a normal thing in certain industries. It's a seasonal thing. Most employees are not going to know what that means, though, if it's a regular— not a regular thing. So make sure you're communicating your plans for the future, even if they feel quite uncertain or are only short-term. A furlough is a situation where you're continuing employment, but it's reducing schedule hours or requiring a period of unpaid leave. So the thought is that all employees are going to incur a bit of the hardship rather than losing their jobs completely. So One company, as an example, might reduce hours by 20 per week for a period of time as a cost-saving measure so that everyone can keep their jobs. It's typically not going to be a termination. However, you still may need to provide certain notices to employees about the change in the relationship, and they would likely still be eligible for unemployment, especially under today's circumstances. If the only— if the entire company is not going to be furloughed but only certain people, it's important to be able to show that the staff selection is not being done for discriminatory mandatory reason. So once again, in that Dropbox, we've put a staff layoff selection form in there. I highly recommend documenting what your process is for choosing who is being laid off. That way you don't face any discrimination issues down the road. So what's a layoff? A layoff involves terminating employment during a period when no work is available. It can be temporary or permanent, but if, if you close down completely but you intend to reopen in the relatively near future, or have an expected reopening date at which time you're going to rehire your employees or all— some or all of your employees, that would be considered a temporary layoff. Temporary layoffs are appropriate for really short-term slowdowns or closures. A layoff is generally considered permanent if there are no plans to rehire the employee or employees because slowdown is expected to be lengthy. So what do I need to do for my paying my exempt people So your exempt employees are exempt from overtime and minimum wage. They have to fit into one of the 5 qualifying reasons. And if you're not sure what classifies an exempt employee versus a non-exempt employee, which is a really common infraction, making someone's salary does not thereby make them exempt. We see a lot of abuse of exempt versus non-exempt. So once again, we've got some great resources on our site for determining determining that. But exempt employees don't have to be paid if they do not work at all for an entire work week. We've talked about this several times over the past. If, if an exempt employee is available and works some during a week, the expectation is that they're going to get their salary, whereas non-exempt employees are to be paid for actual hours worked. So a little bit cleaner and easier there. Another question we're getting: if we close temporarily, will our employees be able to file for unemployment insurance? Yes, absolutely. Employees should be encouraged to apply as soon as possible. Most of the questions that we get related to unemployment, we can't answer from the perspective that what the normal is, is no longer applying. So circumstances have changed so drastically that people that would normally have claims denied are getting accepted now because of all the efforts to keep people financially viable during this incredibly unique time. And I will say there are 3 programs that have been clarified yesterday as it relates to federal unemployment. We talked last week about the $600 per week federal unemployment that's going to be available as part of the CARES Act. You have to apply through your state unemployment office. All state— all unemployment is administered at the state level, even if a federal program is funding it. So encourage your folks to go, give them the way to follow the processes. Once again, going back to that Dropbox, we've got a step-by-step for if I'm an employer in South Carolina and I'm filing on behalf of my team, or if I'm an employee and I'm filing on behalf of myself. And each state has their own unique— once again, we serve 40 of the different states, so 35 or so. So we don't have a breakdown for every single individual state, but they're all very simple to find with a simple Google search.

Hey Matt, can I interrupt just a second?

Yeah, please.

I think something that's interesting in some states, and I think it's over half of the states states also have a program that's been in place where you can negotiate with your state unemployment agency if you want to reduce hours, and they will pick up the other hours through the unemployment office. So that's something that might work for you. It is something that you have to reach out and talk to your own state about. But, and like I said, over half of the states have that. It might make sense, that might be an option to keep people doing work but only have to pay them for part-time, and the state will pick up the rest of it. And right now the federal government is giving the states the money so that they can pick up the rest of that. So that's just an option as well.

And that's fantastic. And I will say, so at least it's been my experience that these unemployment offices are doing awesome work. While normally not known as an efficient organization, organization that gets things done, and you are certainly not going to get somebody on the phone on the third ring when you call over to your unemployment office right now. But I'm seeing people getting return calls, return correspondence much faster than what you would expect given the circumstances. It's not like they've all of a sudden ramped up thousands of people to serve the growing need of, you know, last week it was at 3.3 million additional unemployment claims, and I'm sure it's just compounded even higher this week. I haven't checked the numbers this week, but so once again, exercise patience there, but, but be grateful for how well they're doing with this and how each state has really stepped up to try and help out their, their residents. So this is one we get a lot: I'm concerned about the cost of unemployment as well as how to advise employees about it. Any help? Remember, you don't pay unemployment insurance claims directly. They're paid by the state, and the state gets funds for that from unemployment insurance taxes that we all pay into regularly. So some employers are concerned that their UI tax rate will increase due to current layoffs, but it appears that many states, and perhaps all, will be forgiving COVID-19-related terminations with respect to future increases in UI tax rates. Because, I mean, I understand that completely. If you go and you lay off your entire staff and they all go on unemployment, You know, you're in— if it were traditional circumstances, next year when your renewal comes up, you'd get pounded. So it's a very viable concern. However, it looks like we're all going to get relief for that. So, and I will say once again, just echoing, most employees who experience any reduced hours, furloughs, or layoffs are going to be eligible for some form— most likely going to be eligible for some form of unemployment insurance. And it's impossible to get to that exact number. Without applying. All right. So what info should I get from an employee who is requesting eligible leave? So emergency paid sick leave or emergency FMLA. So we've got a written request form in that Dropbox that you should have your employee complete. It's going to have at least their employee— their name, dates which leave is requested, a statement of the COVID-19-related reason that they're requesting the leave, and written support for such reason. And a statement that they're unable to work, including by means of telework, for such reason. So, if it's one of these cases where it's based on a quarantine order or a self-quarantine advice, the statement from the employee should include the name of the governmental entity ordering quarantine or the name of the healthcare professional that is advising the self-quarantine. This one just came up today. Somebody came in at your office, says, "Oh, I've been advised to self-quarantine." great. We need in writing who told you to self-quarantine. Self-selecting and saying, "I don't feel like coming to work because I'm scared," unfortunately, is, is not going to be a qualifying reason in this circumstance. So in the case of a leave request based on a school closing or if a child care provider is not available, the statement from the employee should include the name and age of the child to be cared for, the name of the school that is closed or the place of care that's unavailable, and a representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave. And with respect to the employee's inability to work or telework because of a need to provide care for a child older than 14 during daylight hours, you must also have a statement that special circumstances exist requiring the employee to provide care. So those are some things where we're getting further clarification, right, particularly that piece of when somebody's over 14. Secondarily, we're also getting that question a lot of— we've got husband and wife at home with the child. I need them to state who is, you know, is it because nobody else is available? So they're gonna have to put it in writing, and then that, that onus is on them, right? That's not up to you to make that determination. So, you know, there could be some further substantiation required as well, documentation showing how you got to the amount of sick and family leave wages to apply. Now, one other thing I didn't put in here that we're getting more frequently is, can I apply the leave intermittently? So I've got somebody who needs to take care of their children but can telework for 4 hours a day, and the other 4 hours a day they need to use one of their respective leaves. That is up to you as the employer. So that can— you can do it, but you do not have to do it. And so certainly you do not want to do one for one person and not for another. You'll be showing discrimination. So make your determination on what you're going to do there and move forward with it. All right. So how long are these refundable credits available? So if I go out and I pay that person $250 for a week of emergency paid sick leave, How much longer can this actually occur for and how long can I keep rolling these credits forward? So let's use that example of I tried to keep applying to this, this quarter's 941. There wasn't enough there. How long could I keep these credits? They're good April 1st, 2020 through December 31st, 2020. You can continue to reduce your tax liability over the course of the year with these refundable credits. All right. So we had on a a barrage swap of stuff today. So I know we've given you all a lot to chew on and some, some new stuff, some refreshers on some old stuff, some updates. I think you've got some big-time decisions to make, particularly when you look at what things are available to your organization to help to keep the lights on, to help to keep people working, to help you to make sure that you're not only leaving this intact, but, but in a position to grow and take advantage of all the opportunities that could be coming your way after this and during this particular rough patch in our economy. So, as I've told you on each of these webinars, you know, if you plan to fail— excuse me, if you fail to plan, you plan to fail, right? So, sit down, make a plan, plot the course that makes the most sense for you based on the things that you do know, and then cover that with somebody who may know more than you where you can start to look for things that are maybe not necessarily things you've thought about. I talked to another group of small business owners business owners regularly, and they have a completely different vantage point of this than I do and have opened my eyes to components of it that I wouldn't have thought about for my own business. And that's an important thing. I think Teresina and her team do a really good job of bringing us up that a lot of small business owners on this call, one of the things that I think makes us unique and why our clients like working with us, why they like working with Clara so much is because we're small businesses too. And this stuff impacts us just as much as you, and we've got to go through the same process of deciding how we're going to move forward to make sure that this is, is valuable in the long run and not a dark spot in our history. And so the last piece, and we've mentioned it several times throughout the call, is make sure you're updating your policies and procedures. Even going back to the first one, we're starting to get 3, 4 weeks into remote work now for some of you. You're going to want to update your policies and procedures around what's acceptable for your remote work policy. How is this going to impact you going forward, policies and procedures as it relates to requesting and administering leave, all things that you need to take into consideration going forward. So, I'm going to— I leave with this every single time. It's kind of like the parable of the mustard seed where you talk about how sometimes it's going to fall on fertile soil and other times it's going to fall on the stiff rock. I had a client reach out to me a former client, excuse me, one of the few companies that have left us over the years. And he said, you know, I'm just starting to look back. I just read your book about organizational culture. And I'm starting to really think that all these things that you were telling me 3 years ago about organizational culture and how important it is, I'm finally starting to buy off on it. It makes sense to me now. And I've got to make some changes. Mind you, this organization had 100% turnover. And he's finally getting this mindset right here. And that's why I go to the parable of the mustard seed, because I talk about this all the time. Excuse me, the sower's parable, not the parable of the mustard seed. My bad, got my parables mixed up. Because hopefully this will fall on one of you differently today than it did last time, even though we've done it at the end of each of these. Your employees are your number one asset. And while it is critically important that you make sure that you are maintaining maintaining the type of work environment that keeps them coming back. Conversely, you also have to make sure that there is a workplace for them to come back to. So, take great care of them and consider all factors when making decisions related to the future of your business. And thank you so much for joining us. If you're not familiar with ERG Payroll and HR, please stop by our website. We are a mission-based company. As mentioned, we're doing everything we can to serve organizations in the community, clients, not clients, whoever we can help. We're taking calls all day, every day. We are a mission-driven organization. We give 5% of our business away to local nonprofits and, well, I guess nationwide nonprofits at this point. It used to just be local and has since grown over the last few years. And we do that in the form of 3% of gross revenue, 1% of our time, and 1% of our product. And, you know, we are incredibly grateful for the opportunity to speak to each and every one of you, and thank you so much for stopping by. Stopping by. If there's anything we can do to help, please don't hesitate to drop us a note. Teresina, thank you so much for sharing some of your knowledge and wisdom with us today. And I hope that you all have a blessed afternoon.

Thanks, Matt, and goodbye.