OSHA Issues Guidance for Social Distancing in the Workplace

The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) issued an alert providing steps that employers may follow to implement social distancing in the workplace; helping to protect their workers from exposure to the coronavirus.

OSHA suggested the following safety measures employers can implement:

  • Isolate any worker who begins to exhibit symptoms that cannot immediately leave the worksite;
  • Establish flexible schedules to include telecommuting and alternative work schedules;
  • Stagger breaks and re-arrange seating in common areas such as break rooms or kitchens to help maintain physical distance between workers;
  • In workplaces where customers are present, mark-off six-foot distances with floor tape in areas where lines should form, use drive-through windows or curbside pickup, and limit the number of customers allowed on the premises at one time;
  • Move or reposition workstations to create more distance, and install plexiglass partitions; and

Encourage workers to bring any safety and health concerns to their manager or supervisor’s attention.

HHS Issues New Rules Extending Key Deadlines

Per a Department of Health and Human Services (HHS) memorandum released May 14, 2020, the Department of Labor (DOL), in coordination with the Internal Revenue Service (IRS) and the Treasury Department, issued new rules extending key deadlines for health, retirement, and welfare plans subject to ERISA and the Internal Revenue Code. Employers are encouraged, but not required, to adopt the notice extensions. The deadline extensions are intended to provide relief to plan sponsors and participants impacted by COVID-19.

  1. Key Extensions

The following list of key extensions are retroactive to March 1, 2020:

  • Extends time for plans to furnish ERISA-required notifications to “as soon as administratively practicable”, Summaries of material modification(s) (SMM) and summary plan description(s) (SPD);
  • Benefit/claims determinations;
  • Blackout notices (30-day advanced notice as well as notices required after the blackout period begins);
  • Extends the COBRA Election Notice provision timeline (the 44-day timeframe for provision of notice to a qualified beneficiary) by disregarding the Outbreak Period.

In addition to formal extensions, the DOL will not take enforcement actions for temporary delays in forwarding participant contributions or loan repayments if the delays are attributable solely to the COVID-19 outbreak and compliance is achieved as soon as administratively practicable under the circumstances.

The Notice also encourages fiduciaries to make reasonable accommodations to prevent payment delays and benefit losses.

  1. Employee Extensions:
  • HIPAA Special Enrollment timeframes extended from 30 to 60-days;
  • Extends plan’s benefit claim filing deadlines; 
  • Extends plans’ deadline to file appeal of an adverse benefit determination to 180-day timeframe under a group health plan or disability plan;
  • Extends an ERISA plan’s deadline to file an external review request (four months for federal review, may be different for state);
  • Extends COBRA Qualifying Event Notice Deadlines (60-day employee notification for qualifying event);
  • Extends the COBRA Election Period (60-day timeframe/deadline for a qualified beneficiary to elect COBRA);

Extends COBRA Premium Payment Periods (45 days from COBRA election date to make initial premium deadline (or 30-day grace for subsequent premium payment deadlines, starting at the beginning of coverage month).

Maryland updates Pass-through Entity Tax Meant to Circumvent the Federal SALT Limitation

On May 7, 2020, Maryland joined states such as Connecticut, Louisiana, New Jersey, Oklahoma, and Wisconsin, to enact an elective pass-through entity tax to circumvent the $10,000 state and local tax (SALT) cap. While the IRS rendered other state and local tax workarounds ineffective, such as the state charitable deduction. The adoption of a state level pass-through entity tax (PET) results in the imposition of the income tax at the entity level. A PET also allows the business entity to claim the state tax deduction on a federal income tax return, which is not subject to the Tax Cuts and Jobs Act $10,000 limitation placed on individuals.

Currently, the IRS has not issued guidance limiting the use of the pass-through entity tax as workarounds. This being the case, there are certain elements to a state PET that may lead to the same IRS denial as charitable deductions:

  1. The expansion of the PET to income of residents is elective;
  2. Different tax rates apply, depending on the type of taxpayers that own the pass-through entity (i.e. individual or corporate);
  3. The PET does not apply to any portion of income attributable to a member that is also a pass-through entity;
  4. Non-resident individuals and corporations that own a pass-through entity that makes the PET election still have a filing obligation, even if the owner has no other Maryland source income; and
  5. Individual and corporate owners of a pass-through entity that makes the PET election are required to claim a credit for the tax paid by the pass-through entity instead of an income back out.

Putting aside the IRS taking aim at State PETS, Maryland together with the other states will continue to use it as a viable workaround for SALT.

2021 Health Savings Account Limits Increased By IRS

The Internal Revenue Service (IRS) announced the following on May 20, 2020, applicable for the tax year 2021:

The annual maximum has increased for the Individual and Family Health Savings Accounts (HSA).

  • The HSA Individual level contribution limit will be increased to $3,600 from $3,550. The HSA Family level contribution limit will be increased to $7,200 from $7,100.
  • The HDHP minimum Individual deductible remains at $1,400. The HDHP Family minimum deductible remains at $2,800.
  • HDHP Out-Of-Pocket Adjusted Limit for Individual will be changed to $7,000 up from $6,900. The HDHP Out-Of-Pocket Adjusted Limit for Family will be changed to $14,000 up from $13,800.

Any employees impacted may want to review their current and future deductions and make any needed adjustments.  The IRS allows employees to make changes to their HSA contributions on a monthly basis.

Contact Tracing in the Workplace Amid COVID-19

One of the most confusing aspects of the COVID-19 outbreak has been the emphasis on “contact tracing.” In essence, contact tracing involves identifying those people with whom an infected person has recently come in contact to determine those individuals the person might have infected with the virus. The Centers for Disease Control and Prevention (“CDC”) have published contact tracing guidelines for businesses, although they can be a bit confusing. But the guidance boils down to the following: infected employees must identify others who worked within 6 feet of them, for 15 minutes or more, within the 48 hours prior to showing symptoms, or later.

1. Who Worked Within 6 Feet of the Infected Employee?

The first step requires employers to inquire with the infected employee about those who worked within close proximity of them. The CDC generally defines a direct exposure to COVID-19 as an individual who is a household member with an infected person, intimate partner with an infected person, or an individual who has had close contact (less than 6 feet) for a prolonged period of time with an infected individual.

2. For Those Who Worked Within 6 Feet, Was It For 15 Minutes or More?

The current CDC guidance on the issue of prolonged contact states that “recommendations vary on the length of time of exposure, but fifteen (15) minutes of close exposure can be used as an operational definition.” Thus, after identifying the employees who worked within six feet of the individual worker, employers should determine if any remained within that proximity of the sick employee for fifteen (15) minutes or more.

3. Was the Direct Exposure for a Prolonged Period of Time During The 48 Hours Before the Infected Employee Exhibit Symptoms or Later?

The CDC defines the key period of time for determining if an employee was exposed to an infected worker as the “period from 48 hours before symptoms onset until” the infected employee is cleared to discontinue self-isolation. For purposes of contact tracing, the key metric is the 48-hour period before the sick employee had symptoms and was still working in the workplace. For example, if a sick employee worked on Wednesday and Thursday, started showing symptoms at 8:00 a.m. on Friday, and immediately left the workplace, you should look for employees working near them starting at 8:00 a.m. on Wednesday.

4. Ask Exposed Employees to Remain Home For at Least 14 Days

After following the above three steps, you have identified through contact tracing those other employees who were potentially exposed to the sick employee. Once identified, the CDC guidance for non-critical businesses provides that the exposed employees should take the following steps:

  • Stay home until 14 days after last exposure and maintain social distance (at least six feet) from others.
  • Self-monitor for symptoms.
    • Check temperature twice a day.
    • Watch for fever, cough, or shortness of breath.
  • Avoid contact with people at higher risk for illness (unless they live in the same home and had same exposure).
  • Follow CDC guidance if symptoms develop.

PPP Loan Forgiveness Application is Now Available

The Small Business Administration (SBA) has announced the release of the Paycheck Protection Program (PPP) Loan Forgiveness Application. The Treasury Department and SBA released the 11-page application form and instructions which is designed to help borrowers understand the process by which their loan forgiveness amount will be calculated and the overall approach for loan forgiveness. Note however, Congress is anticipated to vote as early as this week to extend the loan forgiveness period from eight (8) weeks to sixteen (16) weeks, which would give employers more time to use the funds and, as a result, more time to request loan forgiveness.  SBA will have to revise the application and instructions, depending on what changes Congress ultimately makes to the program.  But for now, the loan forgiveness application steps are outlined below.

Determining the loan forgiveness amount

 

The process to calculate the amount of loan forgiveness requires three steps:

1. Determine the maximum amount of possible loan forgiveness based on the borrower’s expenditures during the eight (8) weeks after the loan is made. The 8-week period in which expenses must be incurred or paid can begin on

  1. the day the PPP was disbursed, or
  2. for borrowers with a biweekly (or more frequent) payroll schedule, the eight (8) weeks may begin on the first day of the first pay period following the PPP loan disbursement.

2. Determine the amount, if any, by which the maximum loan forgiveness will be reduced due to reduced employment or reduced wages.

  1. Borrowers can avoid having their loan forgiveness reduced if they restore an employee’s pay to an amount greater than or equal to their annual salary as of February 15, 2020.
  2. There is no reduction in the forgivable loan amount for borrowers who reduced their FTEs during the period beginning on February 15 and ending on April 26, 2020, but who restored the FTEs to the level that existed on February 15 no later than June 30, 2020. There will be no penalty if an employer cannot maintain FTE count due to circumstances beyond its control (employee quits, employee is terminated for cause or voluntarily takes a reduction in hours).

1. Apply the 75% rule that requires that at least 75% of eligible loan forgiveness expenses go towards payroll costs. A borrower’s maximum loan amount could be reduced if the borrower’s eligible nonpayroll expenses exceed 25% of the total eligible expenses. The maximum eligible loan forgiveness is payroll expenses divided by 0.75.
Any loan amount that is not forgiven will be subject to the original terms of a two-year maximum loan at 1% interest rate with payments deferred for the first six months

What documentation is needed to submit the application?

 

Along with the completed application, borrowers will be required to submit documentation to substantiate their proper use of the loan funds.  Lenders may require slightly different forms, but the information employers will need to provide will include the following:

1. Payroll Documents

  1. Bank statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
  2. Tax forms for the periods that overlap with the coverage period.
  3. Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the borrower included in the forgiveness amount.

2. Full-Time Employees (FTEs):

  1. Documentation showing the average number of FTEs for the borrowers selected reference period. Documents may include payroll tax filings and state quarterly wage reporting and unemployment insurance tax filings.

3. Nonpayroll Expenses:

  1. Business mortgage interest payments: amortization schedule and cancelled checks or lender account statements from February 2020 and covering the 8-week period.
  2. Business rent and lease payments: Copy of current lease and receipts or cancelled checks or lessor account statements from February 2020 and covering the 8-week period.
  3. Business utility payments: Copy of invoices from February 2020 and the 8-week period and receipts, cancelled checks, or account statements