Items to Consider in Light of the Coronavirus

Employee layoffs/reduced work schedules

  • Have your team file for unemployment, even if they are working reduced hours.  The team will qualify for unemployment due to a temporary layoff at the business.  Keep in mind that you have to offer accrued PTO first prior to someone filing for unemployment.  If the employee receives accrued PTO, unemployment benefits start after accrued PTO.  For example, if the staff member receives two weeks of accrued PTO, or the equivalent of two weeks of pay, unemployment benefits would not start for two weeks.  Employees can also decide not to receive accrued PTO.  Please note this is the employee’s choice and not the employer’s choice.  Employees working reduced hours will also qualify for unemployment (pay received while working part time will reduce unemployment benefits, but employees working limited hours can still receive unemployment).
  • Contact your health insurance broker. It is very important that you follow the rules regarding how health insurance is handled during a layoff.  We strongly recommend that you talk with your insurance broker and that you continue to pay for health insurance unless your broker advises otherwise.
  • New sick leave pay and tax credits go into effect April 2nd – this may or may not apply to your business depending on when or if you lay off your team. As a small employer, unemployment remains the best path for your employees.
  • CEDR HR Solutions – we and many of our clients use CEDR for HR needs. They have put together a great reference site “Practical Guidance for Employers for handling the Coronavirus” including answers to many of the most common questions we get.
  • Can employees work for you while collecting unemployment? Yes, however, they will need to report any pay they receive, including bonuses, which will reduce the amount of unemployment received. Do not try to “hide” pay as that will likely cause problems in the future.
  • Consider Qualified Disaster Relief Payments to employees to assist with covering their expenses and loss of pay. Code Section 139 allows an employer to make tax free qualified disaster relief payment to an employee which is fully tax deductible to the employer if made pursuant to a federally declared disaster. The COVID-19 pandemic satisfies the requirement in Section 139 of a federally declared disaster. The payment must be to reimburse the employee for “reasonable and necessary personal, family, living or funeral expenses” incurred as a result of COVID-19. Please contact us to discuss documentation requirements and reimbursable expenses.
  • Make sure to check your state Unemployment website

Financial support from banks and financial companies

Speak to your banker about options, i.e. interest only payments for a couple months or payment deferral. CNBC reported some banks and financial companies are willing to provide support during this difficult time, including:

  • Deferring payments on mortgage, auto, and other personal loans
  • Deferring payments on small business loans
  • Waiving customer overdraft, expedited check, and debit card fees
  • Waiving customer fees on excessive savings account withdrawals
  • Waiving penalties for early withdrawals from certificates of deposit
  • Refunding overdraft, insufficient funds, and monthly maintenance fees for bank and small business customers
  • Offering economic disaster loans
  • Obtain or renew your line of credit
  • Consider taking a loan from your 401(k) account, up to $50,000
  • Consider applying for an SBA disaster relief loan even if you don’t think you will need it

Other considerations

  • Owner Compensation
    • Stop paying yourself your salary and related payroll tax deposits
    • Stop making 401(k) or SIMPLE plan deferral and match deposits
  • Tax Payments
    • Defer April 15, 2020 tax payments for federal and state (check state) taxes to July 15, 2020, including IRA contributions, Health Savings Contributions and 2020 first quarter estimated tax payments
    • Although the April 15, 2020 tax return due date has been extended, we encourage you to file your tax return sooner than later especially if you expect to get a refund. However, if you have a retirement plan that will require a contribution by the due date of the return, request that we file an extension to file untill October 15, 2020
  • Eliminate any nonessential business and personal spending, cancel or delay new purchases especially large expenditures
  • Put a hold on construction projects and new equipment purchases
  • Rent – if you are your own landlord stop paying rent or reduce the amount to just cover the underlying loan payments and expenses. If you are a tenant, reach out to your landlord and request a deferment or reduced rate while closed.
  • Put a hold on non essential utilities while closed i.e. cable TV/internet, cleaning, shredding
  • Only order enough supplies to keep going, if needed contact vendors for payment plans or stop orders
  • Contact your Business Insurance broker and determine if your policy has business interruption insurance. While typically excluded from a claim when there isn’t a direct loss, there is a legal challenge regarding business income and COVID-19 which may allow a claim as a business closure by order of Civil Authority
  • Sign the ADA petition to urge Congress to include dentists in COVID-19 relief packages
  • Federal student loan relief – applies only to federal student loans and includes an interest waiver for 60 days and an option to suspend payments for 60 days. If you have outstanding federal student loans or your employees do, have them contact or call 1-800-4-FED-AID for assistance
  • Consider refinancing high interest student loans